Select Committee on Public Administration Fourth Report

Chapter 2: Overseeing the appointments system

The scope of regulation

17. The remit of the Commissioner for Public Appointments covers ministerial appointments to executive and advisory NDPBs (or quangos), public corporations, NHS bodies, nationalised industries and some utility regulators. But, as this Chapter makes clear, the Commissioner's writ does not run to a wide variety of other public bodies. We explore the implications below.

18. We sought initially through our questionnaire to government departments to establish how many NDPBs and 'other' public bodies exist within central government and are either regulated by OCPA or not. Delays and gaps in this process have prevented us from doing so. Thus far, therefore, we have been able simply to analyse the data published in Public Bodies 2002 in January 2003; and this does not of course extend to 'other' public bodies, though the volume does usefully publish information on task forces, ad-hoc advisory bodies and policy reviews, all of which by definition are not OCPA regulated.

The regulated and the unregulated—looking for a rationale

19. We were intrigued and concerned to discover how many public appointments were not regulated or even monitored by OCPA. Despite the importance of the Office to integrity and public confidence in public appointments, OCPA's writ does not run everywhere. Nor does there seem to be any convincing rationale to explain why some bodies are free from direct regulation and some are covered.

20. Analysis of all NDPBs, public corporations and nationalised industries within the remit of central government, as listed in Public Bodies 2002—a total that includes other departments and agencies, such as the Inland Revenue and Oftel—shows that some 85 per cent of these bodies—1,163 bodies out of 1,375—are OCPA regulated. Thus nearly one in six of these bodies—212, or 15 per cent—are not independently regulated.

21. The Commissioner explained to the Committee on 27 February that it might be that all such unregulated appointments were not 'ministerial appointments', and that OCPA regulation only covered appointments 'made directly' under the authority of ministers. In many cases, however, she said, the Nolan principles are 'voluntarily' applied to the process.

22. Our inquiries into how many 'other' public bodies exist within Whitehall are not yet complete. Departments had difficulties in identifying 'other' public bodies in reply to the Committee questionnaire. However, one department seems to have compiled a full census of these bodies—the Department of Health. Its response listed 43 bodies which are not NDPBs and do not appear in Public Bodies—37 'other' bodies, including six sub-groups, plus six medical councils like the General Medical Council, which the department classes as 'external bodies'. We have also noted a variety of bodies that were not listed in departmental returns to the questionnaire and do not appear in Public Bodies. The following bodies, for example, are not classified as NDPBs for a variety of reasons: BTI, the Civil Service Commissioners, the Electoral Commission, the Financial Services Authority, the Parades Commission in Northern Ireland and Partnerships UK, an advisory body attached to the Treasury. Appointments to these and similar bodies are not regulated or monitored by OCPA and are not necessarily bound by 'Nolan' rules.

23. Other appointments which can currently escape the Nolan process include those for a number of formal and ad-hoc advisory bodies, and many Prime Ministerial Appointments. We examine each of these in turn.

Hidden corners

British Trade International

24. British Trade International was established in 1999 under a board chaired by DTI and FCO ministers and subsumed the existing British Overseas Trade Board, an advisory NDPB sponsored by the DTI. British Trade International is neither an executive agency nor an NDPB. This public body was set up following a review by Sir Richard Wilson, then Secretary of the Cabinet, of arrangements for the support and promotion of exports. The former BOTB consisted of high-ranking government officials and representatives of major construction and other companies and co-ordinated the activities of a set of advisory bodies. In a Parliamentary Answer in 1999 the then Foreign Secretary, Robin Cook, announced that the BTI board would be drawn predominantly from the private sector with senior officials from the FCO, DTI and Export Credits Guarantee Department and representatives of the Scottish, Welsh and Northern Ireland administrations[11]. The BTI website, annual review and Civil Service Yearbook simply refer to the BTI as an organisation "responsible to both the FCO and DTI".

Partnerships UK

25. Partnerships UK (PUK) is a good example of an important body which has undergone several transformations. PUK, which plays a significant role in the processes of the Private Finance Initiative (PFI), began life as a non-regulated task force, briefly became an NDPB, subject to OCPA, and was then privatised as a merchant bank (with the government retaining a 49 per cent share). As a 'private body', PUK is not reported in Public Bodies and is outside the sphere of OCPA and possibly other forms of public accountability, even though its activities are very influential within the public sphere and raise conflict of interest issues. Is Partnerships UK a 'one-off' case or a potential precursor of other public bodies that are or may be privatised and thus removed from various forms of public scrutiny; or has it been given special attention as a politically sensitive body best kept out of sight?

Prime Ministerial appointments

26. The Prime Minister makes a large range of appointments under royal prerogative and statutory powers, of which a relatively small number are to executive and advisory NDPBs, public corporations and other public bodies. For the sake of completeness, we publish a full list of Prime Ministerial appointments to individual posts and public bodies in the Annex, divided into two categories—Crown appointments made by the Queen on the advice of the Prime Minister, and appointments made by the Prime Minister. For Crown appointments, we indicate those in which the Secretary for Appointments at 10 Downing Street is involved in the consultation process and the formulation of advice to the Prime Minister. His office has a more formal or executive role in most of the other appointments, generally limited to processing them, though he engages in "more proactive involvement from time to time". For those appointments made by the Prime Minister, we also indicate in the Annex the appointments for which he has sole responsibility.

27. Our remit is confined to appointments to public bodies and we make no comment on the arrangements for the accountability of appointments to individual posts, political, ecclesiastical, judicial, scholastic or royal appointments (such as the Astronomer Royal or Poet Laureate). The Prime Minister appoints to some bodies, such as the boards of Customs & Excise and Inland Revenue, the Civil Service, Forestry, Crown Estate, and Surveillance Commissioners, and Public Works Loan Board, which are not designated as NDPBs or public corporations. Below we recommend that appointments to such bodies should be made more transparent.

28. As for NDPBs, we note that the Prime Minister is involved in appointments to royal commissions, 11 boards of trustees of museums and galleries, and some 20 executive or advisory NDPBs or public corporations, including the governors of the Bank of England and BBC, the Criminal Cases Review Commission, the House of Lords Appointments Commission, the Millennium Commission, the Police Complaints Authority (chair) and the Honours Scrutiny Committee. The Prime Minister also approves appointments made by his ministerial colleagues to an indeterminate number of bodies on grounds of statute and custom. We list those cases we have been able to identify in the Annex. As we understand the position, most Prime Ministerial appointments to NDPBs and public corporations are made on the advice of the sponsoring departments and fall fully within the OCPA remit. In making Crown appointments officials follow the principles in OCPA's Code of Practice. On the three NDPBs for which the Prime Minister is solely responsible for appointments—the Advisory Committee on Business Appointments, the Committee on Standards in Public life and the Senior Salaries Review Body—the Public Appointments Order in Council 2002 gives the Commissioner a formal regulatory role.

Ad-hoc advisory bodies

29. The Cabinet Office records that, as of 31 March 2002, there were in existence in central government 41 task forces, with nearly 300 members from outside government; 137 ad-hoc advisory groups, with almost 1,200 external members; and 35 policy reviews, with some 125 external members.[12] In all, then, some 1,600 appointed members served on such bodies in 2002. The justification for releasing appointments to these bodies from the full weight of the Nolan process is that they are simply temporary bodies: i.e. the proportionality principle applies. We accept that this is an appropriate course of action. However, 85 of these 213 temporary bodies are shown to have existed for more than the two-year period, recommended by the Committee on Standards in Public Life, during which they might remain unsupervised before being classified as an NDPB or wound up.[13]

30. Some of the 85 longer-lived bodies are apparently quite significant, covering, for example, funding social housing, the health impact assessment strategy, youth homelessness, road haulage, and shipping. The Chancellor of the Exchequer chairs the Standing Committee on Euro Preparation, an ad-hoc advisory body set up in May 1998; a third of its members are from the private sector. This is one of several bodies that are described as being 'ongoing', but are also deemed to be 'more akin to an internal official committee than an external body'—even though they have appointed members—and thus not eligible to be classed as an advisory NDPB. Others among the 213 ad-hoc bodies seem to be defunct or lead an exiguous existence.

Executive agencies

31. There are some 128 executive agencies attached to government departments. Most of the agencies have 'an independent [i.e. external] source of strategic advice', according to the Cabinet Office.[14] Basically there are three models for such advice-giving, none of which is formally subject to Nolan rules:

  • Ministerial Advisory Boards (MABs), comprising senior departmental officials, external members and the Chief Executive, typically meet about four times a year;
  • 'Fraser figures', or Senior Departmental Sponsors, who take their name from Sir Angus Fraser's 1991 report, are senior figures within a department who act as the main source of external advice on the performance of an agency. As Fraser figures are likely to perform a variety of functions, the Cabinet Office warns departments to ensure that there are no conflicts of interest with other roles they may have in a department;
  • Departments are encouraged to boost the number of non-executive directors on agencies with no MAB (as is usually the case with agencies that are also departments) to provide particular business or technical expertise and represent major stakeholders. On some agencies without MABs, non-executive directors comprise up to half the management board.

32. Most executive agencies within departments have ministerial advisory boards. Where there is a Fraser figure as well, he or she usually chairs the board. These boards are not regarded as public bodies and are not formally subject to the Nolan rules on public appointments. The Cabinet Office urges departments to observe Nolan rules 'in spirit'. Fraser figures and non-executive directors are also appointed outside the Nolan process.

33. We identified another anomaly. While the House of Lords Appointments Commission is OCPA regulated, its own appointments are not. Yet surely the choice of 'people's peers' ought to be rigorously examined in the public interest for the merits and diversity of those chosen? Billy Bragg, the singer-songwriter-activist, drew our attention to the symbolic significance of representation in a reformed House of Lords. He said that if appointments to the Lords, "at the centre of our democratic process", could draw in people from outside Westminster circles, they could reinvigorate the whole process of making appointments at all levels and inspire people to want to be part of it.[15]

34. It is the responsibility of the Cabinet Office to classify a new body as an NDPB or not, and the Cabinet Office is responsible for the Public Appointments Order in Council, which sets out those bodies which fall within the OCPA remit. We do not consider that this ad hoc, opaque arrangement is adequate. The decision whether or not an important public body is regulated should not be made in this way.

A radical new look at public bodies

35. It is our view that the terms on which appointments to public bodies are subjected to independent scrutiny should be made more comprehensive, transparent and precise than they currently are. We appreciate that the role of ministers in making public appointments was prominent among the issues that the Committee on Standards in Public Life was set up in 1994 to address; and it is natural enough that ministerial appointments remain central to the application of Nolan principles and process. But time has moved on. There are public bodies to which ministers do not directly make appointments that ought nevertheless to fall within the full OCPA remit. There are public bodies to which the Prime Minister makes Crown appointments that are automatically excluded from OCPA regulation. We see no justification for this exclusion in and of itself, and below we make recommendations which would tighten up regulation and increase accountability and transparency.

36. More generally, our inquiry has demonstrated the need for much more clarity about the role, status and activities of public bodies. As we have seen, there is a constant flow of new bodies which start life, change their status and merge with others. Some have ministerial appointments, some do not. Some are designated as NDPBs and are included in official lists, some lurk as 'other bodies' in departmental corners, no doubt doing good and necessary work, but not very transparent or accountable. Most importantly for this inquiry, there is no clarity or consistency about the application of the Nolan rules.

37. We believe that there should be a radical new examination of public bodies. Nearly a quarter of a century ago, amid political and public concerns about an unchecked 'spread of patronage' and 'a concealed growth of government',[16] Sir Leo Pliatsky was asked to inquire into quangos. The Pliatsky report adopted the wide-ranging NDPB category specifically to encompass the wide variety of bodies that the survey uncovered. It appears to us that the NDPB category itself may have outlived its usefulness. Considering how rapidly the world of public bodies is changing, it would be very useful to undertake a new review of this world.

38. We recommend that the Cabinet Office undertake a new fundamental review of all public bodies attached to central government and 'map' them. If necessary, the definition of non-departmental public bodies should be revised according to precise, comprehensive and transparent criteria to encompass as far as practicable all relevant public bodies. This comprehensive review should be repeated at regular intervals.

39. We recommend that all public bodies, whether executive or advisory, statutory 'other' or 'private', 'ad-hoc' or 'ongoing', within the remit of central government, should be placed on the public record in Public Bodies and departmental websites, with information on their roles, accountability and appointment arrangements.

40. We recommend that Crown appointments to public bodies should not be excluded from regulation by the Office of the Commissioner for Public Appointments in the absence of specific justification for their exclusion.

41. We recommend that the review of public bodies, recommended above, should consider on a case-by-case basis whether public bodies not now subject to OCPA regulation should come under the OCPA remit.

42. We recommend that the Commissioner for Public Appointments should report to Parliament the list of public bodies that she considers should come within her remit; and that there should be an opportunity for Parliamentary scrutiny and approval of the list, possibly through a select committee.

43. We recommend that any variation from OCPA regulation should be placed on the public record with reasons given.

The local appointed state

44. Our visit to Bristol demonstrated that these issues are not important simply at the national level. As we stated above, the Committee identified some 5,300 local quangos in the UK as part of its 2001 'mapping exercise'. These include Boards of Visitors to prisons and other penal establishments (now called Independent Monitoring Boards), which have an important local role in ensuring standards in the criminal justice system. Of these local bodies, 847 were NHS bodies and trusts that are OCPA regulated. But the great majority of such bodies, many classified by the Nolan Committee as 'local public spending bodies,' fall outside the OCPA remit.

45. Most local quangos are wholly or largely self-appointing; and very few appointments are subject to ministerial or departmental oversight. Most of what is known about the processes of appointment derives from a study, published in 1996, which found that that they were 'a word-of-mouth affair, with a consequent lack of transparency'.[17] There is no reason to believe that this judgement is seriously out of date.

46. There are no official statistics on local partnerships, despite their growing significance in local and sub-regional governance. These bodies—New Deal for the Community, regeneration, crime reduction, anti-drug and other schemes, action zones, etc.—bring together representatives of local authorities and public agencies, local voluntary bodies and private enterprises. In 2001, we identified some 2,300 local partnerships. In their paper for this Committee, Professor Chris Skelcher, University of Birmingham, and Dr Helen Sullivan, University of the West of England, calculate that twice as many—some 5,500 partnerships—exist; and even this figure, they say, is a significant under-estimate.[18] For example, it does not include partnerships funded through EU programmes.

47. When we visited Bristol we found a complex range of inter-agency partnerships, partnership programmes funded by various government departments and the EU, and partnerships and other co-operative arrangements initiated by the local authority. John Savage, Chief Executive of Bristol Chamber of Commerce and High Sheriff, says that his involvement in the 'network of connectivity' in Bristol—that is, in at least six partnerships with the City Council and other bodies—is a full-time job. Business in Bristol "paid for us to have a unit that could do the interface" and the "structures of connectivity" had bridged the gap between the public and private sectors.[19]

48. Bristol City Council has identified all the partnerships with which it has a relationship and has published a short and long list. The long list runs to 76 Bristol-wide partnerships, forums and strategy groups, etc; 46 neighbourhood partnerships and groups; 36 regional partnerships and groups, including the South West RDA and regional assembly; and ten national and international networks. There is no monitoring of the memberships of key partnership and analogous boards, let alone the potential for unseen or undesirable influences being brought to bear by concentrated or overlapping memberships of key partnerships.

49. Clearly there is a need for greater accountability and transparency here. The activities of, and appointments to, all local public spending bodies and partnerships carrying out public functions on behalf of government, the EU or local authority should be properly monitored. The importance of these bodies (and the complexity of their 'connectivity') leads us to conclude that while these local bodies need not be subject to full OCPA oversight, they need some form of credible regulation.

50. We recommend that the Government should consult with local authorities to determine the most effective and proportionate means of achieving public oversight of the boards of local public bodies and partnerships.

11   Official Report, 12 March 1999, Col 399/400 Back

12   'Task Forces 2002: by Sponsor Departments', pages 163-224, Public Bodies 2002, Cabinet Office 2003, TSO Back

13   Op.Cit, Recommendation 41. Back

14   see Cabinet Office Guidance on Review of Executive Agencies and Public Bodies Back

15   Q 57 Back

16   Report on Non-Departmental Public Bodies (the Pliatsky report), Cmnd 7797, HMSO, January 1980 Back

17   Opening the Board Door: the Membership of Local Appointed Bodies, Skelcher C and Davis H, Joseph Rowntree Foundation, York, 1996 Back

18   PAP 70 Back

19   Q 1063 Back

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