There are approximately 450 arm's-length bodies (ALBs) responsible for investing more than £200 billion per annum of the public’s money – so the efficiency and effectiveness of these bodies is important to government, and to all of us.
Chairs of public bodies will often cite the relationship between their ALB and their department as one of the major influences on the efficiency and effectiveness of their organisation. There is a significant current opportunity to reset expectations and build a stronger, more effective and efficient delivery system. This isn’t a "nice to do" – it’s vital.
MPs on the Public Accounts Committee (PAC) recently published their report on departments’ oversight of arm’s-length bodies. It was the result of an inquiry launched off the back of the National Audit Office’s investigation earlier in July, which compared how the Ministry of Justice, the Department for Environment, Food and Rural Affairs, the Department for Business, Innovation and Skills, and the Department for Culture, Media and Sport managed oversight of their arm’s length bodies. It found significant variety in their approaches.
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The PAC report has produced many positive recommendations, particularly calling for guidance from the Cabinet Office to facilitate more consistent and proportionate levels of oversight across departments, and recognition of the expertise and skills within ALBs.
I welcome the drive to achieve greater consistency in the relationships between departments and ALBs. I have long felt that the current approaches too often reflect history and personal preferences more than the strategic and operational needs of the organisations concerned. This is being thrown into sharp relief in the current climate with the creation of new government departments, which has meant the transfer of some ALBs to new "sponsoring" departments.
The report, however, also focuses heavily on greater scrutiny of ALBs, tightening budgets, developing frameworks; and its overall tone projects the relationship between departments and ALBs as a continuation, maybe even intensification, of a "parent-child" model.
In their 2012 report It Takes Two, the Institute for Government and the Public Chairs’ Forum (PCF) found that trust and mutual respect is central to enabling effective relations between government and ALBs. They called for a relationship which is much more "adult-adult" than "parent-child". If anything, the need is even greater in the current circumstances. PCF members have often spoken of overbearing, disproportionate oversight from departments, which can hinder their ALB’s ability to get on and deliver the services they have been set up for.
This must not be seen as an opportunity just to tighten oversight, but to redefine the relationship between departments and ALBs; to cut out waste and duplication of effort; and to create a new way of working which will benefit service users and the general public. There is a lot of expertise within ALBs and they need the space to be able to use it fully.
This is not to deny the vital importance of oversight in the role of the departments, but a call to recognise that oversight is not the only important part of the role. So while frameworks, guidance and checklists may be helpful in achieving structural reform, so is recognising the important functions of ALBs as partners in delivering the government’s agenda and the level of independence required to be effective, efficient and productive.
In the PAC hearing, John Manzoni, chief executive of the civil service, referred to the need to build a "total delivery system" incorporating departments and ALBs, and I think this is a very important concept. It requires understanding of the value and purpose of ALBs and the importance of working in partnership with them to achieve overall departmental objectives.
The PAC report helpfully recognises the expertise and skills within ALBs and suggests their use in developing policy. As an immediate next step, let’s make sure that leaders of ALBs are fully engaged, as equal partners, in working out how best to take forward the recommendations of the NAO and PAC. I am confident we will end up with a better, more efficient and workable solution as a result of their involvement.