Last year, the coalition cut back many branches of government in its 'bonfire of the quangos'. Joshua Chambers looks at how officials can integrate some of the staff and functions of dismembered quangos into their departments.
The word ‘quango’ sounds like it should refer to a rare, plump, pleasant-tasting fruit – perhaps one found only on the south side of a faraway mountain. However, unless you’ve been living on the south side of said faraway mountain yourself, you will know that quangos (a phrase which has come to refer to any non-departmental public body) are viewed by the coalition government as a common and intrusive weed that is engulfing and engorging the public sector.
Last year, Cabinet Office minister Francis Maude took out his shears and pruned the quangocracy back to the roots, before burning the branches in his ‘bonfire of the quangos’. This is all very well, but it leaves civil servants with the problem of absorbing some of their functions as spending cuts start to take effect. CSW therefore offers a practical guide for civil servants whose departments find themselves ‘reclaiming’ areas of policy.
A courageous decision, minister?
In an early episode of the hit sitcom Yes Minister, Jim Hacker MP attempts to reform quangos – but ends up getting caught up in a maze of complications, which eventually result in him setting up another quango to assess how best to reform the others.
Fictional, of course – but, as with many other episodes, the message is clear and accurate: quangos are tough to get rid of. Hoping that momentum would help it push through the inevitable opposition, the government moved fast, scrapping many quangos only months after taking power. Out of 901 quangos, 291 had their funding axed and 177 are set to be merged with other organisations by 2012. Others will continue, but many may have their structures reformed.
The pace with which the government moved was criticised, most notably by the Public Administration Select Committee (PASC), which said the moves were “rushed” and wouldn’t lead to significant savings. By that time, Maude had already changed tack and was soft-pedalling the message on cost savings; but last week the Cabinet Office published a rebuttal to the PASC report, defending its plans and arguing that the reform of arm’s-length bodies should lead to £2.6bn of administrative savings over the next Parliament. This is an estimate, though, and may change depending on how many staff transfer into central government departments – and under what conditions they transfer.
PASC also criticised plans to move many quango functions back into central government, saying that “bringing functions back into sponsor departments is likely to undermine other channels of accountability, resulting in less effective accountability and challenge on a day-to-day basis”. But Maude disagrees, and is arguing that “there should be a clear presumption that functions carried out by the state should be accountable through democratically elected structures, unless there is a compelling reason for them being carried out by an independent body.”
Given the tight timescale and big departmental cuts, many civil servants are facing quite a task when reabsorbing quango functions. It may help, then, to refer to a newly-published Cabinet Office checklist and the experiences of three quangos that have been split, merged, or scrapped: the Hearing Aid Council (HAC); the Infrastructure Planning Commission (IPC); and the Sustainable Development Commission (SDC).
Speak to stakeholders
Quangos aren’t isolated and totally autonomous. Instead, they liaise with and rely on charities, businesses and individuals affected by government policy: the so-called ‘stakeholders’. These groups are likely to have opinions and experience which will be useful in shaping government structures: the Cabinet Office advises that departments engage “important stakeholders in the reforms, gathering their expertise and suggestions as appropriate.”
Sandra Verkuyten was chief executive officer of the Hearing Aid Council: a quango which regulated the sale of hearing aids, taking financial contributions from industry to run the organisation. But Verkuyten argues that in fact the public interest was better served by abolishing the body and handing its responsibilities to a set of less specialist public bodies. The abolition of the body “gave a real opportunity for consumer protection; it was absolutely the right thing to do”, she says, explaining that the functions of the organisation were split between the Office of Fair Trading, Trading Standards, and the Health Professions Council.
Verkuyten worked with officials in the business department on the transition, and advises civil servants that in the case of a quango’s abolition “the first thing is to ensure that all of your stakeholders believe that the abolition of the body is the right thing to do.” This may be easier said than done – as some departments have discovered – but she advises that if you “get stakeholder agreement, you can actually get something very positive and proactive out of the abolition.”
In order to win stakeholders over, the Hearing Aid Council worked closely with the voluntary sector right until the quango’s abolition, and therefore was “able to get targeted information for hearing aid users out using charity websites”, Verkuyten says. So service users were kept well-informed via organisations that, she says, acted as “advisers to us so we could tailor absolutely everything to the consumer group”. Charities are very good at explaining changes to ordinary people, she thinks, and should be brought on board where possible.
Such explanations are crucial to a successful handover by abolished quangos: if communication with stakeholders is poorly handed, the whole policy area can suffer. The former chief executive of the Sustainable Development Commission, Andrew Lee, believes that this mistake was made in announcing its abolition; the quango disappears this week. The SDC is part-funded by the Welsh Assembly, the Scottish Government, and the Northern Ireland Assembly as well as the UK’s environment department (Defra), and Lee says there was “no negotiation between Whitehall and the devolved governments” before Defra cut its funding. This created confusion, he says, and delayed the ability of those administrations to decide what measures they would put in place to continue the SDC’s work after its demise.
Lee also criticises the department for failing to engage voluntary groups effectively and keep its stakeholders informed: “They’re making a poor job of it, frankly, and I would say Defra’s relationship with its stakeholders is at a low ebb at the moment compared to where it was a few years ago – particularly in the light of the forestry policy.” CSW repeatedly asked Defra for a comment, but the department could not answer Lee’s criticisms by the time we went to press.
Engage staff (but don’t marry them)
Quangos don’t only have external stakeholders: its staff are just as important as its partners, suppliers, clients and service users. The Cabinet Office advises departments to engage quango staff in making changes to their organisation. It adds that, if the quango is closing, consideration should be given to how many staff can transfer into central government and under what terms and conditions they should transfer.
Verkuyten warns that, as quangos are wound down, they can suffer an exodus of staff that leaves them unable to perform their duties until other players can step in to pick them up. “You’re developing something new, but you’ve got to continue what you’re already doing because people depend on it,” she says.
Transfer arrangements differ from department to department, with permanent secretaries deciding how many staff to take on from disappearing quangos. Currently, the Department for Communities and Local Government (DCLG) is merging the Infrastructure Planning Commission – which is concerned with large-scale infrastructure projects – with the Planning Inspectorate, which handles planning appeals. The IPC’s director of operations, Ian Gambles, explains that the government didn’t want to lose some of the IPC’s key skills, and is thus transferring some staff into DCLG under TUPE regulations.
Staff transfers could easily lead to departments taking on significant additional costs, even while budgets decline. Verkuyten points out that such transfers may prove cheaper than losing people altogether: if essential skills are lost, she points out, then government may end up relying on more expensive consultants and interims. Nonetheless, at the SDC, only two staff out of 60 have transferred into Defra, while there was no formal mechanism to allow staff at the HAC to transfer elsewhere.
Where jobs losses are necessary, the Cabinet Office guidance argues that managers should seek first to lose head count via “natural wastage” (retirements and resignations) before opting for redundancies.
The importance of senior staff (rank not age)
Senior staff at quangos are particularly important in the transition process, because they combine a strategic oversight of the body’s aims with a knowledge of its staff and assets. The Cabinet Office advises departments to consider “whether there is a clear role for the board of that body” in helping to manage the transition process.
DCLG has decided to hire the chair of the Infrastructure Planning Commission, Sir Michael Pitt, to become chief executive of the Planning Inspectorate when the current chief executive retires at the end of this month. The IPC’s commissioners are also moving across: DCLG minister Greg Clark says this will ensure a “seamless transition”. Gambles explains that it’s vital that there aren’t delays introduced by the move and that service doesn’t suffer because of the integration.
To oversee the transition, DCLG has set up an integration board chaired by its director-general Richard McCarthy. This board brings together senior representatives from the IPC, DCLG and Planning Inspectorate. Other departments may also want to consider how best to use the experience and advice of senior staff throughout the transition.
Shared services, shared savings
Departments will be particularly interested in the level of savings they can make by closing quangos. The Cabinet Office has given its estimate – £2.6bn – but it will be up to departments to realise that level of savings.
In the case of the Planning Inspectorate and IPC, DCLG has delegated much of this work to people within those organisations on the basis that they will be more familiar with their own processes and assets. In particular, the bodies are looking at property savings – with Sir Michael Pitt chairing a dedicated board on this topic. Both of the organisations are based in the same building in Bristol so, unlike other mergers, the office move should be a simple process; but Gambles talks of an “integration dividend” created by combining communal and corporate spaces. The Cabinet Office advice is clear that Government Property Unit advice should be sought for disposing of quango property: the GPU can help with everything from tax issues to disposal of office furniture through the Office of Government Commerce’s furniture clearing house, it says.
Quango mergers also create a significant opportunity for shared services. For the IPC, Gambles says that savings are emerging in IT, finance, and HR processes. Currently, a business plan is being drafted which will then be put to the department for approval.
Conclusion
The UK’s quangos are experiencing a range of different fates: some will reformed, some merged, some abolished. In the midst of such change, civil servants and ministers are having to decide which of their functions should continue – and, in these cases, who should carry them out. In many cases, even where services are deemed essential, responsibility for delivering them may be passed to the voluntary sector.
An example of this is British Waterways: the organisation responsible for 2,200 miles of Britain’s waterways and canals is being turned into an independent charity, modelling itself on the National Trust. This move has been supported by the body, which has lobbied for the change for two years; the chair Tony Hales called it “excellent news” when speaking to CSW last year (p9, 3 November 2010). Nonetheless, the Public Administration Select Committee has criticised the Cabinet Office for not doing more to devolve powers to the voluntary sector.
In many cases, though, quango functions will end up inside Whitehall departments – a result that meets Maude’s aims of increasing democratic accountability through Parliament, and reducing the overheads associated with running myriad public bodies. have been set tight timetables to merge quangos. So overburdened departmental officials will find themselves taking on additional responsibilities – and often to a tight timetable set by the Cabinet Office.
In practice, though, departments may not always be able to hit these deadlines . Verkuyten explains that her organisation was given three years to disband, but took five – largely because legislation was required. The government “completely underestimated what it means to repeal an act, draft a new bill and get it into the parliamentary timetable,” she says. Because the Public Bodies Bill was changed in the Lords to deny ministers blanket powers to shut quangos, the coalition will encounter similar problems; the merger of the IPC, for example, is reliant on the Localism Bill.
Key to success is proper planning, and the Cabinet Office document begins by asking civil servants whether they have “clear, measurable objectives for the change programme, backed up by an implementation plan?” If quangos have another parallel with rare fruit trees, it is that pruning them is a delicate art. Key to cultivating success is communication with stakeholders, retention of the crucial skills, and engagement with interested parties to help shape the future of quangos’ powers and responsibilities.