Written evidence from Karamjit Singh CBE,
the Social Fund Commissioner
EXECUTIVE SUMMARY
— I believe that overarching government
tests for whether a public body should continue to exist should
focus on impartiality, specialist function, value for money, transparency
and whether the public body serves a useful function, undertaken
in the public interest. In addition to the popularly used term
"quango" there are a number of other terms that will
better describe the varied types of organizations that fall into
this category. I have tended to use the term "public body"
and "arm's length body" in my submission.
— Before a decision is taken about the
possible merger, abolition or absorption of a particular public
body, it is vital to: establish a real understanding of what that
public body does and whether it is necessary; include value, proportionality
and cost effectiveness in any assessment; consider whether all
or any of the organization's functions are being undertaken efficiently
and effectively elsewhere; consider whether the function should
be visibly independent of government and evaluate what impact
abolition may have on stakeholders.
— Any evidence based assessment of whether
abolition is appropriate should include a structured process of
consultation.
— When comparing the costs and benefits
of merger or re-absorption, consideration should be given to whether
the functions are closely aligned with another public body or
particular government department; the distinct culture and structure
of the particular body or department with which the quango could
be merged or absorbed, and whether a cost/benefit analysis indicates
that successful merger or re-absorption is a viable option
— Where the work of a public body duplicates
the work of others there may be scope for the merging of functions.
There may also be a case for those public bodies with expertise
in a given field, and with a proven track-record of delivering
value of money, to have their remits extended at the expense of
those delivering an analogous function at a much higher unit cost.
— Some arm's length bodies provide public
services, including those offering independent grievance resolution
and/or independent non-partisan expert advice which also play
an important role in promoting public confidence. It is a fundamental
tenet of administrative justice that citizens should have recourse
to an independent grievance process.
— Careful consideration needs to be given
to those areas and activities that are identified as best operating
at arm's length from direct Ministerial responsibility, and there
should be clarity about the reasons for this.
— Abolishing public bodies performing a
specific function could see those functions being absorbed within
the sub-division of a government department. This may appear to
be a superficially attractive course of action but potentially
also negates savings, in that it could actually cost more in administration
and set-up costs, could erode expertise, and remove clear mechanisms
of accountability.
— It will be most effective to target any
cuts at those public bodies with the highest proportion of expenditure
and the greatest potential for efficiency savings.
— An effective business model for any public
body should include the following characteristics:
— an organizational structure with as few
layers as possible;
— processes that are proportionate and
able to deliver core functions effectively and efficiently;
— clear lines of accountability to government
and across a range of stakeholders that include service users
and taxpayers;
— transparency of reporting systems; and
— an appropriate level of scrutiny.
— To minimise disruption and costs caused
by changes to the structure and remit of public bodies it will
be important to: focus on ensuring that the process for key senior
appointments is appropriately resourced and receives attention;
ensure staff and external stakeholders are informed; seek to harmonize
cultural differences between organizations and promote areas of
common ground; set clear performance milestones for and conduct
regular reviews of public bodies; share best practice from similar
bodies, and ensure that service delivery to the required standard
is seamless throughout the change process.
FOREWORD
I am responding to the Public Administration
Select Committee's (PASC's) issues and questions paper "Smaller
Government: Shrinking the Quango State". I reply in my
capacity as Social Fund Commissioner, having been appointed as
an independent statutory office holder by the Secretary of State
for Work and Pensions to head up the Independent Review Service
(IRS)[1]
which (across Great Britain) provides an external review of Jobcentre
Plus' decisions on applications to the discretionary Social Fund.
Payments from the Social Fund are targeted at some of the poorest
and most vulnerable citizens in our society. During 2009-10 the
IRS, which has a current headcount of 106 staff, reviewed around
50,000 decisions at a unit cost of £99 per case.
I support the Coalition Government's plans to
review the number of arm's length bodies and appreciate this is
one of the central elements in the Government's constitutional
and spending reform programmes. I support the Government's commitment
to increase the accountability of public bodies and to ensure
value for money in public spending. I believe this is necessary
because our society is constantly changing and public bodies should
undergo—as should Whitehall departments and other organizations—regular
assessments which test their continued relevance and contribution
within a challenging financial background.
The IRS continually seeks to keep its resources
and processes under review. During the last year, we have developed
more flexible ways of working that retain the quality standards
that have always underpinned the work of the organization. This
is against a backdrop of continually increasing casework levels.
We are currently conducting a "root and branch" organizational
review to identify further efficiencies and will refine this following
the outcome of the Comprehensive Spending Review.
Although supportive of the Government's review
of arm's length bodies, I would like to stress that it is important
to ensure that the right questions are asked; that priority is
given to services identified as being essential by citizens and
in particular those front line services focused on or used most
heavily by poor and vulnerable citizens; and that the right checks
and balances are implemented, in order to help maintain appropriate
levels of transparency and accountability. Overall, it will also
be important that any changes which occur assist in promoting
public confidence in those public bodies that either remain or
emerge as part of this process.
I welcome this opportunity to submit evidence
to the Select Committee because this inquiry is taking place at
a crucial time.
THE CONSULTATION
QUESTIONS
1. How should the Government decide which
public bodies should be abolished?
1.1 The recently published report by the
Institute for Government[2]
notes that the popular term "quango" is loosely defined
and covers a very wide range of arm's length bodies which vary
in size, function and scope. Some are independent bodies carrying
out statutory functions; some are advisory bodies; some are tribunals
with jurisdiction in a specialized field; and others are regulators.
There is likely to be a correspondingly wide range in the performance
of individual bodies and in their overall cost to the tax payer.
This level of diversity makes direct comparisons difficult. Before
a decision is taken about the possible abolition of a particular
public body, it is vital to establish a real understanding of:
what that public body does; whether it is necessary; whether it
has tangible value; how proportionate and cost effective that
work is; whether all or any of the organization's functions are
being undertaken efficiently and effectively elsewhere, and the
impact that abolition would have on stakeholders. The typology
put forward in the Institute's report is helpful in this respect.
1.2 I am mindful of the value that certain
public service functions have for service users (particularly
the poorest and most vulnerable users) where, for example, financial
or legal issues are concerned. The resulting challenge for government
will be to achieve a balance that realizes required savings, yet
retains functions that have an important public benefit.
1.3 Careful consideration needs to be given
to evaluating those areas and activities that were positioned
at arm's length from direct ministerial responsibility in order
that they were perceived as being demonstrably non-politicized;
and in order to maintain public confidence through fair and accessible
independent mechanisms. The use of smaller arm's length bodies
can also help provide specialist functions and a high degree of
expertise in a given field, which may be more difficult to achieve
as part of a sub-section of a much larger department.
1.4 I believe that there are inherent risks
in abolishing bodies that currently provide an independent tier
of decision making and grievance resolution. This action could,
in effect, exclude some important aspects of decision making from
independent review and scrutiny. It is a fundamental tenet of
administrative justice that citizens should have recourse to an
independent grievance process. This plays an important role in
promoting public confidence.
1.5 The process adopted by government should
be structured and have a consultative element. Not adopting such
an approach risks eroding confidence in the purpose and fairness
of such a process. Other risks related to a less considered approach
are:
— transferring functions may negate potential
savings, by generating set up and transitional costs;
— erosion of valuable expertise in a given
area; and
— weakening lines of accountability and
visibility for related functions, as they compete for attention
within a wide range of departmental concerns and priorities.
2. Are the three criteria outlined by the
Government the correct ones? Should there be others, for example
an additional value for money criterion?
2.1 I believe that overarching government
tests for whether a public body should continue to exist should
focus on impartiality, specialist function, value for money, transparency
and whether the public body serves a useful function, undertaken
in the public interest.
2.2 Value for money and current performance
should be key considerations in any government review of individual
public bodies. The Institute for Government's recent report on
arm's length government[3]
makes the following comments:
based on historical experience, an excessive
focus on the number of bodies will be unlikely to yield long-term
improvements to arm's length government, and it neglects the fact
that ALB spending is concentrated in just a handful of larger
bodies.
3. How does the Government decide whether
a public body that fails the tests should be merged, abolished
or reabsorbed into department?
3.1 Based on the tests mentioned above,
key considerations will include:
— value for money in relation to process
costs of potential merger and the ongoing operational costs;
— the impact that any option would have
on the service provided, expertise, public confidence, stakeholders,
delivery, realizing tangible benefit from economies of scale,
and the extent to which particular functions must be seen to be
impartial and independent from government;
— when comparing the costs and benefits
of merger or re-absorption, whether the functions are closely
aligned with another public body or a particular government department;
— the distinct culture and structure of
the particular body or department within which the arm's length
body could be merged; and
— whether a public body duplicates the
work of other arm's length bodies or existing government departments.
There may be scope for the merging of functions where there is
clear overlap, or to extending remits at the expense of those
delivering an analogous function but with much higher operating
costs.
4. Is the process for deciding which public
bodies should be abolished sufficiently transparent?
4.1 This question raises two distinct considerations:
how to ensure sufficient transparency for the general public and
also for the body under review. For some public bodies there is
likely to be continuing public interest. This may heighten the
importance of managing the media reaction as carefully and positively
as possible, and openly engaging with stakeholders (including
staff from the body under review) ahead of abolition. To facilitate
an evidence based assessment of whether abolition is appropriate,
it will be important to give any public body under review the
opportunity to make their case for retention. There are of course
risks, and the recent (presumably unauthorized) disclosure of
information relating to arm's length bodies being reviewed will
not have enhanced confidence.
5. How can the Government ensure that the
abolition/merger/re-absorption of public bodies result in long
term savings?
5.1 It is important to take a long term
view of wider government objectives and adopt a realistic view
of whether integrating public service organizations and functions
is tenable in the longer term. Clear accountability mechanisms
should be established and regular reviews conducted. An open and
constructive relationship between the public body and it's sponsor
department should help to maintain focus on long-term savings.
The Institute for Government[4]
report highlights the diversity of existing practice in these
relationships. An important element here is the quality of leadership,
both within the sponsor department and the public body, and that
both parties are able to handle these relationships with the requisite
maturity.
6. How can the Government minimise the disruption
and costs caused by changes to the structure and remit of public
bodies?
Steps taken to minimise disruption and costs
might include:
— ensuring that key appointments to public
bodies attract the appropriate investment of attention and expertise
from the sponsor department;
— keeping staff and external stakeholders
informed throughout the change process; including regular consultation;
— recognizing from the outset the cultural
differences between organizations and the need to harmonize these;
whilst also identifying and reinforcing areas of common ground;
— clear milestones and regular progress
reviews;
— sharing best practice from similar projects
in the public and private sectors; and
— ensuring that service delivery to the
benchmarked standard remains seamless throughout the change process.
7. Will the abolition of public bodies lead
to increased public accountability?
7.1 Much will depend on the accountability
framework that is being implemented. The abolition or merger of
some public bodies should underline, for all public bodies, their
important duty in relation to public accountability; as well as
those who are undertaking the reviews. By reducing the number
of public bodies it is assumed that one result should be that
it will be clearer to members of the public which particular bodies
should deal with specific issues. This should lead to increased
public accountability, if it is linked to more transparency about
roles and remits.
8. How could the Government improve the accountability
and effectiveness of remaining public bodies?
8.1 It will be important to establish an
effective business model that includes the following characteristics:
— an organizational structure with as few
layers as possible;
— processes that are proportionate and
able to deliver core functions effectively and efficiently;
— clear lines of accountability, both to
government and across the range of stakeholders that include users
and taxpayers;
— transparency of reporting systems; and
— an appropriate level of scrutiny.
8.2 Periodic reviews, perhaps every three
years as a minimum, should be a key to improving accountability
and effectiveness. To promote public confidence, reviews should
ideally be carried out through independent mechanisms, such as
select committees. Putting this framework in place introduces
potential to identify and deal with, at an early stage, a range
of performance issues: including scope for efficiency savings.
The review framework would also help to focus ongoing attention
on whether functions carried out by a particular public body are
contemporary, whether that the body in question is best placed
to deliver them and whether any growth in the scale or scope of
a body is grounded in a clear business case.
8.3 Continued transparency is crucial to
ensure the right degree of accountability to government and the
tax-payer, and to ensure public confidence. Ideally, all public
bodies should produce and make publicly available annual reports,
which should include information about their remit and functions,
their performance against key targets and (where appropriate)
operating unit costs. This information should be easy to access
and presented in ways that make it meaningful to service users.
8.4 Public bodies should seek and take account
of public feedback, in order to promote an ongoing process of
reviewing their own effectiveness.
8.5 I believe that a strong relationship
between the public body and the sponsoring department is vital.
This should be underpinned by a Memorandum of Understanding which
highlights respective roles. This would be agreed at the outset
and supported by regular and direct interaction between the parties
involved.
October 2010
1 The Social Fund Commissioner's statutory duties and
powers are set out in primary legislation at section 37 of the
Social Security Act 1998 and include appointing Social Fund Inspectors
and other staff as he thinks fit; arranging training as appropriate;
monitoring the quality of Inspectors' decisions; providing advice
and assistance as appropriate to improve standards; and reporting
annually to the Secretary of State for Work and Pensions. Back
2
Read before burning: Arm's length government for a new administration,
Institute for Government, July 2010 Back
3
Tom Gash et al, Read Before Burning: Arm's length government
for a new administration, Institute for Government, July 2010,
p52 Back
4
Read before burning; Arm's length government for a new administration,
Institute for Government, July 2010 Back
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