CHAPTER 5: ARM'S-LENGTH BODIES
101. Arm's-length bodies (ALBs) have been a common
feature of the UK executive, especially since the introduction
of "next steps agencies" in the 1980s. Several hundred
such bodies exist,[131]
and there are questions about their constitutional accountability.
A factor which prompted our inquiry was the controversy which
arose from the House of Commons Public Accounts Committee's questioning
of senior HMRC officials.[132]
Some of the more notable features of that dispute from a constitutional
perspective stemmed from HMRC's status as an ALB. Another dispute
about the accountability of officials in an ALB arose in November
2011, when Brodie Clark, the head of the UK Border Force (part
of the UK Border Agency, an executive agency of the Home Office),
was suspended over the relaxation of border controls for certain
non-EU citizens. The Home Secretary said the decision had been
taken without her knowledge.[133]
Overview of arm's-length bodies
102. Throughout this chapter we use the term
ALB to denote a public body other than a department of state under
the direct leadership of a Cabinet minister. ALBs include a vast
range of public bodies, of varying degrees of removal from ministerial
control, and subject to a range of internal and external accountability
mechanisms. Three broad categories are identified in box 3.
103. There are common features to the accountability
arrangements of all ALBs. All such bodies will have a sponsoring
minister, who is constitutionally responsible to Parliament for
the body's work. All ALBs have Accounting Officers (usually the
ALB's chief executive), who are directly accountable to Parliament
(via the House of Commons Public Accounts Committee) in the same
way as the Accounting Officer of a standard ministerial department.
ALBs have boards, containing non-executive and executive directors,
to whom the chief executive is also accountable.[134]
Both the chairs and the chief executives of ALBs can be called
to give evidence to parliamentary select committees; in terms
of accountability this is a significant benefit of ALBs.
BOX 3
Types of arm's-length bodies
(1) Non-ministerial departments are not led directly by a minister; rather, they are led by a chief executive and by a board consisting of executive and non-executive directors. Examples include HM Revenue and Customs, and the Office of Fair Trading.
(2) Executive agencies are: "created to enable executive functions within government to be carried out by a well-defined business unit with a clear focus on delivering specified outputs within a framework of accountability to ministers."[135] Executive agencies are governed by framework agreements, which set out in detail the division of responsibilities between the agency and the sponsoring central government department. They do not determine policy: rather, they implement the policies set by their sponsoring departments. Examples include the UK Border Agency and the Met Office.[136]
(3) Non-departmental public bodies are not government departments; rather, they have distinct legal personalities separate from the Crown, and their employees are not civil servants. As with executive agencies, non-departmental public bodies operate within strategic frameworks set by ministers.[137] Examples include the Health and Safety Executive and English Heritage.
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104. A wide range of bodies fall within each
of the three categories, and the accountability arrangements of
such bodies can vary greatly. We heard evidence that the number
of different types of ALBs, together with the complexity of other
government structures, leads to confusion amongst those trying
to understand how government works. Moreover, it can cloud what
otherwise might be clear lines of accountability.[138]
105. The solution identified by some witnesses
was for the Government to produce a map of the state. Lord Hennessy
of Nympsfield believed that the production of such a document
would be: "a great service to every select committee."[139]
Professor Talbot agreed, pointing out that it is done in
most other OECD countries and that in Australia a map of the institutions
of the central government is contained on two sides of A4.[140]
106. We recommend that the Government publish,
maintain and make available to Parliament a full diagram of the
central state, similar to an organisational chart.
Distancing ministers from decisions
107. A common reason for creating an ALB is that
the nature of the decisions taken makes it inappropriate for ministers
to be directly involved in the oversight of those decisions. ALBs
set up in such cases are often designed to support statutory office-holders,
to whom the decision-making power is delegated by law. A classic
example of this is individual tax decisions. Mike Clasper, non-executive
chairman of HM Revenue and Customs, explained
"in an individual tax situation, the commissioners
of HMRC, of which the accounting officer is one, are charged with
interpreting the policy and the law in that particular case as
to what is the right tax due and then to collect the tax
that separation is quite important, because it means that the
actual affairs of individuals and companies are not politicised
through the tax system."[141]
108. A similar situation occurs in relation to
individual prosecution decisions in criminal matters, and to regulatory
decisions taken by the statutory regulators of certain industries
(such as energy or telecommunications). In such cases, there is
a clear constitutional need to maintain a separation between ministers
and decision-makers.
The policy-implementation divide
109. Another justification for establishing an
ALB is that the implementation of a particular policy is clearly
separate from the formulation of the policy. In such
cases, it is argued, there can be clearer, enhanced accountability
by creating a separate delivery body.
110. Several of our witnesses thought that, where
a clean separation between policy and implementation is possible,
the creation of an ALB to take responsibility for implementation
is efficient and effective. Lord O'Donnell told us that the central
issue in relation to ALBs is clarity: "the really important
bit is: [whether it is possible to] define and be clear about
who is accountable for what".[142]
111. It seems, therefore, that the success or
otherwise of an ALB is strongly linked to the clarity with which
its objectives and purposes are defined. We heard evidence, however,
that suggested that such clean definition is not always possible.
Lord Turnbull explained that, even in cases where failures were
clearly operational, the underlying reasons for such failures
are often related to the availability of resources, which is a
policy matter. In this way, ministers can become entangled in
what are at first glance clearly delegated areas of implementation.[143]
It may also be that matters which are, on a technical level, purely
concerned with implementation are nonetheless extremely politically
sensitive, such that ministers will on occasion wish to retain
control over them.[144]
112. We also heard evidence that, even where
a split between policy and implementation is possible and desirable,
the accountability of the minister to Parliament for implementation
remains intact. Penny Ciniewicz, chief executive of the Valuation
Office Agency, stressed that the minister is ultimately accountable
to Parliament for the work of the VOA, and that her duties as
chief executive were performed in support of the minister's accountability.[145]
113. The accountability mechanisms of ALBs
are a supplement to ministers' constitutional responsibility to
Parliament, not a replacement for it. The primary means by which
public servants in ALBs are held to account is via the convention
of individual ministerial responsibility.
131 This is after some were abolished under the Public
Bodies Act 2011. Back
132
See Public Accounts Committee, 61st report (2010-12): HM Revenue
& Customs 2010-11 Accounts: tax disputes (HC 1531). Back
133
See HC Deb, 7 November 2011, cols 44-46. Mr Clark later resigned,
claiming comments made by the Home Secretary amounted to constructive
dismissal. Back
134
Q 191. Back
135
Executive Agencies: A Guide for Departments (Cabinet Office),
p 1. Back
136
To add to the complexity, executive agencies can be sponsored
by another ALB: for example, the Valuation Office Agency is an
executive agency of HM Revenue and Customs (a non-ministerial
department), and the Office of Nuclear Regulation is an executive
agency of the Health and Safety Executive (a non-departmental
public body). Back
137
Machinery of Government Changes: Best Practice Handbook
(Cabinet Office), p 9. Back
138
QQ 135-136; Talbot. Back
139
Q 135. Back
140
Q 136. Back
141
Q 191. Back
142
Q 279. Lord Butler of Brockwell agreed (Q 296). Back
143
Q 273. Back
144
Q 281. Back
145
Q 197. Back
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