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Reining in the quango state: our four key findings

Quangos are back in the news again with the leak of the proposed list of bodies facing closure or merger.

Ministers have already said that the list does not represent current policy. But the desire to rein back the quango state was already clear in the coalition agreement and earlier announcements. Since arm’s length bodies account for some 13% of all government spending, a large scale rationalisation was always on the cards with the government seeking to achieve large scale fiscal consolidation. But this comes back to some of the key findings in our July report, Read Before Burning.

First, over half of all quangos are small advisory bodies of experts with no independent budget or staff. Abolishing them may make sense if their advice is no longer needed – but it won’t save significant sums of money. In Read Before Burning we argued that since they advise, not execute, they should not be regarded as part of the arm’s length landscape at all. In addition, some of the bodies on the list are trading funds which raise fees to cover their costs. That is not reason to keep them if they no longer serve a purpose – but abolishing them won’t save money.

Second, the really big money is tied up in relatively few bodies. In 2007-8 just 15 Executive NDPBs accounted for 77% of the spend. But three quarters of that money is passed on to third parties – so making savings means cutting programmes.

Third, the scope for making savings where functions are transferred are merged is limited, certainly in the short-term. Savings in overhead costs need to be balanced against upfront costs. And reorganisations risk losing expertise and focus during the transition – with attendant risks to the services they provide.

Fourth, bringing back functions into government departments may increase Ministerial control – but potentially risks a loss of transparency. Our report found that too many bodies had gone unreviewed for too long. Many had accreted new functions and grown away from their original purpose. So a systematic look to see what functions still need to be performed and by whom was necessary. But one of paradoxes of quangoland is that, while quangos as a class of bodies are seen as undemocratic and inefficient, why we have established  so many is because, on an individual basis, putting function at arm’s length from government is a way of reassuring the public that decisions are being made by experts – or people above party politics. Past governments have taken the view that the wide range of activities performed by quangos can be better done by a self-managing entity than by a government department. So the government needs to be clear that the decisions it announces when we see the official list are ones that will last, and will lead to better management, better value and improved accountability.

And, as we recommended in our report it needs to implement changes in parallel to ensure those arm’s length bodies that remain, and the new ones it sets up, are managed on a robust basis.
Publisher
Institute for Government

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