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By Geraint Day

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  1. 1. INSTITUTE OF DIRECTORS PUBLIC SERVICES COMMENT Quangos 1 IntroductionQuangos are a fact of public life. Public services and public bodies are continually under scrutiny.Issues range from the political parties concerns with public service reform, as well as with publicexpenditure and the efficient use of the United Kingdoms resources. Members of the Institute ofDirectors (IoD) have commented on them from time to time.This Comment takes a snapshot of the current state of the quangos in the UK. It also: asks whether the accountability of quangos has always kept pace with moves to strengthen accountability in the business world and other sectors; asks whether some quangos still have a valid role to play; and warns the Government that creating more advisory bodies to consider new challenges such as responses to climate change could be seen as a substitute for practical action. 2 What is a quango?Definitions and numbers may vary according to source, but quangos (quasi-autonomous non-governmental organisations) are organisations whose board members or the equivalent areappointed by government to perform a public function. Quango statistics in 2006 [and in 2004] 883 [839] public bodies sponsored by UK government departments, made up of: 23 public corporations, including 2 broadcasting authorities [9 public corporations and 2 nationalised industries] 1 [1] Bank of England 23 [24] NHS bodies 836 [803] non-departmental public bodies (NDPBs). The 836 [803] NDPBs comprised: 199 [210] executive NDPBs 448 [407] advisory NDPBs 40 [34] tribunal NDPBs 149 [152] independent monitoring boards (formerly known as boards of visitors). There were also 16 [21] task forces, 67 [100] ad hoc advisory groups and 5 [7] reviews. More than 21 thousand people were reported to serve on these public bodies. 1
  2. 2. P U B L I C R U N NV NC E H E A D M M E N T SER II G S CO 1 According to the Cabinet Office publication, Public Bodies 2006, at March 31 of that year there were over 800 such organisations, as shown above, with comparative figures for 2004 [in square 2 brackets]. The Cabinet Office noted in its 2006 publication that there were 27 fewer bodies in 2006 than in 2005, but note that there were 44 more in 2006 than in 2004. Note that the figures above do not include the counts of all the localised public bodies, such as NHS trusts, education and other bodies, of which there are thousands in all. More precisely, in the Cabinet Office compilations some bodies which number dozens or hundreds are counted as one body, e.g. health authorities. However, other subnational bodies, such as the individual Regional Development Agencies, are counted individually. The Government does not tend to use the term quango. The term public body is preferred. Public bodies (or quangos) come in several forms: non-departmental public bodies (NDPBs); public corporations; National Health Service (NHS) bodies; public broadcasting authorities. Continuing this taxonomy a little, NDPBs come in four flavours: executive NDPBs that employ their own staff and set their own budgets; advisory NDPBs, which are usually staffed by people from a sponsoring government department, and normally costs come out of those departments budgets; tribunal NDPBs - which operate in a specialised field of law - usually staffed from a sponsoring department and without their own budgets; independent monitoring boards (previously known as boards of visitors) of the prison system, supported by the sponsoring departments. There are also task forces, ad hoc advisory bodies and reviews undertaken by one or more persons on behalf of government. These are given a specific issue to work on and are disbanded at the end of it. Finally there are very many local bodies such as higher and further education institutions; schools of various sorts; Learning and Skills Councils; registered housing associations; registered social landlords and NHS trusts and other bodies.2
  3. 3. P U B L I C R U N NV NC E H E A D M M E N T SER II G S CONote that none of the above has referred to the mainstream public bodies which rely on thedemocratic process to justify and maintain them. These are primarily the UK Parliament, the ScottishParliament, Welsh Assembly and perhaps soon the Northern Ireland Assembly once more, plus localgovernment authorities, with thousands of elected councillors. There is also - within the NHS inEngland - a new type of local public body known as an NHS foundation trust, which has electionsfor a governing body which acts as part of a two-tier governance model with the rights to appointthe non-executive directors (NEDs) of the trust board.Also excluded from this Comment are government departments and non-ministerial departments 3and executive agencies, as they are departments or parts of government departments.Collectively quangos are responsible for large amounts of public resources. For example, public 4bodies had a gross spending total of more than £167 billion in the year ended 31 March 2006. In 5the year ended 2004-2005 the outturn was £153 billion. For comparison, total local governmentexpenditure on services in the UK for the year 2005-2006 was around £139 billion (estimated 6outturn), and £130 billion in the previous year.Quangos have over the years attracted attention as to numbers and the facts of their creation anddemise. Looking at the period from 1979 and just considering NDPBs, these have reduced from 72167 in number. Over the past quarter century the trend has been to smaller numbers oforganisations. In 1997 the total number of NDPBs was 1128. Since the advent of devolution withinthe UK, the UK Government and the devolved administrations have separate powers over the 8setting up and oversight of public bodies. 3 Public purposesQuangos functions cover many areas of public life. These include the provision of education andhealth services, advising government on issues such as pollution, regulation of business activities,the investigation of complaints and deciding on disputes (as is done by employment tribunals).Government in the 21st Century is not a simple matter, some would say, and therefore there is aneed for flexibility for any government to be able to respond to issues of the day by establishingbodies to provide expertise as it sees fit. Yet government ministries are already able to gain theservices of specialists and others in carrying out their duties, so why go to the trouble and expenseof forming entirely new organisations?An alternative view is that a government sets up a quango to deal with difficult issues or deal withthem in ways that remove them from public gaze. Some quangos seem to exist to deal with rathernebulous issues. Adherents of such a viewpoint might say that examples include the Commissionfor Integrated Transport or the Sustainable Development Commission.Ministries such as the UKs Department for Transport already have responsibilities to help delivertransport improvements, including those around encouraging easier interchange between varioustransport modes. So why set up a public body to discuss the notion? 3
  4. 4. P U B L I C R U N NV NC E H E A D M M E N T SER II G S CO In the field of sustainable development - which seems useful as a way of thinking about how humanity deploys the scarce resources available to it - there are again challenges to be addressed. But setting up a quango to discuss a concept may seem to some people (no doubt of a critical nature) to be not the best way to optimise the use of public resources. Academic institutions, think tanks and a whole host of non-governmental organisations (such as many green groups) exist in abundance, lobbying and working in that area as well as engaging in public discussion. This is not to mention public bodies such as the Royal Commission on Environmental Pollution, the Environment Agency and the Scottish Environmental Protection Agency. There are bodies which, although not stand-alone quangos, amount to standing committees and have paid members. An example is in the Department for Work and Pensions which has a Decision Making Standards Committee, which "is a group of independent experts who advise the chief executives of Jobcentre Plus, The Pension Service and the Disability and Carers Service on 9 improving social security benefit decision making". Although the number of quangos has reduced since 1979 they are still collectively responsible for resources that are comparable to the combined spending of all of UK local government. The trend 10 in public spending on these bodies has been up over the same period. That fact alone gives pause for thought when thinking about public expenditure, efficiency and about issues such as accountability and governance. 4 Accountability of quangos One area of concern relates to the accountability of quangos and of their board members. The IoD is well used to corporate governance issues that affect relations between firms and their shareholders. Directors are accountable to the latter for the stewardship of the business. There have been many developments in corporate governance in the business world in recent years. These, ranging from the outcomes of reports such as the Cadbury and Higgs reports on corporate governance, were intended to strengthen accountability. Some of the principles have been picked up in sectors such as parts of the NHS, with the publication of codes of practice and corporate governance guidance. Not so in all quangos, some would argue. Board members of these public organisations are not elected. Ministers may decide on who serves on a quango board. Although many quangos hold meetings that are open to the public, there is no equivalent to either a shareholders meeting or to the election process for local government councillors. A recent exception to that has been the creation of public benefit corporations - the legal structure that is used in NHS foundation trusts in England. These have a two-tier system of governance. A board of governors (or members council) is drawn from local stakeholders such as foundation trust employees, patients and health interest groups by a mix of election and by nomination. The board of governors appoints the NEDs on the foundation trust board of directors.4
  5. 5. P U B L I C R U N NV NC E H E A D M M E N T SER II G S COOne facet of the world of quangos in general is the fact that some quangos nominate quangomembers to serve on other quangos. That appears to create a perverse form of corporategovernance and accountability that is not easy to unravel. 5 The continued case for quangos?It would be hard to argue that government in any major modern nation should act in isolation.Governments should indeed harness expertise and resources to tackle the issues of the moment,and those of the near and longer-term future. Thus in specialist tasks like advising on allocation ofmonies for research in science, engineering and medicine, there would seem to be sensible reasonsto call upon and even set up separate agencies funded via the public purse. There are the researchcouncils which co-ordinate peer review and support processes which form a key part of scientificendeavour. 11Directors responses to a January 2000 Policy Discussion Paper in IoD Policy about quangos andsimilar public bodies contained some interesting and thoughtful views about this aspect of publicadministration and resource use.In the consultation with IoD members on the case for continuation of quangos at that time theanswer seemed to be a qualified yes. One comment was that they were a good way of gettinginnovative and practical solutions by drawing on skills from outside a "conservative anduncommercial civil service culture". They could also be useful in carrying out activities at arms lengthfrom the government that do not need great political input, such as certain regulatory functions.Others wanted a review of quango numbers, as there seemed to be far too many. It was proposedthat advisory NDPBs be drastically cut, beginning with areas in which specialists could readily besought to give advice to government on individual issues.In the same IoD member consultation there were thought to be some examples of bodies thatperformed well in health, higher education, industrial tribunals and prison visiting. On the other hand,there was a perception that there were quite a few poorly performing bodies that had outlived theiruseful lives. 5
  6. 6. PUBLIC SERVICES COMMENT The weakest link? It can be an easy sport to single out some quangos. Yet governments should not flinch from continual examination of the deployment of public resources, most of which derive from the enterprise and efforts of business. Efficient businesses do not keep in being units which are either inefficient or have outlived their useful purpose. To do so could threaten the very existence of the business as a whole. The same principles should apply to public service reform: lest the concept of public bodies become only as strong as its weakest link. So, notwithstanding the diminution in numbers of quangos and of plans for future mergers, why do these bodies mentioned below exist (to choose just some examples), whatever may have been the reason for their creation? Weblinks are given so that the reader may make an independent judgement on the basis of information available. British Potato Council [sponsored by the Department for Environment, Food and Rural Affairs (Defra)]. This develops and promotes Britains potato industry. See www.potato.org.uk. The Government Hospitality Advisory Committee for the Purchase of Wine (in the Foreign and Commonwealth Office). This advises on the purchase of wine for government hospitality: established in 1922. It has zero expenditure. See page 221 of Public Bodies 2006 (via: w w w. c i v i l s e r v i c e . g o v. u k / o t h e r / a g e n c i e s / p u b l i c a t i o n s / p d f / p u b l i c - bodies/publicbodies2006.pdf). The Millennium Commission [sponsored by the Department for Culture, Media and Sport (DCMS)]. From its website: "The Millennium Commission assisted communities in marking the close of the second millennium and celebrating the start of the third. The Commission used money raised by the National Lottery to encourage projects throughout the nation which enjoyed public support and would be lasting monuments to the achievements and aspirations of the people of the United Kingdom." See www.millennium.gov.uk. School Food Trust (Department for Education and Skills). "Its remit is to transform school food and ... improve the quality of food in schools". See www.schoolfoodtrust.org.uk. Theatres Trust (DCMS) acts as a statutory consultee on planning applications affecting land on which there is a theatre and promote the protection of theatres. See www.theatrestrust.org.uk. Generally, the opinion was that there should be greater openness. One IoD branch discussion led to the comment that, "Just because a Quango has members of the public serving on its committees … or main board, does not mean that it is accessible and accountable". In practice, directors have valuable experience to offer "given their expertise at setting strategic objectives and delivering results - thats real accountability!" Furthermore, board members should have the same level of accountability to the public as company directors have to their shareholders. Some contributors to the debate wanted there to be elections to quango boards, especially for the more powerful and high profile bodies, although the practicalities of doing this would need to be considered. Having elections to nearly 900 public bodies could produce electoral fatigue, at a time when democratic participation in traditional parliamentary and local council elections has been on the wane.6 Nevertheless there may be a political climate in coming years to take devolution of accountability to
  7. 7. PUBLIC SERVICES COMMENTsome aspects of local government, judging about some of the debate on further public service 12reform.Back on the numbers front, to be sure there have been continued quango mergers. For exampleNHS Estates was wound up in October 2005 and its core functions brought into the Department ofHealth (DH), others being devolved to NHS bodies. The Health and Safety Executive (HSE) is in theprocess of absorbing several other public regulatory bodies, to become one of seven thematicregulators. From the point of view of the outside world that approach, which followed the HamptonReview, should also make things simpler; reducing the potential number of bodies to be contactedin this specialist field. The Hampton and Better Regulation path of consolidating 31 of 63 regulatorsby 2009 also seems to be a move in the right direction that should well be emulated in other keypublic services.The IoD has in recent years encouraged more autonomy within public bodies and moreaccountability. The trouble is that in many realms - health, education and local government, forexample, there are still very many such bodies with overlapping responsibilities and, it seems, longlife and longstanding offices. A focus group of IoD members that met at the IoD headquarters inLondon to discuss local government and public services in September 2006 threw up considerationabout overlapping of some public organisations responsibilities - a comment not necessarilyconfined to quangos.One logical extension of more autonomy (it was called earned autonomy in NHS reform) is thatpublic bodies should take on more responsibilities themselves. That requires a greater movetowards becoming fit for purpose in being able to conduct their own affairs in terms of management,direction and with adequate accountability arrangements. It should, however, lead to far less needfor the plethora of external bodies that are somehow meant to deliver improvements within thepublic services. If the organisations themselves become more effective and efficient there should 13surely be less need for entities such as the Improvement and Development Agency and the 14Standards Board for England (both bodies are in the realm of local government) and the NHS 15Institute for Innovation and Improvement.Some well-known German political philosophers of the 19th Century asked whether the State wouldwither away. Perhaps the same question should now be posed about many of the quangos,particularly as their control of public resources now collectively exceeds many of the local anddemocratically accountable bodies such as local government.Long before Gordon Brown became Chancellor of the Exchequer he called for a "bonfire of the 16quangos", speaking in the context of devolution. While noting that the number of quangos is welldown on what it was in 1979 or 1997, there is still a tendency for the Government to turn the quangocreation handle whenever a new piece of public policy looms. 7
  8. 8. P U B L I C R U N NV NC E H E A D M M E N T SER II G S CO For instance recent Government discussions about climate change seem to be heading in a direction of creating at least a greenhouse gas monitoring committee (if not a full-blown public body), if remarks from Defra are anything to go by. The Government intends to create an independent body (the Carbon Committee, it is suggested) to monitor carbon dioxide emissions, according to plans to 17 be set out in a Climate Change Bill. Is that really necessary? Could not existing resources within Defra and elsewhere in government and the civil service be deployed in place of setting up yet another public sector environmental body? In responding to climate change action is needed instead of what could easily turn into a lot of hot debating air. Geraint Day Head of Health and Environment February 2007 Note: The author takes part in HM Government’s Health, Work and Well-being National Stakeholder Council and Defra’s Business Resource Efficiency and Waste Programme (BREW) Waste Protocols Project Advisory Board. He was formerly a member of SMEs [Small and Medium Sized Enterprises] Subgroup of the UK Round Table on Sustainable Development. That body was dissolved prior to the creation of the Sustainable Development Commission. He was a member of the DHs NHS Foundation Trusts External Reference Group on Governance (also wound up), and a member and chair of Swindon and District Community Health Council (CHC). The DH abolished CHCs in late 2003. He also served on the HSEs Business Involvement Programme Board (now disbanded). No remuneration is or was associated with any of the posts mentioned. Acknowledgment: Thanks are due to James Walsh (Head of Public Affairs, IoD), for some comments as to content. References 1 Taken from: Cabinet Office, Public Bodies 2006, London, 2006. To be found at: www.civilservice.gov.uk/other/agencies/publications/pdf/public-bodies/publicbodies2006.pdf. This and previous years publications also contain a directory of public bodies. 2 From Cabinet Office, Public Bodies 2004, London, 2004. At: www.civilservice.gov.uk/other/agencies/publications/pdf/public-bodies/publicbodies2004.pdf. 3 For these bodies see: www.cabinetoffice.gov.uk/ministerial_responsibilities/?OpenFrameSet. 4 Cabinet Office, Public Bodies 2006, London, 2006, Table 6, p xii. 5 Cabinet Office, Public Bodies 2005, London, 2006, Table 6, p xxii. 6 HM Treasury and National Statistics, Public Expenditure Statistical Analyses, Table 5.10, p 79, The Stationery Office, Norwich, May 2006: www.hm-treasury.gov.uk/media/375/5A/cm6811_comp.pdf. 7 Taking figures given in the Statistical Summary of Public Bodies 1998 (at www.archive.official- documents.co.uk/document/caboff/pb98/contents.htm). 8 See, for Scotland and Wales: www.scotland.gov.uk/Topics/Government/public-bodies/introduction and www.wales.gov.uk/recruitment/pubapps-e.htm, respectively. 9 Public Agenda, p 17, The Times, 26 September 2006. 10 See for example Statistical Summary in Cabinet Office, Public Bodies 1998, The Stationery Office, 1998, at8 www.archive.official-documents.co.uk/document/caboff/pb98/statsum.htm.
  9. 9. PUBLIC SERVICES COMMENT11 Quangos, IoD Policy, January 2000, p 4 IoD, London. Comments from IoD members were summarised in The quangostate were in, IoD Policy, April 2000, p 4.12 For example, some ideas set out by the Department for Communities and Local Government in Strong and ProsperousCommunities - The Local Government White Paper, The Stationery Office, Norwich, October 2006:www.communities.gov.uk/index.asp?id=1503999.13 See www.idea-knowledge.gov.uk.14 See www.standardsboard.co.uk.15 See www.institute.nhs.uk.16 "The real alternative to secretive, centralised, bureaucratic government - the Whitehall question - is a bonfire of thequangos and greater democracy and decentralisation within the United Kingdom", remarks made by Gordon Brown MP tothe Labour Finance and Industry Group in 1995 and reported by Joy Copley, Brown upends devolution debate, originallyin The Scotsman, 13 January 1995. See http://heritage.scotsman.com/videos.cfm?vid=39.17 James Sturcke, Climate change bill to balance environmental and energy concerns, Guardian Unlimited, 15 November2006: http://environment.guardian.co.uk/climatechange/story/0,,1948346,00.html. 9