Tim Ambler is a writer, academic and Senior Fellow of the Adam Smith Institute.
Westminster governments have for years festooned themselves with public bodies, collectively barnacles on the ship of state. This summer, Michael Gove said, in a much touted speech: “we surely know the machinery of government is no longer equal to the challenges of today.”
The Public Administration Select Committee and the National Audit Office have also complained of the lack of any clear taxonomy of these “arm’s length bodies” (ALBs) and their excess number. To govern well, the Government needs to strip itself of quangos and other bodies that are not part of governing at all.
Over 30 years ago, Robin Ibbs created executive agencies to provide government departments with specialist units to deliver policies. Crucially, their performance should be measured against pre-defined quantified targets and reported annually. They are essentially part of governing.
Other ALBs include quangos – both independent and not independent of government at the same time. Whitehall and ministers are confused by which ALBs are truly part of the executive and which are independent.
Ofqual, for example, is an independent regulator and the Secretary of State should not have overruled its judgement. Public Health England, however, is an executive agency and Matt Hancock was wrong to claim he did not have direct control.
The NHS is, technically, a quango and that is clearly nonsense. If being part of the government is more important, they should be “executive agencies”; if being independent is more important, they should be accountable to another branch of state.
Government, or the “executive”, is only one branch of the state – the others of note here being the legislature and judiciary. Democratic accountability derives from Parliament, our elected representatives; the executive is only democratic to the extent that it is accountable to Parliament.
The word “independent” needs clarification in this context. Individuals and quoted companies are independent of government, but still have to do what the Government tells them to do. Governments govern.
In the case of ALBs, it means managerial independence. Government sets their objectives: what they should achieve, but not how to do so. When Gordon Brown famously gave the Bank of England its independence in 1997, the Chancellor set the objectives (the target rate of inflation), but not how they should be achieved; the setting of interest rates moved from the Treasury to the Bank itself. The BBC’s objectives are laid down in its charter, and the funding, as with all ALBs, is a matter for the government, but the BBC itself has managerial independence. All ALBs falling into this category are “public corporations”.
The Cabinet Office lists 16 “non-ministerial departments” and 185 quangos. In a report released by the Adam Smith Institute today, I propose reclassification as either executive agencies, or as public corporations answerable to a branch of the state other than the executive, merger with another body or its parent department, privatisation, or closure.
Regulators and ombudsmen are also supposed to be fully independent of the executive and should therefore, like the National Audit Office, be answerable to the first branch of the state, namely Parliament. Furthermore, economic regulators were only created to transition their markets from state monopoly to competition and then depart. Ombudsman bodies should take over this function as part of continuing to ensure fair play for consumers. Tribunals should be part of the third branch of the state, namely the judiciary.
This leaves a fourth category: national assets such as parks and museums, which are neither governing us, and therefore should not be part of the executive, nor do they fit into the judiciary.
The legislature is not geared to supervise each one of these bodies. A clear taxonomy for all public bodies demands a further branch of state to supervise these public corporations, here termed “Guardians”. These would be answerable to Parliament, and therefore be democratically accountable.
Commons’ Select Committees already approve the appointment of the chiefs of major ALBs, although some consider they make rather feeble use of that authority. Ideally, both the Government and select committees should agree appointments. The logic of this paper is that the Government should have the casting vote in the case of executive agencies, and select committees in the case of public corporations and other bodies reporting directly to Parliament.
Executives should focus on governing – no easy task. The current Government is considering how it should be streamlined to do so most effectively. This paper, and especially the proposed taxonomy, is a contribution to that discussion. While savings are not the objective of the exercise, we estimate that streamlining the quango state could mean nearly 34,000 people off the taxpayer payroll, and a saving of £3.25 billion a year.
As a result of abolishing all quangos, we are left with the following taxonomy: four branches of the state – Parliament, Government/executive, Judiciary and Guardians, the last three all reporting to Parliament.
In this paper’s analysis, the first group would be 30 (NAO, Ombudsmen and Inspectorates) and the existing 24 Ministerial Departments would remain with 69 executive agencies. 34 tribunal and court services would be added to the Judiciary and the Guardians would supervise 86 public corporations.
This taxonomy clarifies the role of each public body and removes those that should not be part of government. The public have been clear for years that the quango has got to go, today then comes an idea that delivers that and a more accountable system. A more slender and nimble government meets Gove’s call for better government too.