Examination of Witnesses (Question Numbers
219-259)
Sir Ian Magee CB, Professor Matthew Flinders and
Professor Colin Talbot
9 November 2010
Q219 Chair: Welcome
to our new witnesses. I wonder if you could give your names and
roles for the record, please.
Professor Flinders:
Matthew Flinders, Professor of Politics, University of Sheffield.
Sir Ian Magee:
Ian Magee, Senior Fellow, Institute for Government.
Professor Talbot:
Colin Talbot, Professor of Public Policy and Management at Manchester
Business School.
Q220 Robert Halfon:
The language around the cull of the quangos has been quite colourful—some
might even say intemperate. Do you think that we have lost sight
of the fact that some of these bodies do perform very useful functions
and that they are vital to a modern democracy?
Sir Ian Magee:
Yes. I think that is right; the debate has been captured in particular
terms. I should just make clear that in our report, "Read
Before Burning", our institute is neither an apologist for
quangos, nor do we advocate abolition of quangos. Sorry, I should
really say "arm's length bodies", taking my cue from
the previous witnesses. What we do say is that this is a very
confused landscape and that it needed sorting out, so to that
extent we very much welcome the fact that the Government have
begun to do that and have begun to look at some of the facts,
some of the data and some of the numbers rather than necessarily
just talking the language of bonfire, or whatever other emotive
phrase you want to use. I think it's in the interest of everybody—not
least the public, who don't seem to get very much of a mention
in this debate in my view, but also ministers and civil servants—that
the picture is clearer. I thought, incidentally, that the coalition's
Chancellor probably gave the best articulation as to why they
are sometimes necessary when he created the Office for Budgetary
Responsibility. He spoke about the fact that he might, if I remember
the quote properly, find that at some stage in the future it could
become a rod for his back, but nevertheless he felt that it was
absolutely right that this function should be at arm's length
from government.
Q221 Robert Halfon:
But do you think that some of the lack of affection has come about
because of stories about the pay of senior quangocrats, as I mentioned
earlier, and because of the examples of waste and confusion about
what they are for, and also because of the view that party placemen
are just placed on these quangos?
Professor Flinders:
There is a great deal of mythology around these bodies, and I
must say the debate tends to create more heat than light. People
who work in this Palace of Westminster often contribute more to
that than others do. The fact of the matter is that if you look
beyond the UK, which is something that the debate does not do
at the moment, you will find arm's length bodies used in every
advanced liberal democracy in the world. The thing that we manage
to do with them is use them in such an ad hoc, confused manner
that we maybe don't deliver the efficiencies, in terms of financial
rewards, and harness the social capital that these bodies can
bring on occasion. As for the thing about pay, it's often just
ridiculous that you will in effect demonise some people for a
salary that is equivalent or much lower than they would get in
the private sector or in other full-time posts. So I think the
language itself is a big barrier to a sensible and mature debate,
and I think that's maybe part of the problem that we currently
face with the reform agenda.
Q222 Robert Halfon:
But do you not see that the public are worried about the waste
in some of these quangos? For example, as a new MP, every single
day I get 50-page glossy brochures from many of these quangos,
and things like that annoy people and they do not understand why
they are spending money in this way. What is your view about
that?
Sir Ian Magee:
Yes, there may be an element of "What did the Romans ever
do for us?" around this as well, in that quangos are curious
beasts. A straw poll of my friends will say the same when they
hear that I am talking about this sort of thing: "They need
to be culled. They are unaccountable. They are unelected,"
et cetera. But if you speak about individual bodies, expert committees
and the like, then you find—we have not been able to find
the MORI poll evidence to substantiate what I am saying, but I
can recall seeing it at some stage—that some of these individual
bodies get very high ratings indeed. So I think one needs to
differentiate. The implication of your question, I think, was:
should we couch this debate in different terms? I would say very
much yes.
Professor Talbot:
There are two things I would say. First of all on this issue
of pay, it has become politically significant recently, but it
is not a new issue. The previous Conservative Government paid
the Director General of the Prison Service, the Director of the
Defence Evaluation and Research Agency and the Director of National
Savings considerably larger amounts of money than normal civil
service pay to take on those roles in the early 1990s. So it's
not as if it is a new phenomenon; this thing has been going on
for quite a while. But the second point I would make is to make
an even stronger defence of arm's length bodies. I would say
not only do they appear in all advanced Western liberal democracies,
but I think they are an essential part of advanced Western liberal
democracies. If you take the most common arm's length body that
exists not just in advanced countries but in most developing countries
as well, it's tax collection agencies, and there are very good
reasons why they are kept at arm's length from politicians. First
of all, they don't want the politicians putting their hands in
the till, and secondly they want to ensure that people's tax bills
are not influenced by their political affiliations. That is why,
if you look round the world, most tax collection agencies are
on a statutory basis at arm's length from executive government,
quite rightly.
Q223 Robert Halfon:
We haven't touched on the waste argument and the amount of literature
and management-speak that these quangos produce, which does, as
I say, irritate people. Also, often the quangos are used as a
means of satisfying party activists. So each government will
place party activists to run these quangos as a reward of some
sort. What you said in your paper, which I thought was interesting,
about democratic participation and the fact that quangos could
be good forums for this, in the past it does not seem to me that
they have been, and I would be interested to tease out further
how quangos could be democratised.
Professor Flinders:
Sure. I don't want to be too conflictual, but I think actually
you are a bit mistaken in your approach to understanding the role
of patronage and ministerial powers to appoint. Actually, in
the last 10 years, what you have had is a great restriction on
the discretion that ministers enjoy in making appointments to
public bodies. I am sure you have met Janet Gaymer a few times,
and the regulations and procedures that she and her predecessors
have put in place are quite forthright. There is nothing wrong
with a minster appointing somebody who shares their policy preferences;
you would not expect ministers to appoint their enemies. What
we have is a system, increasingly with a role for Select Committees,
that makes sure that those appointees are above the bar. It would
be irrational for a Minster to appoint somebody who could not
do the job, and the chances of it lasting more than a week with
the sensationalist media that we have is pretty ropey as a strategy.
This is the big thing about pay: I don't know if you know this,
but most people who serve on the boards of NDPBs do not get paid.
Did you know that?
Robert Halfon: Yes, I
did.
Professor Flinders:
Right, well this whole, big debate about how much people get paid
is really misguided, because there is a lack of understanding
about the fact that most of the people who serve on the boards
of public bodies do so for no money at all; it is their contribution
to public life, because they will not get involved in—big
"P"—Partisan Politics, because of the immature
debates and sniping that goes on.
Q224 Chair: So why
are—sorry to use the word again—quangos so unpopular?
Why are they such an easy target?
Professor Flinders:
I think they are an easy target because the way we use them in
this country puts them in a shady, unclear, untransparent
position. If you were to locate the use of arm's length bodies
within a clear governance structure, most people, when you talked
to them, would realise that actually they present opportunities
for a wider range of people to play a role in politics. The debate
about the big society is not, "What functions can we get
rid of and give to the public sector or the third sector?"
That might be one element of the debate, but the bigger debate
is, "How can we increase the diversity of those people who
can play a role on the boards of public bodies?" If you
look at the history of Northern Ireland, there was a great shift
away from local and central government departments to arm's length
bodies as a way of ensuring that sectarian tensions were put to
one side and that various different people who would not get involved
in politics did so on the boards of public bodies.
Q225 Robert Halfon:
Would you accept that one way may be to have elections to some
public bodies, as they do in America?
Professor Flinders:
No.
Q226 Robert Halfon:
Why?
Professor Flinders:
Because there is a current fetish for elections. Where is the
evidence that the public want a greater role in elections?
Q227 Robert Halfon:
Where is the evidence that they do not? I believe in democracy
and democratic accountability—
Chair: Let him answer.
Professor Flinders:
I will tell you what evidence there is. There are a lot of data
and survey evidence, actually, that you can find from Ipsos MORI
that will actually say the public are not interested in elections.
What they want is the delivery of high-quality public services
at a low cost. Now, in some areas that might be done by the private
sector or the third sector, but often it will be done by the state.
Now, the important thing here is not how much people get paid,
it's not about the media and it's certainly not about cronies;
it's about the governance system. That is the bigger question
that the Institute for Government's report put at the centre of
the table and that has been missed. That is the core that nobody
is dealing with.
Sir Ian Magee:
In answer to really both of your questions about popularity, unpopularity
and why, one of things that we did when we did the research was
establish that at the moment there are at least 11 different sorts
of arm's length bodies. That of itself, we argue, leads to a
lack of clarity and confusion in everyone's minds. It is hardly
surprising that Members of Parliament and sometimes people in
departments themselves, as we found from one or two of the seminars
we ran, are not as clear as perhaps they could be about what the
nature of these bodies is. We recommend in the report that you
reduce that very simply to four different types by way of bringing
clarity to this. We don't think, as I saw the minister was quoted
as saying to you last week, that this is just administrative tidiness;
we think this would really help an understanding of the situation.
Okay, these arm's length bodies may have proliferated
in the past, but if you accept the premise that in many cases
it is still necessary for some of these functions to be carried
out at arm's length—and I observe that even after the cull
there are more of them that exist than don't exist by some considerable
factor here—we should go for a much more simple taxonomy,
as we have called it; you judge the need for an arm's length body
as to how independent it needs to be. So constitutional bodies
like, for example, the National Audit Office, where the accountability
is direct to Parliament, ought to be thoroughly independent—more
independent, for example, than the independent public interest
bodies, as we have called them; they would include the regulators,
and the Office for Budget Responsibility, too. It was interesting
that the Treasury Select Committee suggested that was categorised
as a nonministerial department, largely because this landscape
is so confused that we have to shove it into some category, because
the independent public interest body category doesn't exist at
the moment. Then you would have the great majority of them that
report through departments to ministers.
Q228 Robert Halfon:
A final thing: I find it astonishing, Professor Flinders, that
you talk about a degree of democratic potential, but you do not
think there should be any kind of democratic elections to quangos.
It may be that you are saying that the public do not want it,
but they have never been offered the opportunity. On the logic
of your argument, if you say the public do not like elections,
you might as well banish elections per se and not have any elections
for any kind of governing body or government at all.
Professor Flinders:
That is ridiculous. The key issue is proportionality. It's a
balance between electoral and unelected roles within public life.
That's the way public life has always worked; it's the way it
works around the world. If you go and visit other countries,
you will see that there is a balance made up there. I serve on
the board of a large public body—an independent acute mental
health trust—with 43 other governors who are drawn from
all members of the background of South Yorkshire. None of them
would be interested in getting involved in party politics; they
are willing to play a distinct role by being appointed on a single
board, and together we play a massive, massive role in changing
the shape of South Yorkshire society. Now on that issue, we have
to by law hold a lot of public functions and provide opportunities
to account. I spend many, many mornings in those meetings where
not one member of the public comes to utilise those accountability
mechanisms. So all I am saying is that this is a matter of balance
and proportionality. We have elections; we have more elections
now than most other countries. We have lots of elected politicians
at various levels. There is a balance, and different opportunities
provide a richness. The question we need to grapple with is:
how do we construct a clear and transparent governance framework
that allows people from a more diverse range of backgrounds to
play a role in public life? That is how you will rebuild trust
in politics.
Robert Halfon: I just
think it seems—
Chair: No, we are stopping
there. We are moving on. David Heyes.
Q229 Mr Heyes: Yes.
Sir Ian, you mentioned the importance of independence as being
one of the criteria to use in making these decisions about the
future of these arm's length bodies, and the Government have said
that that was one of the criteria they used; they also used the
need for political impartiality, the question about whether it
performed a technical function and really the question of whether
it should exist at all. Those, in broad terms, were the criteria
that were used. Now, you have your list; you know what has been
proposed. Have you found any indication that these tests have
been applied in a consistent way? It's not just a question for
you, but for all the panel.
Sir Ian Magee:
There are two points to make there. The first is that we think
the tests are okay as far as they go, but we don't think that
they go far enough. For example, we would incorporate value for
money into these tests as well and have rather more data than
is the case right now. In answer to your direct question about
consistency, no; we don't think that they have necessarily been
applied consistently at first blush. It's not immediately clear,
for example, why arts and sport funding needs to be independent,
but film funding doesn't need to be independent, just to take
a fairly obvious example. One of the things that we argue for
is that there needs to be some resource and if you want to slim
down—
Q230 Chair: May I
just interrupt you there, Sir Ian? In fact, they both have the
same minister, so the Secretary of State has not even himself
applied the same consistency within his own department. Is that
what you are saying?
Sir Ian Magee:
I think that there is a certain amount of inconsistency about
the way in which these decisions have been taken, yes. If you
are applying the tests rigorously across the piece, no doubt you
could find other consistencies or inconsistencies. One of the
things that we argue is that there is a role for the Cabinet Office;
it does not have to be a whole team of people, but some role to
promote best practice. That probably becomes even more important
when you are going through transition and closing these bodies
down, because, candidly, Whitehall's collective memory, as I can
remember from way back in my own time in Whitehall, is probably
not as good as it ought to be here.
Q231 Chair: Sorry,
can I just clarify one thing? Are we expecting DCMS now to be
doing film funding from within the department? Is that the plan?
Sir Ian Magee:
I honestly do not know whether that is the case or not.
Chair: I suspect they
think it is something the Arts Council should do, rather than
them.
Sir Ian Magee:
Absolutely, put it wherever you want. All I am saying is, responding
to the point about consistency of tests, that it did appear to
us not to be absolutely consistent.
Q232 Chair: But if
they are transferring the film funding to another arm's length
body, that would not be inconsistent, would it?
Sir Ian Magee:
That arguably would not be inconsistent, if that is what they
do.
Chair: Sorry, just to
make the point. Mr Heyes.
Q233 Mr Heyes: Well,
we could have problems if we argue every individual case here.
What I'm really trying to get from you is, is this inconsistency
widespread? Are there many other examples of it? Colin?
Professor Talbot:
Well I haven't looked in detail across all of them, but I suspect
yes, partly because the process has been conducted at such an
extraordinary pace. To have reviewed allegedly 900 bodies in
however many weeks it is, I can't for a moment imagine that is
being done very carefully in a lot of cases.
Q234 Mr Heyes: So
it is not credible?
Professor Talbot:
I don't think it's terribly credible. There are pretty clearly
some instances of smoke and mirrors going on. A very small example,
from something I did with the BBC a couple of weeks ago, is the
historic ships non-departmental public body, which is being deregistered.
At the time we spoke to the Chief Executive, he did not know
what they meant. He thinks it meant that they were no longer
going to be an NDPB, but probably converted into a charity. They
would continue to be funded by DCMS to exactly the same level
they are getting at the moment, more or less; I think they are
having about a 15% reduction. They would be doing exactly the
same thing, but they would no longer be on the books, so that
would be one quango to tick off the list. So there has been a
certain amount of smoke and mirrors going on around this.
But can I make a wider point on something Sir Ian
Magee just said? One of the things that I find worrying about
all of this is the lack of institutional memory in Whitehall.
We had a big experiment with how to manage arm's length bodies
back in the 1990s under the last Conservative Government, when
executive agencies were created within the Civil Service and executive
NDPBs were put on to a similar footing as executive agencies with
a whole paraphernalia of objectives set by ministers, performance
targets set, publication of performance reports, giving them greater
operational freedoms and so on; a whole range and, by the way,
periodic reviews of these. That system seemed to fall into disuse
in the early part of the Labour Government, but nobody has gone
back and said, "Well what worked and what didn't about that,
and what should we use in the future?" Whatever the outcome
of this review, it is pretty clear we are still going to have
a lot of these arm's length bodies, and it's quite worrying that
nobody seems to be thinking through seriously how we manage them
better.
Professor Flinders:
Can I come back to the issue of consistency? The answer is no.
There are many examples where you can't find any explanation
for why one body is going and another one is being kept. Why
get rid of the Security Industry Authority and keep the Gangmasters
Licensing Authority? Why keep seven Research Councils? Why get
rid of the HFEA and keep NICE? This is too much too quick; that
is the key issue here. The process for assessing the future births,
deaths and marriages of public bodies has simply not been transparent;
nobody understands. The three tests are okay at a very high level
of generality, but in terms of applying them, nobody can really
understand how exactly they have been mapped on to the current
topography of departments; the landscape. The bigger picture
really of this announcement is that this is about cosmetic pruning.
The real story here is how many bodies will continue to exist.
Q235 Chair: Is it
significant that the three tests are not being included in the
Bill?
Professor Flinders:
I think it is very significant. The House of Lords Constitution
Committee, which has just published its report on that, is scathing.
The draft Bill basically gives ministers major powers to reform
at will, without any detailed explanation of why that would be
necessary. However, as Colin quite correctly said, the big question,
looking to the future, is how we prevent the future proliferation
of these bodies. One of the big vacuums at the centre is how
to support departments in managing, supporting and steering these
bodies.
Q236 Mr Heyes: There
is some hope for the future though, isn't there, in the Public
Bodies (Reform) Bill? It says that—
Chair: Sorry, could we
just hear from Professor Talbot?
Mr Heyes: Oh yes, sorry.
Professor Talbot:
Just because you picked up the point about the Bill. One of the
things I think this Committee ought to look at is its previous
report on the Government's ability to reorganise departments,
because we have seen the same sort of phenomena take place with
departments. There are clear trends in departmental reorganisations
to go from small departments focused on individual areas to large
superdepartments, to going back to small departments again,
all on the whim of the Prime Minister. This Committee quite rightly
in the previous Parliament criticised that and called for greater
institutional checks and balances on that, and instead what we
are seeing is actually those powers extended to nondepartmental
public bodies as well as ministries.
Q237 Mr Heyes: I
would make an observation on that rather than a question. The
Prime Minister said just the other day that he was envisaging
a new role for the Civil Service; that it would no longer be there
to deliver public services, but to ensure that they are delivered.
There is an irony, I think, that much of what has happened as
a result of this review has resulted in delivery being moved back
into the Civil Service.
Professor Flinders:
Some.
Mr Heyes: There appears
to be a contradiction. I just wanted to mention—
Chair: Mr Heyes, can I
just ask Mr Flynn to come in for a moment?
Q238 Paul Flynn: Mr
Talbot brought back a happy memory. Now I'm in the time of life
of a politician when I'm in my anecdotage so I powerfully remember
the next step agencies that were set up by a Conservative Government
because the departments were overloaded and couldn't do their
work properly. At that time, the questions from Honourable Members
would go in, were answered, but did not appear in Hansard. They
actually produced the answers and ran something called Open Lines
as a private enterprise, which the Government then nationalised
and took over. But it is extraordinary, as you rightly and fairly
say, that what was fashionable then is being reversed now. This
seems to be something that is being done almost entirely because
of the Daily Mail agenda; the mindless prejudice against
these bodies, without any deep consideration of the effect it
is going to have. Could you give us examples? Will accountability
be improved or will there be less accountability under the new
arrangements?
Professor Talbot:
It's quite interesting to go back and look at the justifications
that were given at the time for the creation of executive agencies—at
their height, 140 new arm's length bodies were created. The justifications
given at the time were that they would improve accountability
by creating executive agencies and that they would improve the
efficiency and effectiveness of those bodies. Now exactly the
same justifications are being given for taking bodies back into
departments and amalgamating them into the hierarchical structure
of departments. The reason that at the time people argued that
it would improve ministerial accountability—and this came
up in your previous session—was because if you take a large
department like the Home Office, for example, a small part of
that department, something like the Fire Service College or the
Passport Agency as it now is, is in practice, within the normal
hierarchical structure, very difficult for ministers to hold to
account because they have to go down through the whole chain of
command, through about four or five layers of civil servants,
before they get to it. The creation of executive agencies created
this parallel structure outside of that, where agency Chief Executives
were allegedly directly accountable to ministers for what they
were doing in running the agencies. So that's where it was argued
it improved accountability. Exactly the same argument is now
being deployed about improving accountability to take away exactly
those sorts of arrangements around NDPBs and some agencies and
merge them back into departments. I find it quite odd.
Sir Ian Magee:
I will go into my now somewhat distant past in talking about accountability.
I have been in my time Chief Executive of three very different
executive agencies. The first thing, just to correct any impression
here, is that they are parts of departments, and they are accepted
as being parts of departments. I felt very accountable, for what
it might be worth, in that my reporting line was to the minister
and thence to Parliament as Chief Executive. It meant that you
as MPs knew who the Chief Executive was; it meant that I could
answer. Some MPs chose to go nevertheless directly to the minister
for answers on questions to do with the agency that I was responsible
for; others chose to come to me. I did not see anything fundamentally
wrong with that. But just to be clear, that's not part of what
the Government has sought to do here; it has specifically excluded
executive agencies, although as it happens, in our work we considered
executive agencies as part of the general framework of arm's length
bodies.
Q239 Paul Flynn: The
answers that came back from parliamentary questions to the heads
of next step agencies were far better than the answers that one
would expect from the department. This was certainly true; they
were fuller and they were not as defensive as departmental answers.
Can you see going back from this situation as being a retrograde
step and there really is not any desire here to increase accountability;
it is purely an excuse for putting through what is seen to be
a politically advantageous policy for the Government?
Sir Ian Magee:
Well, Professor Flinders may want to comment on this rather than
me. I would only say that I think it is entirely proper that
the Government of the day—and we have said this in our commentary
on the report—makes whatever decision it wants to about
this and if it decides that it wants ministers to be accountable,
that is fine. Let us just be clear what we mean by accountability.
As with so much else in this landscape, I think a bit of clarity
as to what we mean by accountability and a bit of clarity as to
what we mean by the bodies will help to illuminate and will therefore
help the understanding of those who have to deal with these bodies.
Professor Flinders:
It's very interesting to look at the debate about the public bodies
reform. I think it's quite clear that preelection and just
after the election the reform was couched in the language of efficiency
savings; it was to save money. Only in recent weeks did the focus
drastically shift towards increasing accountability. I have spoken
to ministers who tell me that that clearly happened because when
you sit down and look at all these executive bodies, you suddenly
realise that in opposition it is much easier to throw bombs, but
when you are in charge, you realise that a lot of these bodies
do a lot of good work and you don't want them back in your departments.
Will it increase accountability? No. Why? Because if you look
at comparative evidencebased research, that doesn't happen.
In Wales, where part of the devolution debate was to get rid
of all these terrible quangos, the Welsh Assembly Government has
taken them back in and now there is a backlash because all the
different civil society groups that had built very positive working
relations with those bodies now say those relationships and accountability
channels have been closed down.
Q240 Chair: But isn't
one of the hostilities that people have to NDPBs that they are
part of the client state; you set up a body and it creates its
own clientele and its own little world and that annoys people?
Professor Flinders:
Yes, that can be a problem. However, I was watching the appearance
of the minister in front of the Committee and it seemed that there
was a very simple line: "Bringing functions to departments—accountable.
Beyond departments— unaccountable." That is like
going back hundreds of years. There are different forms of accountability
and by bringing it back in, what you are actually likely to do
is repoliticise those issues and make the officials more
risk averse.
Professor Talbot:
Just a very small point, picking up on what Sir Ian said. I would
agree that clearly it's up to the Government of the day whether
it wants to change institutional and organisational arrangements,
but I would agree with your predecessors in the last Parliament
that that ought to be subject to the active engagement and approval
of Parliament over both the structures of ministries and structures
of other public bodies. I think that is where both the Bill and
this process with non-departmental public bodies that they have
just been through falls down very badly. It is surprising that
a government that said it wanted to be far more transparent about
these processes has gone through what has been a very untransparent
process in relation to NDPBs.
Q241 Chair: That
is a very strong criticism to make.
Professor Talbot:
Well, that's what has happened. What has happened is we have
had a review of 900 bodies in the space of a few weeks—a
couple of months at most—with no public consultation at
all around it, no clear indication of why judgments have been
made about these particular bodies, and as I said, it is only
one small example, but at least in the case of the public body
to which I spoke, the Chief Executive did not even know what the
decision was exactly, other than that they weren't going to be
a NDPB any more, which is some indication of how little real conversation
has gone on in the decision-making process.
Sir Ian Magee:
I take a slightly different view, in that I think that the review
was overdue. It is not surprising that governments of all political
colours want to do something like this when they first come into
office, for all the reasons that we began to explore in the first
instance. But we don't think that the review has gone far enough
and there is potentially an opportunity missed here. We have
set all of that out in our report and we would prefer to concentrate
on that aspect of things. We do think that the Government is
entitled to have a review of the way in which it wants accountabilities
to work in the future—of course it is—and if it wants
to do the sort of things that it is doing, fine. But we have
talked about some of the inconsistencies, we have talked about
the fact that there is still this nonframework of 11 different
types of bodies as far as we can see, and we think that those
are questions that need to be addressed. We think there should
be more parliamentary accountability and involvement of Select
Committees, as we have set out.
Q242 Paul Flynn: But
doesn't Karamjit Singh, the Social Fund Commissioner, make a powerful
point when he says that abolishing public bodies "risks weakening
lines of accountability and visibility for related functions as
they compete for attention within a wide range of departmental
concerns and priorities"? What a specialist Chief Executive
covering a small area, clearly accountable, can give would be
lost in the great work of a department.
Professor Talbot:
That is precisely the argument that was given in the Next Steps
report in 1988 about why it was that central ministries were so
bad at organising the services that they did deliver themselves,
because the priorities for the operational management of those
services—in some cases very big services, like Jobcentre
Plus and the Prison Service and HMRC as it is now and so on—tended
to be downplayed. As one Permanent Secretary said to Pam Alexander
when she was doing the Alexander Review, although it was not actually
published in the report, "Those that can do policy. Those
that can't run agencies." That is very much the attitude
of a lot of senior civil servants, unfortunately.
Q243 Paul Flynn: A
political party marches the troops up to the top of a hill, they
are up there for 20 years, they forget why they are up there,
and then it marches them down again. This is what the Government
is doing at the moment. It probably had the right idea in the
1980s and early 1990s.
Chair: Are you giving
evidence, Mr Flynn?
Paul Flynn: Yes, sorry.
I will give evidence to the 12 ministers, yes.
Q244 Chair: You can
help write the report. Before we get to Mr Roy, can I just clarify
this? What you basically seem to be telling us is that whatever
the malaise is, this review of the NDPBs is probably not going
to address this feeling of public dissatisfaction and frustration
that is directed at NDPBs. What is the malaise and how should
the Government be addressing it?
Professor Flinders:
I think the bigger question here is that this was an open goal
for a new government; it was a winwin situation where the
state was clearly in need of some structural change. There were
some quangos that needed to go. However, moving to that very
quickly led to almost a demonisation that quangos are bad, departments
are good. I was shouting at the TV screen watching Sir Francis
Maude, "What about the Rural Payments Agency?" If anyone
wants to see lack of accountability it is there, as many of your
colleagues on other Committees have covered at great length. The
question is: where is the bigger picture that allows us to understand
what these bodies do, why and how? That will increase public
understanding and give MPs much more clarity. Most ministers
that I work with don't even know what public bodies they are responsible
for. The last major review of all public bodies was in 1979.
Can you remember who that was by? A famous guy, Sir Leo Pliatsky—a
real character. That was the last fundamental review. In 2004,
this Committee said that that needed to be redone. The Cabinet
Office started to do it, but it found so many bodies lurking that
it was shelved. There are lots more bodies than the 900 bodies
that the Government says it has already looked at out there; they
have just not been defined as NDPBs or executive agencies. They
have been created off the radar.
Sir Ian Magee:
The malaise is that lack of clarity about government and the way
that government performs its functions can't help anybody, least
of those who look to the government for public services. So addressing
that and bringing some more clarity into this situation—again,
if you accept the premise that some functions need to be discharged
at arm's length from government—is a pretty good starting
point for all this.
Professor Talbot:
I would just add that there ought to be a positive framework for
saying why we want some functions of government to be handled
by independent or arm's length bodies—
Q245 Chair: But that
is in the tests, isn't it, however unsatisfactory the tests are?
Professor Talbot:
It is in the tests to some extent, but I think it needs to be
spelled out more clearly by government why it is a good thing.
Q246 Lindsay Roy:
Sir Ian, you said specifically that opportunities have been missed.
Can you give some detail? We have mentioned already words like
cosmetic and rushed. What opportunities have been missed in this
review?
Sir Ian Magee:
Well they were not my words but—
Lindsay Roy: No, I understand
that.
Sir Ian Magee:
I think again, it goes back to this question of clarity of understanding;
of the ability to say, "Well, instead of this very confused
and confusing network of different sorts of arm's length bodies
at the moment"—nonministerial departments where
a Chief Executive, as I said before, said to us at a seminar,
"What differentiates me in that respect is that I do not
have a department and I do have a minister", which cannot
help with clarity at all—instead of this confusing landscape,
let's simplify the landscape. Let's try to get something that
everybody understands", not least the opinion formers, yourselves,
the journalists and others, so that instead of bandying about
words about this beast called a quango that needs to be slaughtered,
we can talk about how services are delivered, how they may be
more effectively delivered, and how ministers can be held to account
for the delivery of those services. That I think in summary is
the opportunity that is missed here.
Professor Talbot:
I would add that a fundamental review of arm's length bodies,
including executive agencies, which looked not only at whether
they need to exist but whether they need to exist in the format
in which they are, could have asked some serious questions. Take
for example the English and Welsh Prison Service. I know there
has been a long term debate; I was involved in the review of the
Prison Service on behalf of the Government in 199697. There
has been a long-term debate about whether or not we need a single
national Prison Service for Wales and England. We have two perfectly
functioning prison services in Scotland and Northern Ireland that
work quite well and are much smaller. There's a strong argument
for localising prison services; there's no real debate though
about whether or not that should be a national body, whether it
should be an executive agency or an NDPB, for example, or one
of the new statuses suggested by the Institute. Similar arguments
would apply to things like Jobcentre Plus. It is absolutely unclear
to me why Jobcentre Plus needs to be a single national agency.
I am not advocating breaking those up, but if there had been
a fundamental review that had looked at these things more seriously
right across the board, with some clearer principles that had
been thought through, and if we had looked at the history a bit
more of what had worked and what had not worked when we had tried
these various forms of arm's length management over the years,
you might have been able to do something more serious with it.
Instead what has happened is we had a fairly narrow review, essentially
only looking at NDPBs, rushed through very, very quickly. Okay,
it has got rid of a few, but it really hasn't taken the opportunity
to seriously rethink the landscape. It does need rethinking.
I would agree completely with Matthew that we have probably one
of the most chaotic landscapes; not the only one that is as confused
as this, but probably one of the most chaotic landscapes and it
needs some rationalisation.
Q247 Lindsay Roy: And
it hasn't occurred?
Professor Talbot:
It hasn't occurred at all, no.
Q248 Lindsay Roy:
Only nine of the 901 have moved outwith the public sector. Why
do you think that is the case?
Professor Talbot:
Because in most cases these are jobs that government at the end
of the day has determined actually needs to be done by somebody
in the public sector, because they were mostly set up for very
good reasons. Again, actually, it is probably the case that if
you had done a more fundamental review, you could have moved some
more things out of the public sector. I couldn't say what off
the top of my head and I wouldn't want to, because I think you
need to take these things seriously and actually look at the evidence.
Q249 Lindsay Roy: It
sounds like a recipe for bigger government.
Professor Talbot:
I don't think it is a recipe for bigger government. It's a missed
opportunity for reconfiguring how government is done and possibly
in some cases moving things out of government.
Sir Ian Magee:
I guess the argument would be that that is a decision for individual
ministers to take in their departments as to whether they go down
a privatisation, outsourcing or whatever route. So in a sense,
it may be too early to say that this is only going to happen to
nine. That is my impression, at any rate.
Q250 Lindsay Roy: What
are the main inhibitors to moving outwith the public sector?
Sir Ian Magee:
Well it is not an area that I or the Institute have given a great
deal of thought to. Having outsourced some services myself, just
to declare something, when I ran the Information Technology Services
Agency, from the then Department of Social Security in 19941995,
I think there are sometimes some very strong reasons to do with
expertise and economies of scale for putting services out to the
private sector, but I would hesitate to say that that was necessarily
an argument that you would apply in detail to these bodies.
Q251 Chair: Would
it not be more honest to say that there are just some things that
the Government shouldn't do and if they don't happen at all, that
is the price of shrinking government? If you want smaller government,
that is the price of smaller government.
Professor Talbot:
Well there are two types of putting out to the private sector.
One is where you are outsourcing something that the Government
still wants to do and still funds, but wants to be done by private
sector bodies. There certainly can be cases where that makes
sense and that needs serious review. The other is where the Government
says, "Well it does not matter whether this continues to
happen or not and we will privatise or abolish whatever is there".
But again, I don't get the sense that there has actually been
a very serious review of these things in this process.
Q252 Chair: So what
hopes do you have for the triennial reviews?
Professor Talbot:
The time that we had this before was when we had the Next Step
agencies and, if I could say, the agencification of executive
nondepartmental public bodies in the 1990s, and most of
the triennial or quinquennial reviews that took place then led
to no change at all to those bodies. In most cases, they were
fairly routine processes.
Q253 Chair: So you
don't hold much store by the triennial reviews?
Professor Talbot:
Well first of all, they were conducted entirely within the ministries
and there was no external input into those processes. I think
if there was some external input, some peer review element to
it and some parliamentary input, not for all of them—
Q254 Chair: How could
a Select Committee do a triennial review of 901 public bodies?
It is a nice idea, isn't it?
Professor Talbot:
I was trying to say, Chair, that I take your point from the previous
session that you wouldn't want to do that for things like the
Defence Animals Centre, which trains guard dogs for the Forces
or whatever. But for the bigger agencies and NDPBs, you may well
want to get involved in them and I would be surprised if you didn't.
If there was going to be a review of Jobcentre Plus, for example,
I would expect the Work and Pensions Committee to be very interested
in whether or not that remained as an agency or became an NDPB
or was outsourced to the private sector.
Q255 Chair: But the
previous Government, Sir Ian, used to have regular reviews, but
they found they cost a lot of money.
Sir Ian Magee:
Yes. There are reviews and reviews. We recommended that there
should be reviews, particularly of the big spending agencies,
which goes to a point that you raised with the union representatives
at the last session. Both the departmental Select Committee and
your own Committee, Chairman, have a locus when a new non-departmental
public body is created if, as we are recommending, it sets out
a clear business plan. Then you have something against which to
measure it. It does not have to be at the detailed level. The
quinquennial reviews were incredibly detailed in some cases; I
underwent four of them and I think I'm choosing my words advisedly,
really, because they were not just a drain on resources in terms
of time, but also a drain on money resources. So there is that.
The second thing is that these reviews will be most effective
if they look at departments as well. One of the reasons that
we are in the state that we are in is that, as I think we brought
out in our own evidence, departments have sometimes been pretty
ineffective in holding their arm's length bodies to account.
The evidence that we collected suggested that their interventions
ranged on the one end of the spectrum from micromanagement with
a number of different Directors General getting involved so that
the agency was almost inhibited from doing its job properly, right
the way through to almost benign neglect on the other, where the
agency or nondepartmental public body has taken on its own
life, as it were, and where Secretaries of State get frustrated
because a policy unit has built up within the nondepartmental
public body that appears to be mirroring and duplicating the functions
within the department. If reviews go to address those sorts of
points and if they are properly wide ranging and if they are focused
so that your time is not wasted but is actually specific, then
they will mean something.
Q256 Chair: But doesn't
a quinquennial or triennial review leave all these bodies under
the cosh? Is that good for their morale and their effectiveness?
Professor Flinders:
Well I think what is very bad for the morale of these public bodies
is the process they have just been through, to be quite honest,
because most bodies and the employees, which are the greater part
of the public sector, have been left incredibly anxious and frustrated
about where exactly they stand. So I think in terms of public
morale, not doing this process again would be a good starting
point. I do not think there is anything wrong with a creative
tension; most public and private bodies I have been involved with
will have some regular form of external friend questioning about
their roles, fitness for purpose, etc. I do not think anybody
would have any problems with that. I think the problem with the
quinquennial reviews was that they were internal reviews and a
lot of departments lack the support to know how to run them effectively.
I think this goes back to this issue about the centre. The Civil
Service College is changing; a lot of people have been critical
about what it provided; support for training and sponsorship.
The Institute for Government has filled an incredibly important
vacuum at the heart of government. It's really about how can
we build the skills and knowledge base that allow us to manage
this arm's length model better?
Q257 Chair: Is it
a good idea to have a three-year review of the whole lot or would
it be better, as the Institute for Government suggest, to have
sunset clauses for each one so that there is a rolling review
of different organisations at different times and it's just a
constant part of management of arm's length public bodies?
Professor Talbot:
I would completely agree with that, but I would also pick up on
this point about the management; it is interesting we use the
language of parent departments. If I can paraphrase what Sir
Ian has said, I have researched this problem about the relationship
between parent departments and arm's length bodies in a number
of different countries and the common problem comes up about either
the parent department taking this liberal parent approach of,
"Well we don't have to manage that anymore because it has
been set up as an agency" or whatever it has been called
in different countries, or they continue to micromanage as if
it was still part of the department. They find it very difficult
to develop a more adult relationship, if I may say, between the
agency delivering the services and the sponsoring department.
That is a major problem. One of the problems there—and
the literature on strategic management in diversified private
sector organisations makes this very clear—is that if you
have too many different sorts of relationships between your various
satellite organisations and the corporate centre, it makes it
incredibly difficult for the corporate centre to know what sort
of managerial relationship it has with these different bodies,
which is why, if you look at successful diversified corporations,
most of them have a simple subset of relationships with their
constituent companies so that they know exactly what sort of relationship
they have with what sort of body. I think the work the Institute
has done on highlighting the complexities for most government
departments, having a range—the Institute said 11; I suspect
it is an awful lot more than that—of different types of
relationship, nobody knowing what the relationships are and who
is responsible for what, makes it almost impossible for departments
to actually operate this system properly.
Q258 Chair: Right,
we must draw to a close, but can I just ask very briefly, should
this business of reviews be in some way expressed in the Bill?
Professor Flinders:
I think some acknowledgment that a regular review of some kind
would be a matter of common good governance in most other countries
would be very helpful. I think the Bill actually has a lot of
work to be done before it is at a stage that it should be passed.
Sir Ian Magee:
Yes.
Professor Talbot:
Yes.
Q259 Chair: Yes,
okay. And finally, just looking at the whole question of managing
the transition, which we have quite substantially discussed already,
in fact, and I don't know whether we need to revisit this at all—I
think we are actually done. You have been very, very helpful.
Thank you very much indeed and if you have any further thoughts
you want to add on paper, please do send them in. Thank you very
much indeed.
Sir Ian Magee:
Thank you.
Professor Flinders:
Thank you.
Professor Talbot:
Thank you.
| 
