The Coalition's Programme for Government stated that it would "reduce the number and cost of quangos." To achieve this the Government conducted a review of all public bodies to identify those which it felt were no longer necessary. The review focused on whether a body's functions were necessary, and if it thought they were, whether it had to be delivered at arm's length from Government.
This review was poorly managed. There was no meaningful consultation, the tests the review used were not clearly defined and the Cabinet Office failed to establish a proper procedure for departments to follow. It is important that the Government learn lessons from these mistakes as it has indicated that future reviews are likely to be run in broadly the same way. To ensure their effectiveness future reviews should not be conducted in a similar way.
The Bill giving the Government the power to bring about these changes was equally badly drafted. It is being significantly re-written by the House of Lords and we intend to issue a further detailed report on the Bill once the Lords have finished their scrutiny.
Now decisions have been taken as to which bodies to abolish or reform, the Government faces the much larger challenge of successfully implementing these reforms; any organisation would struggle with changes on this scale. The Cabinet Office needs to prepare and issue clear guidance on how to manage this transition. We have developed, with the National Audit Office, our own guidance which draws on lessons from past reorganisations. We encourage departments to use this to assist them in managing the transition process.
The Government's stated intention for the review was to increase accountability by bringing functions previously discharged by public bodies back in to central departments, thus making ministers directly responsible for the decisions taken. We sympathise with ministers' desire to be able to influence decisions they will ultimately be held responsible for; but the Government has failed to recognise the realities of the modern world. Stakeholders and civil society play an important role providing challenge and criticism to public bodies on a day to day basis and it is easiest for them to perform this role when they have a clearly identified body to engage with, not a homogenous central department. There is a way to meet both demands: set these bodies up as executive agencies - this provides a clearly identifiable organisation for stakeholders to engage with, while leaving ultimate responsibility with the Minister.
Departments are not clear about how they should interact with the bodies they sponsor; failing to strike the right balance between oversight and independence. The Cabinet Office should issue clear information on the proper relationship between departments and public bodies.
One reason for this lack of clarity is the complexity of the public bodies' structures; non-departmental public bodies, arm's length bodies, quangos, public bodies, executive agencies, non-ministerial departments, and independent statutory bodies all clutter the landscape. We recommend that the Government gradually implement a simplified system so that it is clear to everyone who is responsible for what, and how much input it is right for the Government to have.
Finally, we think that this review represents a missed opportunity. The Government should have reassessed what function public bodies are needed to perform and transferred many more of these activities to charities and mutuals. Doing so would have helped explain more clearly its vision for a Big Society, giving these organisations the ability to provide more government services. It should also have used the review to get control of some activities of public bodies that provide questionable benefit to the taxpayer, most notably the use of public funds for lobbying and public relations campaigns.