Written evidence from Professor Colin
Talbot
IN DEFENCE
OF QUANGOS
why arms-length bodies are a vital part of our
democratic system of public administration and what should be
done to organise them better.
INTRODUCTION
This submission to the PASC is based on 20 years
of research[7]
and practical experience of working on and with a wide variety
of "arms-length bodies"—agencies or quangos—both
within the UK and internationally. This work is detailed in a
long series of publications, the must important of which are listed
at the end of this paper.
This short paper will focus on so-called "executive"bodies—ie
those primarily concerned with the delivery of various types of
services and as opposed to advisory or regulatory bodies. The
arguments regarding advisory and regulatory bodies are in some
ways similar, and indeed even stronger with regard to the need
for appropriate distance between elected politicians and specific
judgements. But the main focus here is on "service delivery"
agencies of various types, some of which combine delivery, advisory
and regulatory functions (eg tax collection agencies).
DEFINITIONAL ISSUES
AND THE
BIG PICTURE
The governments' review of quangos has concentrated
almost exclusively on NDPBs, which are only one class of what
the Institute for Government have chosen to call "arms-length
bodies" (ALBs). There has been a great deal of international
policy-maker and academic debate about how to precisely classify
such bodies, but however they are defined it is obvious that all
advanced democracies, and many other states too, make use of a
variety of organisational forms that are outside of traditional
"ministry" type structures.
In the UK, it is quite clear that some of the
distinctions between classes of organisations are both blurred
and often unhelpful. For example, by the mid-1990s the only major
difference between civil service "Executive Agencies"
and "Executive NDPBs" was their legal status—both
had been reconfigured along "Next Steps" lines (more
about which below under "managerial reasons").
For ease I will use the term "arms-length
bodies" or ALBs for the whole category and quangos or NDPBs
for the specific sub-set which the Government have considered
in their review.
I will concentrate in the paper on issues to
do with why, and how, ALBs can best be established and organised
rather than on the tests that should be applied as to whether
the function they organise should be done by government at all.
Most ALBs will still be with us after the current cull, and we
should be thinking about why that is and how best to manage them,
not just focussing on how to get rid of them, which has proved
(yet again) far harder in reality than in rhetoric.
POLITICAL REASONS
FOR HAVING
ALBS.
There are numerous reasons why all OECD countries
have a plethora of ALBs, the most fundamental of which have to
do with the nature of representative democratic systems.
Political scientists have developed the idea
of "losers consent"—the notion that for democracy
to function those parties and voters who "lost" elections
have to agree to go along with the decisions of the "winners".
They have to obey the laws, pay the taxes and abide by regulations
they themselves may oppose. In order to maintain this consent
an important aspect of public administration has evolved—the
idea of a neutral public administrative apparatus that is simultaneously
under majority democratic rule but also represents a more universal,
apolitical, "public interest" that embraces both majority
and minority.
All public bodies—from the civil service
through to public corporations—embed this basic tension
between democratic responsiveness and universal appeal to some
extent, but with slightly different balances, often related to
just how distant they are from direct political control.
Typically, for example, police forces and tax
collection agencies are more "neutral", at greater arms-length,
from elected politicians than say education or health functions.
But each has to balance democratic responsiveness against a more
universalistic public interest.
As I have argued previously to this Committee[8],
this creates what has been called a "conservator" role
for public servants—sometimes having to defend public bodies
against the inappropriate, illegal or unconstitutional exercise
of political power. Public servants have to be able to say both
"yes, minister" and "no, Minister", appropriately.
As I said in oral evidence to the Committee,
probably the most common public function in OECD countries to
be organised on an ALB basis is tax collection, for very good
reasons. A strong ALB status prevents elected politicians from
"getting their hands in the till" (as still happens
in some countries) or interfering in individual tax decisions
to advantage or disadvantage individuals (see for example some
recent reported cases in Russia). That is why HM Revenue and Customs
and its predecessors were not only "non-Ministerial Departments"
(NMDs) but also the only large public bodies in Whitehall established,
like NDPBs, on a statutory basis. One of the reasons we have a
relatively high level of tax compliance (as contrasted to countries
like, say, Greece or Italy) is precisely because we have managed
to maintain this clear "public interest" status of our
tax collection system. In my view, these fundamental advantages
of having varying degrees of "arms-length-ness" to our
public bodies is too often neglected in debates, especially about
quangos.
A related function of ALBs is to provide a degree
of "check and balance" within the policy-making processes
within Government. ALBs are often used as a means of bringing
expert and/or independent opinion into decision processes, and
in some cases (regulatory ALBs) even delegating some decision
making to them. This sometimes includes, to use the tax example
again, the detailed interpretation of laws independent of direct
political control. This is a neglected aspect of what in the USA
is often called the "separation of powers" but is in
reality the distribution and duplication of powers to ensure there
are checks and balances against arbitrary exercise of power. This
is a legitimate, and unavoidable, cost of democracy.
This aspect of ALBs often leads to confusion
over the so-called "duplication" of functions between
ALBs and Ministries. This arose, for example, the case of some
of the larger executive agencies such as prisons, employment,
and benefits. There was considerable debate over whether Ministries,
or agencies, or both should have policy functions. In practice
in most cases it was both, regardless of the formal arrangements,
and for good reasons. Policy analysis driven by "delivery"
agencies had a very different, and valuable, perspective to that
driven by Ministry HQs, and both had strengths and weaknesses.
It can be argued that Ministers are better served by hearing advice
from both perspectives rather than just one or the other.
Finally, ALBs were created in the form of "Next
Steps" agencies as a way of addressing the problem of diffuse
accountability between Ministers at the top of departments and
service delivery units, of various shapes, sizes and importance,
within departments. The whole "Next Steps" philosophy—as
applied to both agencies and executive NDPBs—revolved around
the notion that having a direct "line of sight" between
Ministers and various delivery bodies would improve the accountability
of the latter to the former.
MANAGERIAL REASONS
FOR HAVING
ALBS
The "Next Steps" report (1988) set
out cogently the reasons that Whitehall departments were generally
bad at organising the delivery of those public services for which
they had direct managerial responsibility. Mandarins tended to
look upwards to Ministers and policy-making, rather than downward
to delivery and performance. The chain of command within complex,
multi-functional, Ministries often meant it was very difficult
to really hold specific functions to account, or to steer them
in required directions.
The solution adopted—Next Steps "agencies"—tried
to overcome these problems by creating a new ALB form. Each agency
had a Chief Executive who usually reported directly to Ministers,
a foundational "framework document", publicly reported
key performance targets and business plans approved by Ministers,
and crucially operational freedoms over internal organisation,
personnel and financial arrangements. At the height of the Next
Steps programme about 140 such agencies had been created, employing
about 80% of civil servants.
Unlike NDPBs, agencies had no legal status separate
from that of their department (which also in most cases had no
specific statutory basis) and agency staff were still civil servants.
But the agency principles above were soon extended to executive
NDPBs and the differences between agencies and executive NDPBs
narrowed considerably as a result.
The justification for all of this was that these
"agenificified" ALBs could concentrate on "the
job to be done" and adopt more flexible internal arrangements
to achieve their aims. They would be freed from "one size
fits all" constraints and give managers the freedom to manage,
whilst be held tightly to account through performance targets
and ring-fenced budgets. Similar arguments are currently being
advanced in support of more autonomy for schools or GP commission
consortia.
The Next Steps principles were not without their
problems or critics (myself being one of the latter, hopefully
constructively) but the underlying rationale of creating more
focussed, clearly defined, organisations with clear remits, freedoms
and responsibilities would, it was claimed, be both more accountable
and more efficient and effective.
These principles seem to have been largely forgotten
or disregarded in the current review of NDPBs. The argument that
bringing functions back within Ministries from NDPBs will somehow
"increase accountability", for example, runs completely
contrary to the idea that the Next Steps style reforms of executive
NDPBs increased accountability and avoided the problems identified
in the Next Steps report. It is entirely unclear on what this
policy reversal is based.
RADICAL REDESIGN
OR ADMINISTRATIVE
TINKERING?
One of the problems with the somewhat rushed
review of NDPBs by the current government is that it has failed
to take a broader and deeper look at the whole landscape of ALBs
and think seriously about the scope for reform.
There is a great deal of randomness and historical
accident about what functions have ended up where in the British
state. Why tax collection, benefits payments, prisons and job-centres
should all be central government and civil service functions is
unclear. In all these cases there are examples of radically different
distributions of functions in different OECD[9]
countries that appear to work well. Equally, why some bodies are
NDPBs rather than agencies, or indeed public corporations, is
often unclear.
Tax collection is most often organised nationally,
in a "strong" ALB form, but in Denmark it is organised
through local government, which also distributes most benefits.
The Government has decided to "nationalise" housing
benefits, taking away from local government its single biggest
benefits function without it appears any consideration of alternatives.
The proposed mainly centralised, and on-line, organisation for
Universal Credit ignores some of the negative administrative lessons
of the Child Support Agency, where remoteness and difficulty of
access were major factors in stoking up resentment against the
Agency.
In many countries prisons, for example, are
split between national and local systems (and indeed we have two
local systems in Scotland and Northern Ireland). There is a strong
argument that for minor offenders on short-term sentences (the
majority), having a strongly integrated local prisons and probation
regime makes much more sense than a somewhat impersonal national
system. I merely cite this as an example of where serious thought
to radical alternative designs might be considered that perhaps
would offer much better solutions to the problems public bodies
are set up to tackle.
Governments have often shied away from really
fundamental reviews of the whole system of public administration.
When the "Next Steps" review was published in 1988,
for example, it recommended that executive functions might be
considered for agency, NDPB or public corporation status, or indeed
abolition or privatisation. In practice, between 1988 and the
mid-1990s only "executive agencies" were created and
no functions were transferred to any other status, limiting the
scope of the reorganisation of central government functions substantially.
A few agencies were in turn privatised in the mid-90s, but they
were mainly very small and were effectively replaced by new agency
creations (eg EPA and MHS).
It is true that the Next Steps principles were
later extended to executive NDPBs, and also applied internally
within HM Revenue and Customs and Inland Revenue, but these were
systemic rather than structural changes. There was no wholesale
review of where functions should be located, or why, as part of
the "Next Steps" process between 1988 and the mid-1990s.
PROBLEMS OF
ACCOUNTABILITY AND
MANAGEMENT
All of this is not to say that there are no
difficulties about the "arms-length" model. ALBs offer
a different model of both accountability and management and the
two most common problems focus on these two dimensions.
The "Next Steps" approach focused
on creating a new, much more direct, line of accountability between
elected politicians and agency managers (and much of this machinery
was later applied also to executive NDPBs). The whole paraphernalia
of Framework Documents, Key Performance Indicators, business and
corporate plans—all of which were usually signed off (at
least formally) by Ministers—was meant to hold Agency Chief
Executives directly accountable to their Ministers. It soon became
apparent that this approach had limitations—firstly, for
many small, politically unimportant agencies the relationship
between Minister and Agency CE existed on paper but not in reality;
secondly, in a few cases of larger, more politically salient agencies,
the quasi-contractual relationship clearly broke down (eg the
prisons crisis in 1996). Although these problems are not insurmountable,
they do present challenges that have still not been fully addressed.
The managerial problems stem largely from the
difficulties experienced in the centres of departments in effectively
managing ALBs. Our research in a number of countries demonstrated
some fairly common failings:
— the centres of ministries found it difficult
to adopt an "adult" or "strategic" relationship
with their ALBs, often either resorting to over-controlling micromanagement
(the authoritarian parent) or a "hands-off" approach
bordering on a lack of interest (the liberal parent);
— Ministries often had a bewildering set
of different relationships with a myriad of different types of
ALBs and understanding and switching between the differing requirements
proved extremely challenging;
— Within Ministries there were often confusing
and complex sets of relationships with ALBs, with multiple points
of contact and attempts at "steering" various aspects
of ALBs behaviour (eg by different functions within the Ministry—personnel,
finance, operations, policy, etc);
— Problems of coordination and "turf-wars"
between agencies with overlapping responsibilities often arose—it
was not just in Britain that the issue of "joined-up government"
came to the fore as more ALBs were created;
This is not a complete list, but it does suggest
some of the difficulties.
CONCLUSION
ALBs are not perfect—like all other forms
of public administration they have strengths and weaknesses. Nor
are there any obvious universal formulae or prescriptions that
would say when ALBs are an appropriate form of organisation as
against any other.
A review which starts from the premise that
ALBs are inherently "wrong" in some way is however itself
deeply flawed. It ognores the very good reasons many ALBs were
established in the first place. History demonstrates such "reviews"
often deliver far less in reduction of ALB numbers and costs than
at first envisaged. Moreover the trend has been for ALB numbers
to grow again within a few years, as the original drivers for
their creation reassert themselves.
The current government has shown itself willing
to consider radical change in other areas (eg education, health
and welfare benefits). It is a pity it has not considered a more
thorough, principle-based, careful and long-term reform of the
ALB landscape that just might deliver real, enduring, benefits.
BIBLIOGRAPHYJohnson
(Talbot), C L and C R Talbot (2007). "Seasonal Variations
in Public Management: disaggregation and reaggregation."
Public Money & Management 27 (1).
Pollitt, C and C Talbot, Eds. (2004). Unbundled
Government: A Critical Analysis of the Global Trend to Agencies,
Quangos and Contractualisation. London, Routledge.
Pollitt, C, C Talbot, et al. (2004). Agencies—How
Government's Do Things Through Semi-Autonomous Organisations,
Palgrave.
Talbot, C (2004). "Executive Agencies: Have
They Improved Management in Government?" Public Money
& Management 24 (2): 104-112.
Talbot, C (2002). So Who Needs Agencies? Pontypridd,
University of Glamorgan (for UK Department of International Development).
Talbot, C and J Caulfield, Eds. (2002). Hard Agencies
in Soft States. Pontypridd, University of Glamorgan (for UK
Department of International Development).
Talbot, C (1997). "UK Civil Service Personnel
Reforms: Devolution, Decentralisation and Delusion." Public
Policy and Administration 12 (4).
Talbot, C (1996). Ministers and Agencies: Control,
Performance and Accountability. London, CIPFA.
December 2010
7 For example, my colleague Professor Christopher Pollitt
and I led two major comparative research projects a decade ago
looking at "agencies" in the UK, Netherlands, Sweden
and Finland (funded by ESRC) and in Jamaica, Tanzania and Latvia
(funded by DfID). Back
8
In my evidence to the professional Skills for Government Inquiry. Back
9
I will use "OECD countries" as an approximate synonym
for "advanced democracies". Back
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