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Resolving confusion: the unaddressed issue of public bodies reform

How is public body reform faring?

Three years on from the passing of the Coalition’s government’s Public Bodies Act and a period of reform in the UK, how far has the system of arm’s-length government in the UK improved? The answer of course, depends on what the diagnosis of the original problem was.

In 2010 the Institute noted that “previous attempts at reform…have tended to focus on reducing the numbers of arm’s-length bodies (ALBs)” while many of the deep-seated problems of arm’s-length government went unaddressed. Our report warned that a single-minded focus on reducing the number of bodies would not be sufficient to set arm’s-length government on a stable footing for the future. A smaller “landscape” would not necessarily equal a “better” landscape. At the time, our answer to this was a new taxonomy of ALBs which would bring clarity to a landscape which we determined was home to at least 11 different types of ALB. Our proposal was to reduce this to four categories, with a clear link between the form a body took and the function that it performed. In this world, unlike now, all economic regulators would be classified in the same way and would benefit from clearer governance arrangements determining, for example, how budgets were fixed, performance examined and disagreements between departments and regulators over strategic direction escalated and resolved. So how far has the system of arm’s-length government improved since we made this recommendation? This week’s PASC report into the accountability of quangos highlights that there have been substantial improvements in some areas. The government has made progress on transparency by publishing more and better data about ALBs; a new triennial review system requires departments regularly to review their NDPBs to ensure they are fit for purpose; and the reform programme has produced cumulative savings of £2 billion since 2010 according to the Cabinet Office. From the Government’s point of view, there is much to be pleased with. A forthcoming Institute publication will examine this progress in more detail. However, the issue of how ALBs are classified remains a core building block of a coherent system of arm’s-length government, one which has remained largely unaddressed until now. On this point, the PASC report is less complimentary. According to the Committee, the overall landscape of arm’s-length government remains “confused and opaque”. The report calls for the introduction of a new system of classification, based on the Institute’s 2010 model. PASC argue, as we have, that a simpler taxonomy would clarify accountability arrangements and reduce the potential for overlapping responsibilities. The Cabinet Office has also announced that it is running a review of administrative classification intended to determine whether the system for classifying bodies is “fit for purpose”. Both PASC’s recommendation and the Cabinet Office’s review represent an opportunity for this government to show that it has looked past the numbers game and can tackle the wider problem in arm’s-length government. It needs to capitalise on the progress that has already been made in reforming ALBs and initiate a serious reorganisation. Determining the right approach will not be easy. There will be technical difficulties in designing a framework which works for all types of bodies. But the bigger challenge would be transforming existing bodies, many of whom have already been subjected to considerable upheaval in this parliament into a new framework. Some legislation may be needed, which may be tricky within the parliamentary time available before the election. But there are ways of managing a transition. First, it’s crucial that ALBs are involved in designing and testing any new framework. Many ALB leaders have frustrations that their governance arrangements lack clarity so there is something in it or them if they engage beyond fear of what might happen if they don’t. Second, government will need to find a process which allows the efficient shift of hundreds of institutions into a clearer arrangement. For most ALBs a new framework need not mean huge institutional disruption so there is no point implementing changes in ways that promote protracted navel-gazing. All NDPBs are now subject to triennial reviews in which reviewers are asked to consider whether alternative models of delivery could be considered. Expanding this to ask which new category the body under review is best suited to could be a viable way to move existing bodies to the new system, particularly if (as PASC recommends) triennial reviews expand to cover other types of ALB, rather than just NDPBs as they do now. However the Government chooses to take forward the results of its work on ALB classification, it must be seen to be serious about how the landscape of ALBs is arranged. The reforms that have taken place to date represent improvements on the system the Government inherited in 2010. But can the overall programme of reform truly be seen as a success in the absence of a fundamental reorganisation of the landscape? Criticisms from PASC suggest not yet. But if the Government moves quickly to address the confusion, Francis Maude could leave a legacy that many subsequent governments will thank him for.
Publisher
Institute for Government

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