House of Commons - Treasury

Select Committee on Treasury Tenth Report

4 Establishing a non-ministerial department

80. The Government's consultation paper proposes that the new statistics office should be established as a non-ministerial department (NMD), "ceasing to report to, and through, a Minister".[108] The consultation paper explains:

NMDs are departments in their own right, established to deliver a specific function; part of government, but independent of Ministers. The precise nature of relationships between NMDs and Ministers vary according to the individual policy and statutory frameworks, but the general rationale is to remove day-to-day administration from ministerial control.[109]

81. The Cabinet Office identified a total of 20 non-ministerial departments as at 8 May 2006.[110] The Government made specific reference in its consultation paper to the Food Standards Agency, the Charity Commission, the Office for Fair Trading (OFT), the Office for Standards in Education (Ofsted) and the Office of Gas and Electricity Markets (Ofgem) as examples of non-ministerial departments.[111] Each of these non-ministerial departments retains a relationship with a particular department and minister. During a recent House of Lords debate, the Government again drew a parallel between its proposals for an independent statistics office and the Ofsted model.[112] Box 6 details governance arrangements at Ofsted.

Box 6: Governance of Ofsted

Ofsted was established under the Education Act 2005. The Chief Inspector of Schools, the head of Ofsted, is appointed by the Queen in Council following recommendation by the Secretary of State for Education and Skills on behalf of the Government, in accordance with the guidelines of the Office for the Commissioner of Public Appointments.

Ofsted has a Strategic Board which is comprised of two non-executive members sitting with members of Ofsted's Management Board. Ofsted also has an Audit Committee with an independent chair and two other independent members.

Ofsted is funded as part of the Spending Review process and it is committed to achieving efficiency gains which will contribute to those outlined in the Department for Education and Skills' Efficiency Technical Note.

The Chief Inspector must make an annual report to the Secretary of State for Education and Skills, which is subsequently laid before Parliament.[113] The Chief Inspector regularly gives evidence on Ofsted's performance to the Education and Skills Select Committee.

Sources: Various[114]

Departmental overview

82. We discussed with witnesses what the appropriate model for the new non-ministerial department might be. The ONS felt that the non-ministerial department would still "need a minister responsible for statistics legislation to oversee the working relationship", and that "at the top level there is always a need for a minister to deal with Parliament about the legislation under which any organisation works".[115]

83. Lord Moser recently told the House of Lords that, to the extent that the Government would retain residual responsibilities for the new non-ministerial department, the Cabinet Office's "lack of particular subject interest" made it a more suitable location than the Treasury, which was primarily concerned with economic statistics.[116] He told us that the Treasury's focus on economic statistics represented a "conflict of interest" and that many of the most important statistics relating to society related to "things like education, health and all the other social areas which are not the direct interest of the Treasury".[117]

84. Ruth Lea argued that there was a "very, very strong case" for locating the new non-ministerial department with the Cabinet Office. She described the Cabinet Office as a "much less powerful policy-making department" than the Treasury and noted its "much broader remit".[118] The Statistics Commission also favoured moving the non-ministerial department to the Cabinet Office, because of the need for co-ordination across departments on some statistical issues, such as the collection of migration statistics:

One of our concerns is to ensure that there is effective planning of statistical work … to meet future statistical requirements right across government. Many of those issues involve not just a single department but cross-departmental concerns, and the Cabinet Office in many ways seems a more natural coordinator of statistical planning than the Treasury does.[119]

85. Lord Moser argued that locating the non-ministerial department with the Cabinet Office would also be likely to have reputational benefits. He told us that during his time as Director of the Central Statistical Office and Head of the Government Statistical Office he had served three Prime Ministers, and found it "much less difficult to influence other ministries when it was known that behind [him] was the Prime Minister".[120]

86. When we put these views to the Minister, he told us that the Government felt that it was "probably appropriate" for "any residual responsibilities" to sit with the Treasury.[121] He argued that the Treasury had "experience of dealing with statistical issues" and he felt that, as approximately 150 of the 250 National Statistics produced by the ONS were economic, the Treasury would retain a key interest in the operations of the new statistics office. He said that these economic statistics tended to "be produced more regularly" and "carry more impact and command more attention" than other statistics such as population surveys.[122]

87. The Minister also argued that the Treasury had a greater interest in statistics than other government departments because of its coordinating role on public service agreement and efficiency targets. He said that the Treasury had the "most strongly developed audit function" among government departments and had a "direct interest in [measuring] performance against public service agreements" and "a direct interest in departments delivering value for money".[123]

OUR CONCLUSIONS

88. The Ofsted model and the experience of the other non-ministerial departments in the UK suggests that the independent statistics office proposed by the Government would still be subject to some degree of ministerial oversight. There would still be a need for ministers to trigger the appointments process, conduct negotiations with respect to the new office's budget and take responsibility for statistics legislation. As discussed in Part 6 of this report, the non-ministerial department would retain some form of relationship with this minister. We heard arguments from some witnesses that it would be more appropriate for the ministers having a residual relationship with the non-ministerial department to be based in the Cabinet Office rather than the Treasury. The Minister opposed this suggestion, on the basis that the majority of statistics produced by the ONS are economic, and therefore of more interest to the Treasury than other government departments, and that such a move would have a negative impact on the Treasury's ability to measure performance against public service agreements and hold other government departments to account for their value for money.

89. We have considered the arguments for transferring the new non-ministerial department from HM Treasury to the Cabinet Office. On balance, we conclude that the residual responsibilities of Government in relation to the new independent statistics office should remain with HM Treasury, although we do not agree that the Government can credibly argue that locating the new department outside the Treasury would detrimentally affect the Treasury's ability to coordinate, and measure departments' progress against, public service agreements and efficiency targets. The residual responsibilities of ministers in respect of the new non-ministerial department are likely to be limited, and we therefore do not believe that the precise location of the new department is particularly important. However, if HM Treasury is to retain residual responsibility for the new department, we recommend that the Government consider carefully how it will demonstrate that its proposals will result in a genuinely independent statistics office. What is important is that the new department should be perceived to be more independent than the present arrangement.

108 Independence for statistics: A consultation document, para 4.11 Back

109 Ibid. Back

110 These were: Assets Recovery Agency; Charity Commission for England and Wales; Commissioners for the Reduction of the National Debt; Crown Estate; Crown Prosecution Service; Export Credits Guarantee Department; Food Standards Agency; Forestry Commission; HM Revenue and Customs; Office for Standards in Education; Office of Fair Trading; Office of Gas and Electricity Markets/Gas and Electricity Markets Authority; Office of Rail Regulation; Office of the International Rail Regulator; Office of Water Services; Postal Services Commission; Public Works Loan Board; Revenue and Customs Prosecutions Office; Serious Fraud Office; and UK Trade and Investment. See Cabinet Office, Electronic List of Ministerial Responsibilities, www.cabinetoffice.gov.uk. Back

111 Independence for statistics: A consultation document, para 4.11 Back

112 HL Deb 15 June 2006, col 424 Back

113 Education Act 2005, section 3 Back

114 'Appointment of Her Majesty's Chief Inspector of Schools', Department for Education and Skills press release 2006/0083, 8 June 2006; HL Deb 15 June 2006, col 424; Ofsted, Strategic Plan 2005 to 2008, November 2004, p 6; Ofsted, Departmental Report 2005-06, May 2006, p 17; Education Act 2005, section 3 Back

115 Qq 199-200 Back

116 HL Deb 15 June 2006, col 407 Back