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

Written evidence from the Cabinet Office

1.   Did you issue guidance to Departments on exactly what was meant by the four tests and how they should apply them? If yes, can you please send the Committee a copy?

  The Minister for the Cabinet Office wrote to all Secretaries of State in June 2010 with an initial view on how the tests could apply to each department's public bodies. Following this, Cabinet Office officials worked closely with officials in other government departments to support ministers to make decisions about public bodies that were based around the four tests whilst also recognising the unique circumstances of each department's public bodies landscape. In some cases the Minister for the Cabinet Office met the relevant Secretary of State for a bilateral discussion about how the tests could be applied and, where questions remained, two wider ministerial meetings were held where ministers could discuss the application of the tests to those public bodies. No written guidance was issued.

2.   In the Prime Minister's speech of July 2009, his test of political impartially was focused on bodies that distributed money. In practice its application has been much wider than this. When, and on what basis, was the decision to widen the definition of political impartiality taken?

  It is true that many of the bodies being retained on the grounds of requiring impartiality are associated with the distribution of public money. However, distributing money is only one criteria in determining whether an organisation should be impartial, there are organisations like the Charity Commission, for example, where decisions must be impartial from government.

3.   What steps has the Cabinet Office taken to ensure that the tests were applied consistently? Were departments required to submit their reasoning to the Cabinet Office?

  Whilst it was important to apply the tests as consistently as possible across each department, it was also important to recognise any wider considerations that may have a bearing on the body's future. Cabinet Office officials therefore worked closely with officials in other government departments to support ministers to apply the tests to their public bodies in a way that supported the policy aims of those departments. In some cases that meant that a decision could not be reached at that time—for example in the case of Ofwat, where the body is subject to a review.

4.   Why has no reason have been given for the retention several bodies? For example: Competitions Appeals Tribunal, Equality 2025, Health and Safety Executive, Monitor, OFWAT, and Royal Mail Holdings Plc.

5.   Similarly no reason has been given for the retention of the body which will be created by the following mergers: Certification Office and Central Arbitration Committee; Competition Commission and Office of Fair Trading; Postcomm and Ofcom; Gambling Commission and National Lottery Commission; UK Sport and Sport England; Pensions Ombudsman and Pensions Protection Fund Ombudsman; Serious Organised Crime Agency into the new National Crime Agency; and Crown Prosecution Service and Revenue and Customs Prosecutions Office. Could you please explain why this was the case?

6.   Often when a body is being "retained and reformed" no reason is given for its continued existence. Examples include: Environment Agency, Equalities and Human Rights Commission, Financial Reporting Council, Forestry Commission, Homes and Communities Agency and Natural England. Why is this the case?

  There are instances where the Government believes that the body passes at least one of the tests, but felt it was more appropriate for the description in the Written Ministerial Statement to focus on how the body would develop in the future. Equality 2025, for example, will take on the functions of other bodies, including some of the functions of the Disability Employment Advisory Committee.

  Where a merger is proposed, the Government believes that the resulting bodies will pass at least one of the tests but, as the Written Ministerial Statement makes clear, the need to simplify and streamline the system means that merger is the right and the most efficient course of action.

  For bodies being retained and reformed, the Written Ministerial Statement focuses on the reform that the Government believes is required to ensure that the remaining body will pass at least one of the tests.

7.   How can the merger of two bodies by justified on accountability grounds in cases where the new body's relationship with the sponsoring department does not significantly differ from that of the old bodies?

  Accountability is indeed the main driver for the reform of public bodies. In many cases mergers will give clear accountability to one body for a particular activity rather than it being duplicated across many. The work also gives Government the opportunity to streamline the operation of public bodies and create efficiencies where it feels these can be achieved.

8.   How will the government avoid the reforms weakening the visibility of functions current performed by public bodies, as they compete for attention within a wide range of departmental concerns and priorities?

    (a) this not make it more difficult for stakeholder group to hold policy makers to account in these areas?

  The Government considers that bringing some functions closer to ministers, for example by moving them into departments or creating an executive agency, will increase ministerial accountability for these functions. It will mean that stakeholders are better able to engage with ministers on these issues rather than negotiating via a third party. Other bodies will be moved closer to the communities that they serve: the functions of the Thurrock Development Corporation, for example, will be devolved to local government, meaning that local people can better understand and be closer to decisions that affect their everyday lives.

9.   How will the government ensure that triennial reviews consider ways in which government sponsorship arrangements/the way it managed public bodies are inhibiting their effectiveness? Can you please update the Committee on the milestone relating to public bodies included in the Cabinet Office Business Plan? Specifically:

    (a) How can the department have "completed" supporting departments in developing robust implementation plans (1.16.ii) when some bodies are still under review?

    (i)   What form has this support taken?

    (b) Who was consulted when you conducted the review of terms and conditions of employees of public bodies which are to be reviewed (1.16.iii)? The Union said they had not heard of the review.

  Cabinet Office will be issuing guidance to departments on the new triennial review process in the new year. This will include a "checklist" to help departments strike the right balance between departmental control and oversight and operational freedoms and flexibilities for public bodies. Separately, Cabinet Office will be revising its general guide for departments on public bodies which will include guidance, and examples of good practice, on sponsorship.

  Departments are now working through the implementation of their proposals. Whilst some proposals are still under development—for example in terms of specific decisions about where functions will transfer—it is important that departments think early about how to approach implementation and the potential impact on the organisation's staff.

  As the Minister for the Cabinet Office set out on 3 November, departments are absolutely the best placed to lead this work. They have the greatest understanding of how to improve the accountability and efficiency of their public bodies landscape, and are taking forward reforms in the context of their broader business plans for the spending review period. Whilst the pace of change will vary, therefore, departments have been working with their public bodies and stakeholders to come up with sensible plans about how to deliver the reform programme.

  Where it is considered it would add value, the Cabinet Office has been supporting departments to think about implementation, through our Public Bodies Working Group and Steering Board. Whilst implementation planning is proportionate to the scale of reform, the Cabinet Office has generally expected consideration of how to ensure robust governance arrangements are in place, timescales and milestones, risks to delivery, how to track benefits and how—as the proposals become more firm—ensuring that the costs of change are minimised and the savings maximised, in the context of departmental business plans and spending review settlements.

  The Cabinet Office will continue to support this process by running thematic workshops for departments and pulling together existing guidance on implementation issues.

  As the reform process develops it is important for Government to fully understand the appointments landscape in public bodies. The Public Bodies Reform Team has therefore been working with departments to collect information on the terms and conditions of public bodies' board members. Similarly, departments have been working to ensure that the information they hold on the staff in affected bodies is comprehensive.

  This information is of course sensitive, and will be used carefully by departments to make decisions about whether and how the workforce in each body needs to change. Plans for changes to individual organisations will be taken forward, in line with existing practice, in discussion with staff and trade unions.

  10.   The House of Lords Constitution Committee has recommended that Orders made using the Public Bodies Reform Bill [Lords] should be subject to the super-affirmative procedure. What it the Government's position regarding this suggestion?

  The Government values the expertise of the House of Lords Constitution Committee and this Bill will benefit significantly from their contributions throughout its passage through Parliament. In his closing speech to the House of Lords, Lord Taylor was clear that the Government would work proactively and constructively with Peers to ensure the Bill delivers on the Coalition commitment to reform public bodies while also meeting the expectations of Parliamentarians that it contains adequate safeguards, sufficient consultation requirements and is subject to appropriate Parliamentary scrutiny. This is why the Government has tabled a number of amendments that build in these additional reassurances to Parliament, while striking the balance that members of the public expect, that the public bodies landscape is quickly and fundamentally reformed.

  Specifically regarding the Committee's proposal that orders should be subject to the super-affirmative procedure, the Government has tabled amendments that substantively increase Parliament's opportunity to provide scrutiny and also reflect the varying definitions of the super-affirmative procedure. The Constitution Committee's report proposed that the Government replicate the procedure as set out in the Legislative and Regulatory Reform Act 2006. However, the Government believes the scope of that Act is wider and more significant than the Public Bodies Bill and so has sought to establish a form of enhanced affirmative procedure that balances the need for Parliament to scrutinise orders with the need for ministers to deliver part of the Coalition's Programme for Government in a timely fashion in line with public expectation.

  This new procedure allows for Parliament to determine whether an enhanced affirmative procedure is necessary. This procedure then builds in a longer period that allows for select committees to make recommendations, for the Minister to reflect on representations from Parliamentarians and for an affirmative vote in each house. The conventions regarding voting on statutory instruments are a matter for Parliament to consider.

11.   Why does the Government think it is appropriate to have bodies which it believe need to independent of Government (Channel 4, British Library, Committee on Climate Change, Gangmaster Licensing Authority, School Teachers Review Body...) listed in Schedule 7 of the Act? Does the Act not give the Government much more power than it needs to carry out the reforms it has identified in this review?

  Schedule 7 lists all statutory bodies that were subject to the review and bodies that are still subject ongoing review processes, with the exception of a small number of bodies that are already planned to be subject to other legislation (for example the Health Bill). The purpose of Schedule 7 is to clearly define those bodies to whom the powers in the Bill could apply following the conclusion of further review processes. One of the reasons for the Coalition Government's recent review process and plans to establish a triennial review process is to ensure the Government has a clear mechanism to re-evaluate the public bodies landscape and a legislative framework for making changes to statutory bodies. For example, where the conclusions of a future review propose that a statutory body should be retained but subject to reforms that will improve its efficiency and accountability there would not be a legislative vehicle without the Public Bodies Bill. The Committee can be reassured by the recent amendments tabled by the Government that where a function requires an organisation to remain independent, the powers in the Bill could not be used to affect that function. Similarly, the more stringent Parliamentary procedure set out in the amendments provides for additional scrutiny and an enhanced check on Ministerial power. It is certainly not the case that the Government can reform or even abolish public bodies on a whim, but it is important that additional changes to be made in the interest of efficient, effective Government could be implemented.

12.   Why are only some bodies that were reviewed listed in the Act? How were decisions made?

  A number of bodies that were subject to the review do not require legislation in order to make reforms. Other bodies, such as a number of health bodies, are already planned to be subject to other legislation.

November 2010

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