The Institute for Government's report on arm's-length bodies makes recommendations to increase their effectiveness and accountability at a time when 'quangos' are firmly in the spotlight. The government's review of arm's-length bodies (ALBs) was published on 14 October. It proposes the reform of 481 bodies, of which 192 will cease to exist. ALBs often seem the first place ministers look when the call for cuts comes. Yet they:
- protect the constitution
- regulate big business
- administer pensions
- give expert independent advice.
Whatever their merits, quangos are sometimes seen as illegitimate and inefficient.
The confusing landscape
The answer lies in the sheer complexity of ALBs. It confuses ministers, civil servants and the public. No one is clear who does what, which leads to:
- policy coordination problems
- difficulties achieving the right balance between freedom and control of ALBs – there are examples of both micro-management and institutional neglect.
Like bodies have unlike names and status – and often the designations given to ALBs seem designed to mislead. The whole area is characterised by a general lack of consistency, coherence and transparency.
Does it matter?
This matters because ALBs spend 13% of total government expenditure – though a lot of that is simply passed through to others to spend. But the big money is tied up in a few bodies. Just 15 NDPBs account for some 75% of NDPB spend – not in the long tail of 450 small advisory bodies.Past governments have focused on numbers, not efficiency and effectiveness.
Our new report recommends:
- it should be harder to set up ALBs - Parliament should be given a new role when bodies are set up to ensure that they are subject to regular scrutiny, both inside Whitehall and by the NAO
- better management of ALBs in Whitehall - with more attention given to training both ALB appointees and their departmental sponsors
- increasing public confidence in ALBs - greater transparency should be promoted, which would give the public more confidence in the impartiality of appointments.
These changes will address many of the shortcomings revealed in our report. However, on their own they do nothing to remove the confusion in the landscape.
Radical change also required
Our report also proposes a radical change to relate the form of an ALB much more closely to its functions – and the freedom it needs to perform them. So we would:
- sweep away the oxymoron 'non-ministerial departments'
- treat the long tail of 450 advisory bodies as departmental advisory committees rather than ALBs
- ditch the confusing language of executive non-departmental public bodies (who get much of their money from and whose boards are appointed by departments).
In their place we would have three new categories:
- Constitutional bodies - who would answer to Parliament, not ministers
- Independent Public Interest Bodies (regulators, standard setters and watchdogs of govt activity) – who need to be protected from ministerial interference
- Departmental Sponsored Bodies who perform functions on behalf of a department – but have some discretion and where it makes sense for staff not to be departmental civil servants.
Executive Agencies would remain. The benefit of this would be ministers, chairs and chief executives would know what freedoms come with what status – and make clear who is responsible for what. These reforms need to go alongside the current review of what stays at arm’s length, to put it on a solid basis going forward. That is why we are recommending that the government 'Read Before Burning'.