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Mr. Freeman: The right hon. Gentleman has been in the House for longer than I have, and he will remember the debate and the explanations that were given at the time. I have affirmed the principles of the new civil service code, the great advantage of which is that it sets out, perhaps for the first time, in crystal clear language the obligations of Ministers and civil servants one to the other.
I shall now deal with ministerial responsibility for agencies. The introduction of the civil service code represents an important element of continuity in the Government's policy for continuity and change in the civil service. At the heart of the programme for change is the next steps project to improve management in Government. Under next steps, since 1988 we have established executive agencies within the public service to deliver services to the public either directly or indirectly. The next steps project has affected practically every part of the civil service, and that covers a wide spectrum of activity. It has made significant management improvements. Currently there are 110 executive agencies, and two civil servants in three are working under next steps arrangements. I expect that proportion to rise to three quarters by the end of next year.
The introduction of next steps executive agencies does not change the usual framework of ministerial accountability to Parliament. Civil servants report to Ministers and Ministers account to Parliament for all the activities of their Departments, including their agencies. The next steps concept introduces a great deal more clarity into the definition of respective roles and responsibilities.
In particular, it makes clearer the aims and objectives of civil service organisations, the tasks and performance targets that Ministers set each agency to achieve, and the amount of resources that are allocated to agencies. The greater separation of roles within the civil service and the introduction of performance targets to areas where previously there were none have been catalysts for change and for improvement in the management and provision of services.
Dr. Godman:
Two Benefits Agency offices in my constituency are staffed by highly competent and professional people. However, would the Minister agree that some problems that are brought to us by constituents who are on social security incomes require a response from a Minister in addition to the usual letter from the chief executive?
Mr. Freeman:
I entirely agree with the hon. Gentleman. My brief contains comments on agencies, and if he will bear with me I shall deal with his point.
The next steps initiative does not change conventional relationships between Ministers and those carrying out the executive functions of Government. Agencies are within the civil service, and next steps arrangements provide for the clear delegation of operational responsibilities. The chief executive of each agency is personally responsible to
the Minister for its management and performance. The form and extent of the delegation is determined case by case in the agency framework document, which is published. Each document sets out the range of tasks that the agency is to perform. That does not mean that, in delegating operational responsibility to the chief executive via the framework document, the Minister washes his hands of any interest other than in output and outcomes.
As I have said, the Minister remains accountable to Parliament for the agency. If he is to provide an adequate account, he needs to keep in touch and to retain the right to look and question and even to intervene in the operations of the agency if public or parliamentary concerns justify it. He may need to give fresh directions or to take other action if he or Parliament is not satisfied with what is being done. The Minister must be able, if necessary, to examine in depth and detail every part of the activities of the agency. That does not cut across the principle of next steps agencies.
Framework documents may require certain decisions or events to be referred or brought to the attention of Ministers, and the basis on which hon. Members have accepted the arrangements under which their inquiries about operational matters are handled by chief executives is the knowledge that, ultimately, if it becomes necessary, they can take up the matter directly with the Minister. The Select Committee on the Treasury and Civil Service strongly endorsed that.
I agree with the hon. Member for Greenock and Port Glasgow (Dr. Godman) that constituents of any hon. Member have recourse to Ministers either in writing or through their Member of Parliament at the Dispatch Box. The establishment of agencies in no way seeks to cut across that principle.
Mr. Derek Foster (Bishop Auckland):
I have a question for the Minister before he leaves the topic of the next steps agencies. The Prison Service has been mentioned. Does he agree that continual interference by a Minister in what are described as operational matters undermines the authority of the chief executive, and makes it almost impossible for him to run the agency? Is the next steps agency structure incapable of dealing with the problems in the few agencies that are continually surrounded by controversy?
Mr. Freeman:
I have defended the right--indeed, the responsibility--of Ministers to inquire, nay to intervene, in the activities of any agency so as to discharge their accountability to Parliament. That is the difference between the public and private sectors. The analogy being drawn by some that an agency is like a subsidiary company of a large group holding company is false. A Minister is accountable to Parliament and must be able to call to account the chief executive and other officers of an agency. He must also be able to examine and inquire into every nook and cranny of its activities.
We are still developing our experience with the agencies. We have 110 of them, and perhaps in certain cases those who sit on the advisory committees of agencies are unclear about their responsibilities. Are they confused about their responsibility to advise the Minister, or do they think that somehow they are non-executive directors of an operating company? They are not the latter. The Minister is responsible at all times, and is accountable to Parliament.
He delegates day-to-day responsibility but does not forgo the right to intervene in the affairs of the agency or in the responsibility of the chief executive.
Mr. Beith:
I am grateful to the Minister for accepting a further intervention. Is it not the case that the frequency of intervention that he has described and for which there may be the most compelling political and public interest justification, necessarily results in actions at operational level that have been determined by what the Minister has said or by what he is expected to think? Does the Minister accept that the consequence of that is that Ministers must accept that in some circumstances they may have to resign because of operational failures within the agency?
Mr. Freeman:
If the right hon. Gentleman will allow me, I shall deal with that point in the concluding part of my remarks, when I come to ministerial responsibility to Parliament. However, he must be right in principle. If it is the responsibility of a Minister in discharging his accountability to Parliament to look into the affairs of an agency, the distinction between policy and operations--which I have defined more clearly in this debate for the benefit of the House--means that, if he intervenes and directs because of pressure brought by Parliament or because of a collective judgment by Parliament that the operations of an agency may need to change, that will become his responsibility and not the chief executive's.
Some people, including some members of the Treasury and Civil Service Committee, have proposed that chief executives should account directly to Select Committees about their annual performance. However, that could not be reconciled with their position as agency staff or, therefore, in relation to civil servants who report to their Minister. That would also not fit in with the Committee's acknowledgement that it is for the Minister to account to Parliament. However, agency chief executives regularly appear before Select Committees to explain the factual position in relation to the agency without prejudicing normal ministerial accountability.
An essential part of the next steps arrangements is that the framework document should in each case spell out as clearly as possible the division of responsibilities between the Minister and the chief executive. Such clarification does not mean that independent advice to Ministers and agencies should be excluded. Agency arrangements often provide for an advisory board or an adviser to the Minister to serve as a source of outside expertise that is relevant to the business of the agency. That may be mirrored by outside advice which the chief executive requires.
The story of next steps is one of success, and there is no doubt that standards of service and performance have improved. Later this month, we shall publish the 1995 "Next Steps Review", an annual White Paper which summarises progress in all the agencies. The review will show that agencies, overall, met 83 per cent. of the key targets that were set by Ministers in 1994-95, which compares favourably with the 80 per cent. that were met in the previous year.
The 1995 review will be the sixth in a series. However, it is significantly different from earlier ones because it has developed from being a report on the next steps project to one which focuses on agency performance. It will show
that, in different spheres and in different ways, many next steps agencies are delivering services to improved standards with increased efficiency and effectiveness.
I should like to remind the House of the Treasury and Civil Service Select Committee's conclusion, in its most recent report on the role of the civil service. It reported that agencies represented
I shall now examine the question of ministerial responsibility for non-departmental public bodies, commonly called quangos. The Opposition's arguments in relation to quangos lack common sense because, first, they accuse the Government of eroding the principle of ministerial responsibility and, secondly, they accuse us of the opposite--of having strengthened ministerial control through quangos in spheres that were once the responsibility of local government, thus creating the so-called democratic deficit. The Opposition cannot have it both ways at once--indeed, I am showing that they are wrong twice over.
We have not created some sort of quango state. The evidence for that is published annually in a booklet called "Public Bodies", which is a continuous public record that, significantly, did not exist before this Government created it in the early 1980s. The booklet is available to hon. Members in the Library. It shows that, far from running out of control, non-departmental public bodies--the real quangos--decreased from 2,167, in 1979, to 1,227, in 1995, which is a 43 per cent. reduction. Likewise, the number of staff who are employed by those bodies decreased from 217,000, in 1979, to 109,200, in 1995. That is a 45 per cent. reduction.
The Liberal Democrats, at the last count, had proposed the creation of almost 900 new quangos, including an office of utility regulation--to regulate the regulators--an animal protection commission, an arms conversion agency, and both a local enterprise agency and a local housing arbitration agency for every local authority.
The function of NDPBs is regularly reviewed in a continuous programme. Once they are no longer needed in their existing form, the bodies are abolished, merged or privatised. Even so, we have recently undertaken a further series of initiatives to improve their efficiency, standards and responsiveness. First, we are implementing virtually every one of the recommendations on quangos made in the first report of the Nolan committee. Those recommendations deal not only with public appointments but with proprietary issues. We expect to issue a consultation paper in the next few weeks, following a review of the legal framework of propriety and audit in public bodies, as Nolan recommended.
Secondly, my right hon. Friend the Chief Secretary to the Treasury is reviewing the way in which the administrative costs of NDPBs are controlled. Thirdly, my right hon. Friend the Chief Secretary is examining the scope for rationalising the function of NDPBs in certain policy areas in order to minimise any overlap or spheres of unnecessary regulation. Finally, the efficiency unit in my Department is carrying out a study which is designed to ensure that NDPBs with executive responsibilities have a clear concept of their objectives and effective systems to measure whether they have been achieved.
We are therefore strengthening the accountability of NDPBs to Ministers. At the same time, we are strengthening those bodies' accountability outwards--to
the people who use them. Our work on public appointments is a clear example of ensuring the maintenance of the highest standards through greater openness and public accountability.
The first report of the Nolan committee, to which I have referred, covered public appointments. It found nothing seriously wrong with the system, but it made a number of recommendations that were designed to demonstrate publicly that clean bill of health. We welcome those recommendations and have implemented them.
One key recommendation was the establishment of an independent commissioner for public appointments. Sir Len Peach, formerly chairman of the Police Complaints Authority and a man with an outstanding personal record in both the public and private sectors, started work on 18 December last year. His job is to monitor, regulate and audit the processes for all appointments to executive NDPBs and NHS bodies. To that end, he is currently drafting guidance on public appointments.
"a significant improvement in the organisation of Government . . . any future Government will want to maintain them in order to implement its objectives for the delivery of services to the public."
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