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

5  Sponsoring Public Bodies

66.  During our inquiry we encountered wider concerns about departments' abilities to sponsor the public bodies that fall within their remit. One of the key findings of the IfG's report on arm's length bodies, Read Before Burning, was that:

The role of sponsorship is often undervalued in Whitehall, meaning that sponsors receive relatively little specialised professional development, and sharing of best practice is limited. Good performance management is essential for effective arm's length government, yet Whitehall's capability in this area is particularly weak. Many departments do not make clear their expectations in terms of performance, nor the sanctions for different levels of overspending.[76]

Sir Ian Magee, IfG, gave some examples to illustrate the problem when he appeared before us to give evidence.

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 non-departmental 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 non-departmental public body that appears to be mirroring and duplicating the functions within the department.[77]

Professor Talbot, Manchester University, said that this was a theme that had emerged from his own research. He believed that departments found it very difficult to establish a suitable relationship between themselves and their public bodies and ended up tending toward one of two extremes:

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[...] That is a major problem.[78]

67.  When these points were put to the Minister he replied that most Government departments did not manage their public bodies. He explained that this was because:

The whole point is these are meant to be autonomous and not accountable, so if there's a justification for the function being carried out in a way that's independent of a department, then the ability of the sponsoring department to interfere with its management is strictly limited.[79]

We are concerned about this response, which seems to indicate that the Minister has adopted the "liberal parent" approach that Professor Talbot warned against.

68.  This also does not reflect the reality of public bodies' relationship with their sponsoring departments. There is a role for sponsoring departments to play in providing oversight. Frances Done, Chair of the Youth Justice Board, gave several examples of the way the MoJ was involved in overseeing her organisation:

the Secretary of State:[..] sets my target for performance and the performance targets for the Youth Justice Board. Ministers sign our corporate plan [...].[80]

The Prime Minister, when in Opposition, made it clear in his speech of 6 July 2009 that even when powers were devolved to public bodies it did not mean that the Minister had no role to play:

Even when power is delegated to a quango, with a new Conservative government, the minister will remain responsible for outcomes. They set the rules under which the quango operates. And they have the power to ensure that the people operating the quango are qualified to do the job.[81]

69.  The Cabinet Office's own guidance on non-departmental public bodies also requires sponsoring departments to have an oversight of public bodies that fall within their remit:

NDPB managers should have: clear objectives and the means to measure output and performance against them, clear responsibility for best use of resources including output and value for money; and access to the necessary management information, training and expert advice.

How these functions are dealt with should be left to the NDPB; but it is important that the sponsor department's Accounting Officer should ensure that adequate arrangements are in place.[82]

70.  The most likely reason for this confusion over the proper relationship between departments and the bodies they sponsor is the fact that there are numerous different types of public bodies. Different types of public body are supposed to be subject to different levels of involvement with their parent department, but the lack of clarity about these different types is leaving departments unsure about what approach to adopt. As Professor Talbot explained:

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.[83]

We will return to the issue of how the Government could simplify the public bodies' landscape in Chapter 7.[84]

71.  Departments need better guidance about how their sponsoring role should strike the right balance between oversight and independence. The most recent guidance on public bodies was issued over four years ago and is largely silent on this issue. We welcome the indication, given in the Cabinet Office's most recent memorandum, that the Government is revising its guide to departments on public bodies to include "guidance and examples of good practice, on sponsorship."[85]

72.  The Cabinet Office should revise its guidance on public bodies as quickly as possible, placing more emphasis on the proper, on-going relationship between departments and the organisations they sponsor. It should make clear what kind of decisions are purely the responsibility of the bodies, when the department should be consulted and whether any decisions - such as the overall business plan - should be subject to ministerial approval.

76   Institute for Government, Read Before Burning, p12 Back

77   Q 256 Back

78   Q 257 Back

79   Q 123 Back

80   Q 24 [Ms Done] Back

81  Back

82   Cabinet Office, Public Bodies: A guide for Departments, chapter 4 paragraph 2.3.1-2.3.2,July 2006 Back

83   Q 257 Back

84   See para 124 ff. Back

85   Ev 63 Back

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