House of Commons - Who's accountable? Relationships between Government and arm's-length bodies

Who's accountable? Relationships between Government and arm's-length bodies - Public Administration Committee Contents

2 Public bodies in the UK: a taxonomy

7. Opinions differ on the number of different types of public body. The Institute for Government told us there are at least 11.[8] The National Audit Office reported in February 2014 that the Government had so far achieved a major simplification of the system of public bodies, but that even after all planned reforms have been completed, the system will still be complex.[9] And confusing: discussion about public bodies is made all the more confusing by inconsistency in the use of language, as we concluded in 2011.[10] During this inquiry, the then Minister for Civil Society, Nick Hurd MP, acknowledged:

8. According to the Cabinet Office, policy responsibility for the governance and accountability structures of non-ministerial departments, executive agencies and non-departmental public bodies (NDPBs) has been consolidated in a single team.[12] However, policy for machinery of Government changes and policy for public appointments are held in separate Cabinet Office teams, and financial and Accounting Officer policy remains with HM Treasury.[13]

9. Nick Hurd MP recognised that "the system is full of anachronisms and anomalies".[14] There are irregularities in what type of body performs which function, and in what they are called. Some bodies are classed as being of more than one type: Ordnance Survey is a non-ministerial department with executive agency status.[15] Some bodies, such as the Big Lottery Fund, report to more than one government department.[16] The Environment Agency is not an executive agency as its name would suggest, but in fact an NDPB. Tom Gash of the Institute for Government said this was "odd" and "confusing".[17] The de facto and de jure statuses of public bodies sometimes differ.[18] For example, the Environment Agency's recent triennial review concluded that oversight of the Agency was now the same as for an executive agency. The Care Quality Commission (CQC) and Ofsted are both inspectorates. The CQC inspects health and social care services in England, and Ofsted performs a parallel role inspecting children's services.[19] However the CQC is an NDPB, and Ofsted is a non-ministerial department. The reasons for this difference are not clear.[20] It is also not clear to what extent each is intended to be under the influence of the minister in order to support government policy, or independent of ministerial influence in order that its regulatory functions are not seen as subject to political influence.

10. The National Audit Office has stated that there is little consistency in the way government departments delegate their functions to public bodies:

In practice, the difference is managerial rather than functional, as Professor Skelcher, Dr Dommett and Dr Tonkiss of the Universities of Birmingham and Sheffield explained. Ministers and departments have much greater control over the organisation and management of executive agencies because they do not have a basis in statute, unlike NDPBs.[22]

11. 'Public Bodies', an annual Cabinet Office publication, is welcome but falls short of a 'directory' or 'census' of Government, Professor Skelcher told us.[23] The Whole of Government Accounts show in a single document the overall financial position of the UK public sector, and are a key means for holding Government to account.[24] There is no clear, simple map of the state, of central government departments and its arm's-length bodies.[25] Even though the Cabinet Office is adding executive agencies and most non-ministerial departments to the publication 'Public Bodies', some bodies, such as HM Revenue & Customs, remain excluded.[26] Our predecessor Committee argued as long ago as 1999 and 2001 that it would be valuable to consider the UK's system of arm's length governance as a whole.[27] The 1999 report concluded that the digest should contain how much public money each organisation spends and the origin of these monies, its legal status and the department which sets policy for it, details of appointments, and what information each organisation publishes.[28]

12. The Government has adopted the idea we proposed in 2011 that the next development in reforming public bodies might include a taxonomy setting out their types and characteristics. The Government's Response to our 2011 report agreed that "the landscape [is] chaotic and confusing, as the Committee rightly points out".[29] Nick Hurd MP told us in July 2014 that the "next phase" of reform "must be about pursuing greater simplification".[30] In autumn 2014 the Public Bodies Reform Team in the Cabinet Office was undertaking a review of the classifications used, "to ensure it remains fit for purpose".[31] There are arguments for a taxonomy as an aid to public and internal understanding about what is expected of relationships and this is essential for accountability.[32] The Institute for Government has long argued for "a more rational taxonomy of arm's length bodies, which would closely match an organisation's form and governance to its function".[33] In 2010 it suggested the taxonomy shown in Table 2. Other written evidence, however, urged caution in reducing variety.[34] The world is complicated, and so are public bodies, argued Dr Muiris MacCarthaigh of Queen's University Belfast and Martin O'Halloran, Chair of the Irish Association of Chief Executives of State Agencies:

Table 2: One possible taxonomy of arm's-length bodies[36]

Functions Form

Constitutional oversight Constitutional bodies

Regulatory regime setters
Guarantors of standards
Independent watchdogs
Independent public interest bodies

Discretionary grant-giving
Discretionary enforcement and inspection
Stewardship of national assets
Departmental sponsored bodies

Delegated implementation of government policy Executive agencies

Developing government policy Core departments

13. Accountability for arm's-length bodies is confused, overlapping and neglected, with blurred boundaries and responsibilities. A taxonomy would simplify and rationalise the structure of the state.

14. We recommend the Government adopt a taxonomy of public bodies such as that proposed by the Institute for Government but with more detail to provide for all circumstances, which sets out the legal status of each type and how it is held accountable. All public bodies should be included in one or other category. There should be consistent naming conventions. This simple step, which would improve transparency and accountability, should accompany a new online 'Directory of Governance' of annual reports, budgets, minutes of meetings, and other information of value to the public. There is a huge opportunity for the Government to make the British state more transparent and understandable.

8 Institute for Government (QPD9) Back

9 National Audit Office, Progress on public bodies reform, HC (2013-2014) 1048 Back

10 Public Administration Select Committee, Fifth Report of Session 2010-11, Smaller Government: Shrinking the Quango State, HC 537, March 2011 Back

11 Q398 Back

12 Cabinet Office (QDP14) Back

13 Cabinet Office, Public Bodies Reform Strategy Document, July 2014 Back

14 Q 404 [Nick Hurd MP] Back

15 National Audit Office, Progress on public bodies reform, HC (2013-2014) 1048 Back

16 The Cabinet Office and the Department for Culture, Media and Sport Back

17 Q9 Back

18 Qq 151-155 [the UK Border Agency was described by Rob Whiteman as having officially been an executive agency but unofficially part of the Home Office] Back

19 Q7 [Professor Skelcher] Back