Smaller Government: Shrinking the Quango State - Public Administration Committee Contents

Examination of Witnesses (Question Numbers 260-306)

Matthew Sinclair, John O'Connell, and Tom Burkard

23 November 2010

Q260   Chair: We are now talking about public bodies. May I ask our three witnesses to identify themselves for the record?

Tom Burkard: Tom Burkard, from the Centre for Policy Studies.

Matthew Sinclair: I am Matthew Sinclair, Director of the TaxPayers' Alliance.

John O'Connell: I am John O'Connell, Research Director at the TaxPayers' Alliance.

Q261   Chair: Could I ask everyone to speak particularly clearly as one of our witnesses has left his hearing aid in the hotel so we need to make sure that we are heard? Could I ask Mr Burkard to give a little background about what his book is about— "Inside the Secret Garden: The Progressive Decay of Liberal Education"?

Tom Burkard: "Inside the Secret Garden" is an analysis of the failings of British education in the sense in which it has been controlled by a professional elite with no pretence of any kind of democratic mandate for further philosophy and ideology.

Chair: Thank you. Somebody wants to ask the first question already.

Q262   Mr Walker: Can I ask the first question?

Chair: If you like.

Mr Walker: But not off the paper. Can I ask a question about waste?

Chair: So long as it's not somebody else's question.

Mr Walker: No, no it won't be. You are very concerned about waste in the public sector as I am. I would just like to talk to you very briefly—it is not off the point, I think. You heard us talk about the use of lobbyists by the public sector, but there is a growing use of headhunters by the public sector. I mentioned a company last week called Saxton Bampfylde, but it could have been read across to any company. Let me just give you an example. Saxton Bampfylde have just done a recruitment job for the CBI. They boast on their website in a press release that they interviewed 48 candidates on a shortlist. They whittled it down to eight. Then guess what? The CBI recruited John Cridland, the Deputy Director General, who I am sure they were going to appoint anyway. In a sense John Cridland was laundered though headhunting firms. I am concerned we are seeing increasing use of headhunting firms across Whitehall, when actually the candidate they want is already known before the process starts, but in essence these candidates are laundered though headhunting firms and the taxpayer ends up picking up a significant cost in the form of the fees of these headhunting firms.

Chair: Eight months of salary.

Q263   Mr Walker: It is normally 30% to 40% of salary now. Saxton Bampfylde have been in touch with me in regards to a recent head they hunted for the Appointments Commission. They said it was nowhere near that figure, but they won't give me the actual figure. Could you touch on that because I am extremely concerned about this? These are significant sums of money and we need to know what's going on.

Matthew Sinclair: I think the concern with headhunters, as with other consultants, is that they are looking for people to do what IBM used to do for IT professionals, which is no one ever gets fired for buying IBM. If they have had it, rubberstamp. It they have had this approval that this candidate has come from the headhunter, when they later get criticised, if something goes wrong they will be able to say, "Well we did everything we could. We got this headhunter. They told us this was the best candidate." I think there is a huge risk that there will be, as you say, a propensity to use consultants in general, and particularly headhunters, more than is necessary as a way of legitimising decisions and protecting decisions against future scrutiny, which represent extremely poor value for the taxpayer.

Q264   Mr Walker: I can't prove this, but I think there is probably a really good idea who they want in many cases. The headhunter is probably notified who they really want and the whole process is geared around providing camouflage for that person. Would you suggest there could be legitimate grounds for concern about that?

Matthew Sinclair: I think it is absolutely legitimate grounds for concern. I think they will be used to satisfy process rather than to get the best candidates. I think that could absolutely happen.

Q265   Chair: Any disagreement Mr Burkard? No.

Tom Burkard: That's outside my experience.

Q266   Greg Mulholland: Morning, gentlemen. If I could just go to the substance of the Government review, the simple figure is 192 bodies being abolished, a further 188 being merged and 171 being retained but reformed. Both your organisations have identified further bodies that you think should be abolished that have survived the review. A very simple question, has the Government gone far enough here?

Matthew Sinclair: In our view the Government has not gone far enough. Particularly, we think they haven't gone far enough in some of the relatively large spending bodies, which could have been abolished outright. That is where the biggest value in terms of savings comes, if you can find the body that spends many millions a year and cut them out entirely. Our view is that could have been done with a number of bodies that have multi-million pound budgets—the Carbon Trust, the Equalities and Human Rights Commission and several others could have been outright abolished. Some of those are under review as to their status and function. Our view is the Government could and should have taken a more robust approach to identifying bodies that are doing work—equally, some of the bodies that have had their responsibilities transferred. The Regional Development Agencies are being transferred into Local Enterprise Partnerships. In our view, that function would have been better off simply abolished.

Tom Burkard: In my experience, one of the problems we had was uncovered when we were doing our research on school quangos and cutting the Children's Plan. We were looking at the problem from two angles. One, we were looking at it from the standpoint of the major school quangos, 14 of them in total. Second, we were looking at it from the standpoint of the various initiatives that these quangos were called upon to implement. One of the things that we feel is that probably the most difficult problem is the concept of integrated delivery. The example of this was the Family Intervention Programme, which was run by both the Home Office and the DCSF as it was then. It also involved 11 quangos and obviously it also involved private, charitable and other third-sector organisations in all 150 local authorities. The amount of duplication that was going on here was phenomenal. The Family Intervention Programme in itself was criticised. I believe that was because of the fact that it was duplicating existing social provision in a lot of areas. Even though we now have greater financial transparency, the problem we have is that we don't know what quangos are involved in what programmes and what their role in it is.

When we were researching the Children's Plan, we had to contact quangos and other charities and third-sector organisations that were involved in this, and we found it was often very difficult to find anyone who even knew that their organisation was playing a part in this initiative, let alone what their role was. I feel this is an area where the various Select Committees in the relevant areas should be playing a greater role in trying to find out exactly what these various quangos are doing. I think that there should be some sort of provision for transparency similar to what we have in terms of finance, in terms of what the quangos and the third-sector organisations are actually doing.

Q267   Greg Mulholland: Leading on from that, do you think there is potentially a flaw in the remit—

Tom Burkard: Could you speak up a little bit?

Chair: You have to speak up.

Greg Mulholland: Do you think there is a flaw in the remit of the Government's review in that, as I've said, some functions are simply being transferred to Departments; others are being retained in a merged or reformed organisation. But do you think the Government has failed to use the review to evaluate what functions the state should be performing in the first place?

Tom Burkard: I am not entirely sure. We certainly looked at the remit letters that were given to the heads of quangos by the Children's Secretary, and we found that these were very sketchy and they really did not reflect the reality as to what the quangos were actually doing. In other words, the remit letters were very general and they left huge amounts of leeway for individual quangos to decide effectively that they could engage in as much mission creep as they wanted.

Q268   Chair: So the remit given to many NDPBs is simply too vague? That's what you're saying.

Tom Burkard: I would agree, yes.

Matthew Sinclair: I think if you were to look at the frame of the review, there are two issues. The first is the scale of the undertaking and the speed of it. That is very good news in terms of getting action early in the Government where there are willing to take bold action on this sort of issue. I think that did mean that they were too wary of asking, "Is this a function that should be pursued by Government?" rather than, "Is this a function that should be pursued by a quango?" Beyond that I think they excluded some bodies that should have been included. Bodies where there are definitional issues only that separate them from other quangos, like the Carbon Trust, which is a particularly important example if we are looking at the issue of accountability because it is by some margin—it and a few bodies like it—the least accountable of the public bodies.

Q269   Greg Mulholland: We are going to come back to accountability in a minute. This is a question particularly for the TaxPayers' Alliance: do you fear that of those quango functions that are being transferred straight into Government Departments that the bureaucracy associated with them will just follow into the Department and there won't really be any cut in that red tape?

Matthew Sinclair: Absolutely. I think there are some cases where it looks very much like these organisations will move desks but not lose the attached bureaucracy. In other cases they may be able to get more of a bureaucratic saving, particularly the Film Council. That is a case where they should have been asking more about whether that function was legitimate or not—whether funding the film industry is a good idea. In terms of saving on the bureaucracy of it, handing that off to the BFI is a reasonable way of cutting the bureaucratic spend.

Q270   Charlie Elphicke: Your reports on public bodies mentioned the problem posed by taxpayer-funded lobbying, which we finished up with in the last evidence session. What exactly are your concerns and how do you think they can be addressed?

Matthew Sinclair: Taxpayer-funded lobbying is extremely pernicious for a number of reasons. It biases political decision making in favour of those with existing political or bureaucratic power. It therefore acts to entrench the status quo and prevent new thinking, and it dilutes other democratic involvement, and therefore it will increase political apathy. It is a very bad thing. There have been some good steps taken in this regard, particularly in the Local Government Departments. That needs to be extended to other Departments. The hiring of lobbyists by central Government is fundamentally illegitimate. At the same time, they need to look at internal communications and political budgets. The other thing that needs to be done, which hasn't been focused on enough, is other political spending. They can achieve this objective of driving their political interests by paying a lobbyist—by paying the Weber Shandwicks of this world—or they can do it by funding a campaign. For example, you are funding for charities like the Campaign for Better Transport or Demos. Our last survey suggested that the Demos think-tank was receiving over £500,000 a year. Huge amounts of money go into political groups, and that doesn't fall within the rubric of lobbying but is still quangos using their authority and their budget to promote their political agenda, which in our view is again fundamentally illegitimate and action should be taken on that area as well.

Q271   Charlie Elphicke: Taking the example of the UK Film Council episode, would you highlight that as a case that is inherently undesirable?

Matthew Sinclair: I think there are lots of cases. One we've seen that was particularly unfortunate was the Regional Development Agencies and their presence at party conferences. They spent a lot of money—£250,000, that order of magnitude—attending party conferences in 2008. I think the only way you can properly interpret that is that they were there defending their role and their existence, which is not how they should be spending taxpayers' money. The taxpayer has no interest in that.

Q272   Charlie Elphicke: So sponsoring an exhibition at a party conference, you would say is an abuse of public money?

Matthew Sinclair: I would say absolutely it is an abuse of public money.

Q273   Charlie Elphicke: Taking the case where a quango instructs a public affairs outlet like Bell Pottinger to press their case with public money, is that an abuse of public money?

Matthew Sinclair: It is absolutely an abuse of public money to hire lobbyists to promote their political interests.

Q274   Charlie Elphicke: Where members of the quango board itself are financially conflicted and stand to benefit financially if the lobbying were to be successful, would you say that is an abuse of public money?

Matthew Sinclair: I would say that is particularly abusive of public money.

Q275   Charlie Elphicke: Do you think that should be an offence?

Matthew Sinclair: I think that the best thing to do would be simply to look at the example of things like the Byrd Amendment in the United States. The Byrd Amendment isn't complete and isn't sufficient, so you wouldn't want to drop it wholesale into British statute—you would want to be stronger than the Byrd Amendment, which was watered down in Congress—but something along the lines of the Byrd Amendment simply to prohibit lobbying with taxpayers' money would be a very good thing.

Q276   Charlie Elphicke: Should it be regulated or banned?

Matthew Sinclair: Banned.

Q277   Robert Halfon: Just to give another example, the Information Commission, which has come under fire in recent weeks for lack of doing what it is supposed to do, has, it emerged through a written question that I tabled, spent between £10 million and £13 million on PR and internal communications over the last few years. Do you think that is an abuse of taxpayers' money?

Matthew Sinclair: I think a substantial portion of that will have been an abuse of taxpayers' money. There is a need to maintain communications within staff; if that is running a corporate intranet and things like that, it is part of running an organisation, but I would expect that a substantial portion of that is being spent on PR and publicity, and is illegitimate and is an abuse of taxpayers' money.

Q278   Robert Halfon: Do you think that it should be banned completely?

Matthew Sinclair: I think that is harder to ban. With external PR, you have a clear, identifiable amount and you have expense on political consultancies. Internally it is harder to police, but that obviously doesn't mean that it can be neglected, because otherwise you just encourage people to bring this in-house. I think that will be a matter for proper monitoring through spending and HR transparency, and trying to stop it. I am not sure how one would do that.

Q279   Chair: Perhaps use of the Civil Service code.

Matthew Sinclair: Perhaps.

Q280   Mr Walker: Do you think recruitment to senior public posts should be more transparent—the most senior posts—bearing in mind that it is normally the great and the good applying for these jobs, and the chosen candidate emerges, who invariably is part of the great and the good, but we never get to see who he was up against. We may not even need the names, but it would be nice to know who made it down to the final shortlist of four so we can check that the taxpayer got best value for money.

Matthew Sinclair: There is some grandstanding, but I think Senate scrutiny as in the United States is still the kind of thing that we would want to have. I think that it is a matter for proper political scrutiny to look at who is being appointed to these bodies before they are appointed. You can put in place regulatory controls to avoid outright abuses, but often it is not about outright abuses; often, it is about whether the person is the best candidate. Is this person going to take the body in the direction in which we want it to be taken? For that reason, I think that scrutiny through Parliament is absolutely essential for those bodies that need to remain.

Q281   Mr Walker: It just strikes me that, when they retire, the great and the good in the Civil Service are enormously successful at securing other jobs that ensure they retain their status as part of the great and the good.

Matthew Sinclair: I think the problem with the argument that the quango model allows us to get people of real expertise to run these organisations is that you have people whose expertise is in running quangos, not people who have technical expertise in the particular area they are working in. There are plenty of examples of people running through numerous quangos; the Charity Commission would be one of them. There are people whose expertise is in being a quangocrat. We then dispatch them to Brussels a lot of the time. That puts the lie to the idea that quangos are really about sourcing expertise and about getting people who really know the industry, because often I think they don't.

Q282   Lindsay Roy: Are there any quangocrats who are successful leaders in your view or in your experience?

Matthew Sinclair: In our experience, I think that some organisations are run better than others and that reflects well on their leaders. I think that—

Q283   Lindsay Roy: Can you give some examples? Purpose and direction?

Matthew Sinclair: I think that over time Ofgem has been one of the better-run quangos. I think that they have been relatively open and have done a relatively good job at running the market. I think the unfortunate thing is that they have been saddled with a policy agenda that is widely contradictory. I think that is one example I would say of a quango that probably does need some kind of independent regulation and is relatively well run.

Q284   Lindsay Roy: How do you feel in terms of scope for further NDPB conversion into mutuals, charities and businesses, and what the main inhibitors are?

Matthew Sinclair: I think the main inhibitor to moving some of these bodies out of the public sector is a sense that Government should do something about that. There is a sense that there is a problem with school food so Government should be doing something about that, whereas obviously the pressure for better school food should have been coming from the media, from the charitable sector and from parents. The problem was largely the result of central Government interference in the first place. The Equalities and Human Rights Commission is essentially campaigning to defend the Human Rights Act, and that political campaign is properly the objective of civil society groups, not of Government. There is a sense that if something is important Government should get involved. I think that is what causes a lot of these bodies to be created when they shouldn't.

Q285   Lindsay Roy: Ironically there is a high degree of conservatism here.

Matthew Sinclair: Possibly.

Q286   Robert Halfon: Originally, when the quango cull was announced it was heralded as the bonfire of the quangos and there would be huge value for money for the taxpayer, and it seems to be more like lighting a damp box of matches in some ways. The Government seem to have moved away from value for money to it all being about accountability. What is your view about that?

Matthew Sinclair: I don't want to be churlish, because when there have been previous promises of a bonfire of the quangos over a number of decades, they have amounted to less, so it is not the most egregious failure to build a proper bonfire after you've promised one. I think there hasn't been a sufficiently aggressive fire. The value for money side of it is important. In the context of things like the welfare budget, it can be easy to look at it and think the amounts are small, but they are not, because these are amounts that don't play into ordinary household budgets—ergo any saving you can make here lessens the pain of the fiscal adjustment and is very important. Anyone who has tried to put together a package of cuts that would add up to a substantial amount—certainly we found this—without getting rid of some of the larger quangos, which are the ones which haven't been touched—as you say, haven't been hit enough in this review—will find it very hard to make those sums add up without putting what may be an untenable burden on household budgets. That is why more of these quangos need to be abolished.

Q287   Chair: Mr Burkard.

Tom Burkard: What I wanted to add here is that one of the things we have to be aware of is that previous culls of quangos have just resulted in new quangos emerging from the ashes and this gets us absolutely nowhere; it is a waste of money. If you have functions merely absorbed into the Department, even though you may have formal accountability, if that Department is badly run and chaotic, such as the DCSF and now the DfE, you are not really getting anywhere. To give you an example of how transparency in the Department can operate, in 2006, when I was writing a report on illiteracy, we wanted to get information from what was then the DfES on how many pupils were in each year cohort of pupils. I phoned the DfES or whatever it was and posed the question, and the person that I talked to said they would get back to me. Just to add, as a belt and braces thing, my editor also phoned them and spoke to someone else. The person I spoke to came back with the information within a couple of weeks and this information was duly published in the Centre for Policy Studies publication. My editor later received another phone call from the person he'd talked to, who said he'd just found the requested information in our pamphlet. When you have that sort of problem going on in Departments, we have to be aware of the solution of shoving everything into the Department. It may be accountable and I think this is a good thing, but if the information is not there and we don't have means of making the Departments transparent, we're not really achieving anything.

Robert Halfon: That is a very good point.

John O'Connell: Just on your point about how the cull of the quangos all of a sudden became about accountability, if that's the case, it really didn't go far enough. One of the witnesses earlier was saying that a lot of these bodies are introduced by statute. Yes, that makes that notionally accountable to Parliament, but in terms of annual scrutiny of these public bodies, we need to see far more of that. If the cull of the quangos is all of a sudden about accountability, it has not gone far enough at all.

Q288   Robert Halfon: To give one example, I'm delighted that the Government are getting rid of the East of England Development Agency, which you touched upon earlier, but then we have in its place these new Local Enterprise Partnerships, which seem to be even bigger. Is that not going from the frying pan and into the fire? Why are we getting rid of one quango to replace it with another, when the LEP could quite easily be done by local businesses and local councils working together with people like the FSB and the Chamber of Commerce and so on?

Matthew Sinclair: We've seen how Local Enterprise Partnerships are promoting themselves to businesses to get business involvement. What they do is they write and say, "Get involved in this. It's the only way we'll get hold of grants." They become entirely a machine for chasing grant income—taxpayers' money chasing taxpayers' money—as a result of the fact that there's no need for that co-ordination function. We have this idea in our heads that local authorities are small; they're not. Most Britons live in a local authority area—at the county as opposed to the district level—that is larger than most Swiss Cantons, which are effectively self-governing. Local authorities aren't that small. Most of the public live in big counties, and if they need to co-ordinate, they can talk to each other and they do. So what you have with Local Enterprise Partnerships is money chasing money. What the Government should have done with Regional Development Agencies is look at this and say, "Is it sensible to take businesses' money in taxes and then give it back to a politically or bureaucratically selected few in grants?" All they do is recycle that money. That grant money isn't new money; it's coming out of their taxes.

Q289   Chair: But there's an open secret isn't there? This is about organisations that can tap EU funds isn't it?

Matthew Sinclair: In terms of the tapping of EU funds, first, councils are doing it, so there is a duplication there. Councils don't need European offices, but a lot of them have European offices. To the extent they don't have them, that's because someone else in the council is doing that. If they're being used as a device to chase EU money, they'd be a lot better off acknowledging that and setting up regional EU­chasing bodies, not churning billions of pounds of British taxpayers' money through them. The amount we're putting into these bodies—the billions pounds of funding they're receiving—is a very large solution to a very small problem of how you get hold of EU grants.

Q290   Robert Halfon: Do you agree that LEPs will be the Diet Coke version of the Development Agencies—a bit lighter but full of quango rubbish nevertheless?

Matthew Sinclair: They're Diet Coke you've spilled all over the table. They're milder, but they're also going to be messier.

Q291   Robert Halfon: As far as the transition costs go, some of these quangos have been merged into Departments, as has been discussed. Do you think those transitions costs will be big and that we won't save money for the taxpayer at all?

Matthew Sinclair: It will depend on what you're trying to do with the quango. If you're abolishing it, they'll be relatively small; you'll have redundancy but that will quickly be recouped over time. If you're trying to create new bodies, that'll be when it's really expensive because that's when you have to establish the new bureaucracy—and expensive in terms of ministerial time as much as anything and getting these things established. One of the reasons why it is important to look for bodies you can abolish outright is because that reduces the burden they impose on everyone else—Departments, Ministers, businesses—and you also take out those administrative functions. Every quango has its office and its HR department, and that's one of the reasons why getting rid of some entirely is particularly valuable compared with getting rid of a small fraction of the number in budgetary terms.

Tom Burkard: If I could add one thing to that, my feeling is that one of the biggest obstacles to the abolition of quangos, or shall we say more precisely the functions that the quangos fulfil, is political. To give legitimacy to the process of downsizing the operations of the quangos, as opposed to the quangos themselves, the Commons Select Committees have a big role not only in determining what the operation of the quango is so they know exactly how to go about dismantling it, but in giving a certain amount of legitimacy to Ministerial­like actions, as it were.

If you take a look at what has happened in education, so far Michael Gove has implemented a pretty large percentage of the recommendations that we have made, both in terms of cutting quangos and cutting initiatives, but it has come at a huge cost as we have seen over Building Schools for the Future. I believe that if this process were done in a more measured way, with Commons Select Committees evaluating quangos and initiatives both and deciding which ones they could recommend to go, the whole process would be much more orderly and would have much greater potential to offer long­term savings as opposed to just churning things as we often have now.

Q292   Robert Halfon: My final question is about democratic accountability of quangos.

Chair: I think we're moving on to accountability later on.

Robert Halfon: Just a quick one because I have to go. Previous witnesses have said you can't make quangos accountable. Could we not have a model, just as we're going to be electing other authorities, police commissioners and so on, where you can make these bodies where people stand for them and would have some kind of mandate?

Matthew Sinclair: It's difficult to imagine how you would do that on a national level because a national referendum is an extremely expensive thing. You have 1,148 of the things and it just becomes untenable. For some roles, that could be worth while. You can equally have a short form of it through parliamentary scrutiny of the bodies that are coming up and then you can have important scrutiny through transparency.

Chair: Right, we'll move to Mr Heyes on the question of accountability.

Q293   David Heyes: One of the things that has happened under this rhetoric that we're culling quangos is that lots of functions have just been moved back into Departments to be controlled by civil servants, which is a little ironic when at the same time the Government is claiming to be culling the Civil Service. It looks a bit like senior civil servants are making sure that they have functions under their control to justify their continued existence. We've talked about accountability a number of times already. Is it not a serious concern from the point of view of accountability that what has happened as a result of what the Government has done, ostensibly in the name of accountability, has served to reduce accountability?

Matthew Sinclair: I don't think so. You don't have that ability to blame an outside body when things go wrong. It is not possible for the type of thing that happened to QCDA recently to happen if these things are within a Department. That doesn't mean that being within a Department solves the issue or is the right solution for every body, but it would be wrong to say that quangos are more accountable than Departments. Departments are clearly more accountable; they have a political accountability that quangos, in the main, do not.

Q294   David Heyes: I don't think Mr Burkard agrees with you. He was nodding in assent to what I was saying.

Tom Burkard: Let's put it this way: the QCDA example that was quoted was certainly an example where the quango officials were the ones who had to a fall on their swords and obviously the Ministry went unscathed. It is difficult to say how much this was due to personalities, because one looks at what happened to Estelle Morris the first time this problem reared its head. She did the honourable thing, but unfortunately, when it was Ed Balls who was the Secretary of State, he made sure that it was the quangocrats who went. So it's not possible to make any official judgments as to how the form of organisation is going to affect accountability, even though I strongly believe that, ultimately, Ministers should take responsibility. The example of Ed Balls and the QCDA demonstrates that sometimes they don't, and that is a political question.

Matthew Sinclair: It showed that quangos have been used as a tool to evade that accountability, which is the danger. Had that role have been within the Department, you wouldn't have had that ability, ergo it would increase accountability.

Q295   Chair: So it allows Ministers to pass the buck?

David Heyes: Indeed yes, but what about my point about these being opportunities for senior civil servants to re­pad their Departments? On one hand it's being culled to some extent and this bringing in of formerly external functions allows them to—

Matthew Sinclair: It doesn't increase the net justification through bureaucracy; it may shift it into Departments, but it's not increasing it, so I don't see problem there. If you're no longer justifying a quango, you're slightly justifying a Department more. I don't particularly see the harm that does.

Tom Burkard: One of things it brought to mind is that the QCDA, along with most other education quangos, was a shadow organisation within the Department, which worked with the quangos, so there was a duplication of effort here as well. This is one of the reasons why I feel that, once again, the process of getting rid of quangos is something that has to be conducted with consultation outside of the Minister and the Civil Service, because they are very much interested in it and I don't think they can be relied upon to give disinterested judgments in terms of the abolition of quangos and absorbing them into the Department.

Q296   David Heyes: But that's an argument to say this whole process has been too rushed.

Tom Burkard: I would tend to agree with that, yes. The fact that the thing was rushed has a lot to do with political necessity to show that something has been done, but the fact that it was rushed also meant that an awful lot of bodies that probably need a lot more scrutiny haven't received that kind of scrutiny. The process of reorganising business and trying to minimise the amount of political work that is being done in quangos is something that should be thought of as being done over the life of a Parliament, or perhaps even two Parliaments, because if we try and rush it, we are not going to find a lasting solution.

Matthew Sinclair: The rush is worth while. The real problem with the delay is that it becomes a tool for it never to happen and, yes, it means that it hasn't been completed—there are still bodies under review, there are still bodies that haven't been dealt with that should have been dealt with—but that means you do it again. The rush has meant that a lot of stuff has happened.

Q297   Chair: Well, not a reduction in cost, which is what your organisation's about.

Matthew Sinclair: It's led to a substantial reduction in quangos and some reduction in cost. There have been bodies taken out. The Sustainable Development Commission, for example, has had its funding cut outright, so there have been reductions in cost.

Q298   Chair: But not as the result of a quango cull. That was the result of a cut in budgets.

Matthew Sinclair: Well, that was part of the quango cull and part of that effort. It was part of the cut in budgets. The rush and the fact that you haven't been able to get all of them mean, do it again. There's no reason why we can't have another round of quango cuts in a few years.

Q299   Lindsay Roy: So how can we develop a more robust approach to determine whether a quango should continue or be downsized, or whether it should be abolished, and how do we monitor the key outcomes and ensure that the positive developments have continued?

Tom Burkard: The outcomes are very difficult to measure because, to be quite honest with you, the outcome of a lot of the quangos we studied is extremely hard to judge. In terms of ensuring that we have a fair and uniform method of evaluation, as I said earlier, we need a much better system of having public information available on all the activities that the quangos engage in. To give you an idea, when we were conducting our report on school quangos, it took us an enormous amount of time to dredge up the ministerial remits and the parliamentary Acts that, shall we say, legitimised the activities of the quango, and of course, all the various programmes they have been involved in. To be quite honest with you, the difficulty we have here is that we are talking about a research programme that lasted a year and a half, working with people who had access to a lot of advice in terms of investigating Government activities. What hope do other people in this political nation in general have of trying to get a good grasp of what quangos are doing unless we have a means of reviewing their activities and have public information on their websites that gives a lot more information about their activities and their organisation?

Q300   Lindsay Roy: Triennial reviews in themselves are not particularly helpful unless you have robust measurement of outcomes and key objectives that can be gauged.

Tom Burkard: Take a look at the outcomes. The one example I would point out is that we had a good look at the evidence that was given by the Health Committee on various public health initiatives, and it turns out that the Committee was very scathing about the evaluation of programmes that were run. It's much easier to evaluate a programme than it is an entire quango, which is involved in the integrated delivery, with many other organisations, of broad progress, but if you take a look at the programmes themselves, at least you have a hope of evaluating them. The evidence that the Health Committee came up with was that some of the evaluations were so weak that it was more or less a matter of just asking the people involved what they thought of them. The difficulty you have here is that when you have a lot of very small initiatives, some only involving a few million pounds, the cost of you doing a proper evaluation of these initiatives is prohibitive. You therefore have a real problem here in determining whether the money is being spent wisely, simply because you're dealing with such a complex system of organisation and delivery of services. As I say, at the Centre for Policy Studies, we had a lot of arguments as to whether we had to analyse the problem from the standpoint of the organisations or the initiatives. We ended up doing both.

Matthew Sinclair: You cannot come up with a fix for the creation of quangos. They are created by a statute and it is very hard to restrain that. What you can do is try and create the conditions such that they don't serve the functions that they shouldn't be serving, so they aren't able to be created too quickly too easily and avoid scrutiny. Ergo what you need is strong parliamentary scrutiny of their appointments to run them and their budgets while they are in operation, and then you also need spending transparency such that they can be properly scrutinised. A few quangos aren't even subject to Freedom of Information requests. As long as there are bodies outside the realm of proper scrutiny, that allows improper spending to continue and then it will essentially be a political task to control the growth of quangos, because the only way you can control it in the end is to campaign against or say no to individual proposals. There is not a fix that can limit their number because of the way they are created.

John O'Connell: More regular parliamentary scrutiny will stop quangos doing things out of their remit. That was one of the big problems with the Audit Commission—they perhaps started creeping outside their remit—and more regular accountability would perhaps put a stop to that.

Q301   Lindsay Roy: So without taking a comprehensive review of all quangos, what you are saying is by and large there needs to be a much greater rigour and a much more robust approach.

John O'Connell: Absolutely, not just budgetary to maintain value for money, but to stop mission creep.

Q302   Chair: But surely the tests that Francis Maude announced can be improved can't they? You need to have some kind of method to evaluate whether a quango is justified or not.

Matthew Sinclair: You'll struggle to find a uniform method. They've come up with this series of criteria; those criteria are very easy to fudge. It is very easy to come up with bodies where you really need independent advice where that advice could come from outside Government. It is very easy to come up with these kinds of justification. For that reason, the limits on quangos need to be proper scrutiny and criticism of them when they go beyond bounds or when they have been created without good reason. It will be a change in political attitudes, so when they create a new quango now, generally a Minister will be asked in the media, "Are you creating another quango?" That change in the political dynamic will probably be what restrains the number of quangos over time, not an attempt to set some kind of rule as to when they can be created.

Chair: Interesting. Mr Roy, are you finished?

Lindsay Roy: Yes, thank you.

Q303   Mr Walker: The delicious irony of this is that, having spent the last 15 years creating quangos that mess up all our constituents' lives, we've created a quango that's messing up our lives called IPSA, so we are reaping what we sowed, and deservedly so on occasion. You are concerned about the use of public money. Are you satisfied that it is as an effective use of public money for IPSA, for example, to advertise and recruit an £85,000 Communications Director?

Matthew Sinclair: It's quite clear that IPSA have lost control of costs to a certain extent. However, they have been put in a very difficult position, which means that they are being asked to do a job where they will have a lot of unavoidable communications work. They will have a lot of people asking them questions. It does look like costs have got too out of hand in each individual area, but it is not one fundamental error. It is a lot of failures to control costs properly.

Q304   Mr Walker: You will be aware that the Speaker's Committee for the Independent Parliamentary Standards Authority, which I am on—it is another sort of Committee—has strongly suggested that their running costs of £6.5 million are completely over the top and they should move it towards £2 million, which the House of Commons Fees Office, with all its faults and flaws, was achieving. Would you see a significant reduction in IPSA's running costs as something that they should be looking to achieve?

Matthew Sinclair: They should absolutely be looking to reduce their running costs yes.

Q305   Mr Walker: Yes, Mr Burkard, do you have view on IPSA?

Tom Burkard: I think I will defer to Matthew here.

Q306   Chair: But if parliamentarians were to come forward with a substantive cost­saving option for IPSA, is that something that the TaxPayers' Alliance would support, even if it meant a return to something more of allowances rather than itemised expenses?

Matthew Sinclair: The relatively low­cost way of controlling this problem is transparency. One suggestion that came out was that all purchases would be made through a card that would automatically log and publish the expenditure. The only effective policing of the problems around expenses is public scrutiny, and it roughly worked in Scotland. They have a minor kerfuffle each year, but they've never had a major scandal because it was never secret for an extended period. That's how the problem has built up in Westminster. Windsor and Maidenhead Council publish their energy usage almost minute by minute and people spot when the lights are on. That's not costing them a lot of money; that kind of thing is very cheap and very effective compared with the bureaucratic control side of it, which is much more expensive and much more prone to being captured by biases once an organisation has worked for too long with the same groupings, because it is much more prone to regulatory capture.

Chair: Thank you very much indeed for your contributions to our Committee's hearing today. It has been extremely useful and it was helpful that we had some people from outside the system, rather than just people inside the system, giving us their views. Thank you very much indeed.

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