This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
Date Published: 24 September 2021
Arm’s-length bodies (ALBs) are a vital part of how the UK government delivers policies and public services. It is important that they are accountable, transparent and that their responsibilities are clear because they deliver significant services to the public and are responsible for spending approximately £265bn a year of taxpayers’ money. But too often departments are not giving detailed thought or interest in the implications of the structure of an arms-length body, on policy and accountability to the sponsoring department, and the citizen.
When this Committee last reported on ALBs in 2016, we called for the Cabinet Office to use its unique position at the centre of government “to ensure that departments improve the way they manage their business through arm’s-length bodies”. Progress since then however has been limited. Whilst the publication of a Code of Good Practice setting out common principles for effective working between ALBs and their departments has added some rigour to the process, the Cabinet Office does little to monitor whether its guidance is actually being followed by departments. The Cabinet Office fell well short of its 2016 ambition to review the form and function of every ALB by the end of 2020 and is still finalising a new public bodies programme for 2021 onwards.
The Cabinet Office has also not been enforcing the code for public appointments. This gives rise to real risks around the transparency and accountability of the public appointments process and as consequence impacting the reputations of the ALBs they lead. We welcome the steps being taken to develop a new system for tracking applications to public appointed roles, in addition to shining a greater light on ALBs the system should collect and show data on diversity to support future appointments.
Finally, improvements are needed in how government creates business cases for new ALBs. In recent years business cases for new ALBs have regularly been approved despite departments not including all the important information required by the Cabinet Office, such as proper assessment of risk and the costs and benefits of setting up an ALB. Framework agreements, which govern the relationship between a sponsor department and its ALB, are often out of date and not refreshed on a timely basis. These failures lead to real risks in the governance and accountability of ALBs and consequently to how government delivers its objectives. If there is ever to be real progress in the governance of ALBs, the Cabinet Office must place greater emphasis on ensuring these business plans are correct and in order rather than trying to reform an ALB once established.