Both major parties have pledged war on the proliferating numbers of public bodies; in the current economic climate, their future looks bleak. Matthew O’Toole reports from a sobering conference on the prospects for quangos
Everyone in the public sector workforce faces an uncertain future, but for those employed by the large swathe of organisations operating at ‘arm’s length’ from central government, the horizon is particularly cloudy. Both major parties have pledged to clamp down on the numbers and cost of non-departmental public bodies.
Chief Secretary to the Treasury Liam Byrne launched a review into the number of arm’s-length bodies last July; his announcement came hard on the heels of Conservative proposals that all quangos would have to justify their existence by fulfilling certain criteria.
So how do arm’s-length bodies themselves, and the departments which sponsor them, feel about the prospect of a mass cull? And if cuts in their numbers and budgets are inevitable, how can these best be implemented? Those were the central concerns for delegates at a recent Civil Service World conference, sponsored by Locate in Birmingham and entitled, with perhaps a touch of ironic understatement: ‘New Year, New Challenges’.
Tory hostility
“We have a burning platform; the flames are licking merrily around the ankles of people involved in the delivery of public services,” shadow Cabinet Office minister Francis Maude told delegates at the conference. Maude, who is leading on civil service and government reform issues for the opposition, reiterated that a prospective Conservative government would apply the same “fairly straightforward” test to all arm’s-length bodies, based on three questions. Is the function technical? Does it need to be politically impartial? And do facts need to be determined transparently?
In the past, Maude has proved himself unafraid to make broad-brush criticisms of the public sector. He was no different at this conference, lamenting poor productivity in public organisations: he pointedly told his audience that “quangos which do not meet one of those tests can expect to be brought back into government so that accountability can rest with ministers”. Those left unscathed, the shadow minister said, should expect to be subjected to the same level of scrutiny over public expenditure – including disclosure of spending over £25,000 and tightened corporate governance – as Whitehall itself.
The pointedness was reciprocated; at least by one delegate, who asked Maude whether his party had a specific number of non-departmental bodies it wished to cull, or even an estimate of how much could be saved from their budgets. “It’s hard to be specific,” Maude said frankly. “It’s very hard actually to get a hard number of how many quangos exist, because there are huge numbers of categories and the categories move around. But we think there are savings to be made.”
Given his coyness over getting specific, Maude may be interested in the research being carried out by an Institute for Government (IfG) duo, who also took to the platform at the conference: Jill Rutter, currently on secondment at the IfG from the environment department – where she is strategy director – and Tom Gash, a former policy adviser in the Number 10 Strategy Unit.
Gash and Rutter struck a more emollient tone than the Conservative, telling the audience that the debate over public bodies took place in a “very politicised manner”, and frequently ignored complexities. For example, highlighting the total spend by non-departmental public bodies was deceptive, Gash said, because roughly three quarters of the money is spent by just seven (out of more than 700) non-departmental public bodies (NDPBs). “The numbers debate seems kind of confused,” Gash said, adding that 75 per cent of NDPB spending is awarded in grants based on government policy, not taken up by organisational costs.
What’s more, the IfG fellow said, evidence can only “take you so far” in assessing the effectiveness of arm’s-length bodies: questions over quangos’ efficiency may ultimately boil down to different philosophies of government. “[Your view on] the number of arm’s-length bodies will depend to a certain extent on your view of the role of the state,” he said. “A new administration may decide that certain functions can be performed in the private or voluntary sector.”
Clearer classification
Though their findings are far from complete, the IfG pair did help to spark a provocative debate on how management of arm’s-length bodies could be improved. Rutter suggested a “clearer taxonomy” over how bodies are classified, since the number of different types of organisation – and the fact that even bodies of the same type often behave very differently – has produced a very confusing organisational landscape.
Though this approach could be criticised as rather pointless “tidy-mindedness”, Rutter admitted, more clarity would improve democratic accountability and aid efficiency. A regular process of “light touch, health check-style” assessments of bodies, designed to establish whether an organisation is fulfilling its aims effectively, could also help.
If such reviews prompt bigger concerns, she said, then deeper “form and focus” studies could be instigated to examine the logic behind the body’s existence. Such studies should examine the teams in departments that oversee public bodies as well as the bodies themselves, she argued. Currently, she said, these teams lack status: “Sponsorship is not seen as somewhere to get on and get up within departments”.
Conveniently enough, something approximating to a form and focus review of the Legal Services Commission (LSC), the Ministry of Justice (MoJ)-sponsored body which oversees legal aid, was published on the day of the conference. The study, led by former senior official Sir Ian Magee, recommended that the NDPB – criticised for its handling of the £2.1bn legal aid budget – be subsumed back into the department, in the form of a new executive agency more accountable to ministers. Thus the conference was addressed by the soon-to-be-ex-chair of the LSC, Sir Bill Callaghan, who announced the resignation of chief executive Carolyn Regan.
The abolition of the LSC acted as a stark illustration of the possible future facing many public bodies. One of the criticisms of the LSC had been that it had ventured too far into the realm of making policy. And at least, Callaghan said, in the new world there would be “less time [spent] having disagreements with the MoJ, and more time to focus on delivery”.
Lessons in cuts
If Callaghan’s presentation had left any doubts in delegates’ minds about the alacrity with which bodies might be despatched, they were removed by former Labour health minister Lord Warner. Warner oversaw a review and subsequent cut in the number of Department of Health-sponsored arm’s-length bodies in 2003-04, having implemented a similar scheme as a civil servant in the department 25 years earlier.
“The [2003-04] exercise,” Warner brusquely told the conference, “was a classic example of how public sector bureaucracies have a life of their own and are pretty effective at resisting change.” Crucial to realising the savings demanded, he said, was the buy-in of a cabinet-level minister, and absolute clarity over aims. Returning to a theme touched on by Jill Rutter of the IfG, he said that very often the relationship between bodies and the sponsoring departments is imbalanced because those officials working on sponsorship are usually at grade six or seven – “relatively far down the food chain”.
That astringent remark visibly ruffled feathers in the room – presumably mainly those of grade six and seven civil servants – but in truth the day had become one for increasingly frank remarks. Dame Suzi Leather, chair of the Charity Commission – and much maligned by tabloids as a “quango queen” – was during 2003-04 chair of the Human Fertilisation and Embryology Authority, one of the health quangos Warner was working to abolish – in that instance, without success.
She told delegates that public body leaders will need to possess “emotional skills” to help staff get through the coming years, but added frankly that efficiencies can only take organisations so far. For the Charity Commission, she said, funding pressures may result in straightforwardly reducing services. “The next year and the year after may require a complete change of gear,” she said.
As for those bodies facing extinction, blunt words of advice came from Sheffield University’s Matthew Flinders, an expert on the subject of public bodies. First, he said, they must “be seen by ministers to be flexible and positive”. Second, and perhaps more importantly, he urged quango chiefs to get an A4 piece of paper and write “one page of justification” for the organisation’s existence. Cue the sound of pencils being sharpened throughout quangoland.
What they said:
Jane Platt, conference chair and chief executive of National Savings & Investments
“I have prepared four different streams in which the business could go, and I have plans for each of them. That’s a range of options that, whoever asks the question, I can present in a logical and clear way.”
Francis Maude, shadow Cabinet Office minister
“We believe that, in general, where public money is being spent and public functions discharged, the presumption should be that those are exercised by bodies which are directly accountable to ministers and, through ministers, to Parliament.”
Matthew Flinders, Professor of government at Sheffield University
“I was unconvinced that Francis Maude had much of an idea about public bodies at all. The three tests seemed incredibly opaque, and as many bodies could move in or out as a minister wanted.”