7 Opportunities for wider reform
100. We have identified three ways in which we
think the Government could have used this review to undertake
more radical reform of the use it makes of arm's length bodies.
These are:
i. to advance the Government's "Big Society"
agenda;
ii. to reflect on what activities it is appropriate
for public bodies to engage in; and
iii. to simplify the complex public bodies' landscape.
Public Bodies and the Big Society
101. The Cabinet Office describes the Government's
intention behind the Big Society as follows:
We want to give citizens, communities and local government
the power and information they need to come together, solve the
problems they face and build the Britain they want. We want society
- the families, networks, neighbourhoods and communities that
form the fabric of so much of our everyday lives - to be bigger
and stronger than ever before. Only when people and communities
are given more power and take more responsibility can we achieve
fairness and opportunity for all.[120]
We take this to mean the strengthening of civil society
and non-governmental institutions. One of the methods the Government
intends to achieve this goal is through "support[ing]
co-ops, mutuals, charities and social enterprises", and
enabling them to play a greater role in the running of public
services.[121]
102. Despite this intention, of the 901 bodies
under review, only 9 - less than 1% - will be transferred out
of the public sector with a further three others being considered
for privatisation. Bodies that will see their status change include:
British Waterways, the Design Council, the Alcohol Education and
Research Council, and the Theatre Trust which will all become
charities; and the Horseracing Totaliser Board which will be privatised.[122]
103. When we questioned public bodies about their
relationship with the private and voluntary sectors they provided
many examples of how they were working, and could continue to
work, with charitable and private organisations.[123]
However, opinion was divided as to whether it would possible for
more public bodies to become voluntary or private sector organisations
themselves. Nick Gargan said the NPIA was "actively proposing
what form of co-operative, community interest vehicle, or some
mutually owned delivery vehicle for the service might be capable
of being constructed."[124]
Ms Done was less convinced, arguing that the possibility for such
reform would vary depending on the nature of the body.[125]
Ms Chester expressed concern that if a grant distribution role,
such as that performed by Sport England, were discharged by a
mutual it might result in one group within the mutual crowding
out others.[126] Professor
Talbot argued that the Government had struggled to find more functions
to transfer to the voluntary and private sectors "because
in most cases these are jobs that Government at the end of the
day has determined actually need to be done by somebody in the
public sector."[127]
104. When we asked the Minister why the Government
had struggled to convert many public bodies into charities, mutual
or non-public sector organisations he did not accept this claim.
He commented that "it's a considerably large proportion
of those [bodies] to which changes are being made."[128]
While it is true that not all 901 bodies in the review are being
reformed 481 are; meaning that still less than 2% of bodies which
are due to be changed are undergoing these kinds of reforms.
105. The use of the "existential test"
- which examines whether or not the Government needs to conduct
a function - suggests that the Government did attempt to consider
what activities the public sector no longer needed to engage in.
However, it seems that the speed with which the review was conducted
prevented more than cursory consideration. Professor Talbot believed
that "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." But he had not got the impression
"that there has actually been a very serious review of
these things in this process."[129]
106. Similarly, Mr Sinclair thought that the
speed of the review meant that the Government had been "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?'"[130]
He went to give example of functions that he thought were better
performed outside the public sector:
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 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.[131]
Undertaking a review of this kind is essential if
the Government wishes to reduce public body expenditure. As we
argued in the previous chapter, administrative efficiencies can
only achieve so much; achieving significant savings from public
bodies will require not doing the same for less but doing less
with much less.
107. Reforming public bodies
has a much greater potential for strengthening civil society and
its institutions ("the Big Society") than has so far
been realised. While the Government has identified a few bodies
that can be reformed as charities and mutuals we believe more
could be considered. Doing this in a structured way involves not
examining bodies on a case by case basis, but re-examining what
service the state needs to deliver. This would not only provide
greater space in which charities and mutuals could operate, but
also allow for greater savings to be made in expenditure by public
bodies.
108. Some work has been done to develop methodologies
the Government could use to evaluate what functions are ripe for
re-location outside the public sector. BDO recommended that the
Government should evaluate all bodies against two criteria: whether
they are engaged in core public sector activities and whether
they are effective at delivering those activities. The result
of this analysis would then determine the "broad course
of action" that the Government should pursue. Services
that are core and effective should be retained and possibly improved,
whereas ineffective or non-core services should be stopped. They
note that it "may be appropriate to transfer non-core
but effective functions into new delivery structures that sit
outside of the departmental family". They argue that
doing so could result in "the creation of value for the
government through the proceeds of sale or transfer of appropriate
debt into the new structure".[132]
109. The Public Chair Forum has also commissioned
research in this area to identify the various different models,
for services outside the public sectors. The options they identified
included; employee mutualism, joint ventures between ALB staff
and the private sector, and privatisation through the sale of
assets to the private sector.[133]
110. The Cabinet Office has recently announced
plans to encourage public bodies to reform as employee mutuals.
In a speech on 17 November, Francis Maude announced new support
for public service 'spin-outs' building on the Government's Pathfinder
programme including:
i. over £10 million to help the best fledgling
mutuals reach investment readiness;
ii. a new information line and web service for
interested staff, provided by Local Partnerships, the Employee
Ownership Association and Co-ops UK; and
iii. a 'challenge group' involving employee-ownership
experts including, John Lewis Partnerships, to investigate ways
to improve regulation.[134]
The Minister said that this policy was central to
the Government's "Big Society approach to public service
reform",
Devolving power to people on the front line who know
how things can be done better. The right to provide will challenge
traditional public service structures and unleash the pent up
ideas and innovation that has been stifled by bureaucracy. It
will also put power at a local level so public services will be
answerable to the people that use them.
When staff are given a stake in shaping services
productivity and efficiency has been shown to improve dramatically.
We must not be afraid to take bold decisions that will help create
better public services at a time when there is less money to go
round.[135]
111. We welcome the Government's
recent announcement encouraging the formation of employee mutuals.
We ask the Government to provide us with an update as to how many
public bodies have expressed an interest in taking part in this
scheme, and how this programme related to the recent review of
public bodies.
Public Body Activities
112. Mr O'Connell, TPA, expressed concerns about
public bodies extending their activities beyond those there were
initially created to discharge.[136]
Mr Burkard, Centre for Policy Studies, believed that this was
due to a lack of clarity about the purpose of the organisation
when they were created:
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.[137]
113. The Government's review identified several
public bodies that it intends to "refocus on their core
functions."[138]
We believe that there has been a tendency in recent years for
public bodies to go beyond their original remit and expand into
new areas. There is a need for public bodies to concentrate on
their core activities. The current financial situation gives additional
cause for bodies to be reformed in this way. A reduction in expenditure
will necessarily mean that organisations cannot continue to conduct
all the activities that they currently engage in. Therefore, they
will need to prioritise where they direct their resources to.
This should be on the primary - often statutory - aim they were
established to achieve.
114. Deciding which bodies can
be moved into the private and voluntary sector should form only
part of the Government's review. It should also reconsider what
activities public bodies should continue to engage in. Some public
bodies have allowed their remit to increase over the years and
there is a need to refocus them on their core functions. Identifying
the essential activities of these bodies will both make them more
efficient and reduce cost. This principle must be embedded in
future reviews.
LOBBYING
115. One particular concern that was raised during
our inquiry was the public bodies' lobbying activities. The TPA
have been critical about what they perceived a public bodies engaging
in "taxpayer funded lobbying." They argue that
public bodies often "serve to cement the claims of particular
interest groups [...] once set up the quangos affords the groups
a platform from which to lobby for further funds, and to argue
against reductions in public expenditure in their relevant sectors."[139]
116. The current guidance says that "in
certain limited circumstances an NDPB may be able to justify expenditure
on publicity which would not be appropriate for a government department."
It continues:
It will always be an improper use of public funds
for NDPBs to employ PR or other consultants to lobby parliament
or government departments in an attempt to influence government
policy or obtain higher funding.[140]
117. Despite the wording of this guidance some
public bodies have been hiring lobby firms in an attempt to influence
Government policy. The most notable recent example of this was
the UK Film Council who were reported to have hired lobbyists
to organise a campaign against their own abolition. The campaign
included Facebook pages and an online petition,[141]
with one newspaper placing the total cost at "tens of
thousands of pounds."[142]
Commenting on this decision to the Culture, Media and Sport Committee
the Secretary of State, Jeremy Hunt, said that:
it was completely inappropriate for them to hire
Portland Communications and use taxpayers' money to launch a lobbying
campaign to protest against their own abolition.[143]
However, when questioned by that Committee, Mr
Tim Bevan, Chair,
UK Film Council denied that the company had launched the "Save
the UK Film Council" campaign, saying it had merely helped
it respond to press inquiries.[144]
118. Mr Sinclair, Taxpayers' Alliance argued
that the use of public funds to hire public relations firms "is
absolutely an abuse of public money" if it is done to
promote their own political interests - especially if members
of the public body had a personal interest in the outcome of a
decision.[145] When
the Minister was questioned about the use of lobbyists by public
bodies he referred to the existing guidelines, arguing that these
should be sufficient to prevent public bodies from hiring lobbyists
to lobby Government. However, he also said that he did not think
that "those guidelines are sufficiently tight"[146]
and would be reviewed.
119. Some public bodies, such as those involved
in promoting behavioural change, or providing information, will
have a legitimate need to use its resources to run advertising
campaigns. However, we agree that the guidelines around lobbying
should be reviewed, but think this is a symptom of a deeper problem.
Public bodies should not be engaged in activities that require
the use of lobbyists in the first place. Reviewing what activities
it is appropriate for public bodies to engage in, as recommended
earlier in this report, is the surest way to ensure that in the
future no public body has a need to hire PR organisations.
120. Public bodies should never
be engaged in activities that necessitate instructing lobbyists.
We recommend that the Government revise the guidance to public
bodies to make it clear that it is not appropriate for it to hire
PR organisations; especially when such organisations are used
to lobby Government. The current guidance already prohibits such
activities but has failed to prevent abuse. The Minister must
establish effective monitoring and enforcement procedures.
121. Another public relations activity
of arm's length bodies that attracted criticism is spending on
stands at party conferences. Mr Sinclair raised the case of a
Regional Development Agency which "spent
a lot of money£250,000, that order of magnitudeattending
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."[147]
122. When we raised this concern
with the Minister he said that he thought that whether it was
justifiable would "vary [...] Some
of them would say that it's justifiable to make decision-makers
more aware of what they do", but
that this activity was covered by the advertising and marketing
moratorium he had introduced. When pressed on whether this would
be permitted in future he said that he would have to approve all
future requests for public bodies to attend party conferences.[148]
123. We welcome the Ministers
commitment to examine all future requests for public bodies to
attend party conferences. However, we can see no reason why this
activity should not be banned outright, as it could be construed
as indirect taxpayer funding of political parties.
Reform of the public bodies landscape
124. One of the central recommendations in IfG's
Read Before Burning Report was the need to implement a
new, and much simpler system for classifying public bodies. Its
research revealed a muddled picture of governance arrangements
with similar bodies having different governance and freedoms for
no apparent reason. Professor Talbot argued that the UK had "probably
one of the most chaotic landscapes."[149]
This echoes comments made by Sir Gus O'Donnell, Cabinet Secretary,
at the launch of the Institute:
The more I look into these bodies, the more convinced
I am that the current situation owes far more to history than
it does to operational effectiveness.[150]
In total the IfG identified 11 different types of
arm's length bodies. These are: Advisory NDPBs; Executive NDPBs;
Independent monitoring boards; 'other' NDPBs; Tribunal NDPBs;
Executive Agencies; Non-Ministerial Departments; Public corporations;
Independent statutory bodies; Special health authorities; Parliamentary
bodies; and the Bank of England.[151]
125. The purpose of simplifying the system would
be "to ensure that a body's set-up relates more closely
to function and ensures governance reflects the degree of freedom
the body needs to perform that function."[152]
Sir Ian Magee, from the IfG, argued that the sheer number of different
types of public bodies had led to "a lack of clarity and
confusion in everyone's minds." He commented that, in
seminars the IfG had run, both Members of Parliament and sometimes
people in departments themselves had not been "as clear
as perhaps they could be about what the nature of these bodies
is."[153]
He also argued that a simpler landscape would also improve the
quality of the debate surrounding public bodies:
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 [...] is the opportunity that is missed here.[154]
The IfG's solution to this problem was to devise
a new taxonomy with four different types of public bodies, with
each type having a different relationship with its sponsoring
department. This framework is replicated below in fig 1.
The Minister agreed that the current system was "very
untidy" and was the result of "a random process".[155]
He also agreed that having eleven different types of bodies was
"probably unnecessary."[156]
However, he was cautious about implementing a new governance framework:
I'm kind of temperamentally slightly allergic to
trying to create a top-down overall scheme of arrangement for
all of this.[157]
He then reiterated his support for a simplified system,
but argued that it should not be done "to meet the demands
of administrative tidiness."[158]
126. Sir Ian directly responded to this argument,
saying that a reorganisation would deliver more than administrative
tidiness. "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."[159]
127. The variety of types of bodies is indicative
of the tendency of UK public administration to 'muddle through'.
Where it is necessary for functions to be undertaken by the state
they should be subject to ministerial accountability. The exception
is where a degree of independence is necessary to ensure public
trust. Independent bodies undertaking similar functions should
take similar forms and operate under similar governance arrangements.
Administrative untidiness can only undermine clear understanding
and accountability.
128. This review has highlighted
the complex and confusing nature of the public bodies' landscape.
Simplifying this set-up is not a matter of administrative tidiness
but a necessary step to ensure the accountability and effectiveness
of these organisations. The current system is chaotic, making
it difficult to understand why different types of bodies exist
and what these variations mean in practice. We recommend that
the Government use its triennial review process to re-examine
the proper governance arrangements for each public body and place
them in a new simplified taxonomy.
120 http://www.cabinetoffice.gov.uk/media/407789/building-big-society.pdf
Back
121
Ibid Back
122
http://download.cabinetoffice.gov.uk/ndpb/public-bodies-list.pdf Back
123
Q 31 [Ms Done & Mr Gargan] Back
124
Q 32 [Mr Gargan] Back
125
Q 33 [Ms Done] Back
126
Q 33 [Ms Chester] Back
127
Q 284 Back
128
Q 105 Back
129
Q 251 Back
130
Q 268 [Mr Sinclair] Back
131
Q 284 Back
132
Ev w10 Back
133
Public Chairs Forum, Arms Length Bodies Alternative Models
for Service Delivery, Section 3 Back
134
http://www.cabinetoffice.gov.uk/newsroom/news_releases/2010/101117-staffmutuals.aspx Back
135
http://www.cabinetoffice.gov.uk/newsroom/news_releases/2010/101117-staffmutuals.aspx
Back
136
Q 300 Back
137
Q 267 [Mr Burkard] Back
138
http://download.cabinetoffice.gov.uk/ndpb/public-bodies-list.pdf
See comments on Passenger Focus, Financial Reporting Council,
and Equalities and Human Rights Commission. Back
139
Taxpayers' Alliance, ACA to YJB: A Guide to the UK's Semi-Autonomous
Public Bodies Back
140
http://www.civilservice.gov.uk/about/resources/public-bodies.aspx
6.1.4-6.15 Back
141
http://www.gopetition.com/petitions/save-the-uk-film-council.html
Back
142
Film quango spends public money on fight against closure - The
Times 25/08/2010 Back
143
Evidence taken before the Culture Media and Sport Committee on
14 September Q26 Back
144
Evidence taken before the Culture Media and Sport Committee on
19 October Qq 129 -134 Back
145
Qq 273 - 274 Back
146
Q 109 Back
147
Q 271 Back
148
Qq 114-116 Back
149
Q 246 [Professor Talbot] Back
150
Institute for Government, Read Before Burning, p10 Back
151
A full description of each different type of body can be found
in Read Before Burning, p22 Back
152
Ev 50 Back
153
Q 227 [Sir Ian Magee] Back
154
Q 246 [Sir Ian Magee] Back
155
Q 140 Back
156
Q 139 Back
157
Q 141 Back
158
Ibid Back
159
Q 227 [Sir Ian Magee] Back
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