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The coalition government has a turbulent relationship with quangos

 

This was originally published by Political Insight, on the PSA website, which is available here. This was written by Dr Katherine Tonkiss.

The salaries of quango bosses are, Jeremy Hunt suggested earlier this week, ‘unacceptable and unjustified’. He called for a review of all salaries at health quangos to ensure that they are ‘appropriate and justifiable’. His comments are part of a wider anti-quango discourse which, I argue, sits in tension with the realities of the coalition’s use of arm’s length governance.

The claim that chief executives are being paid extortionately high salaries is a recurring criticism levelled by the coalition government at quangos. For example, not long after the election victory in 2010, the Coalition published the salaries of more than 150 quango chiefs with six-figure earnings, and Minister for the Cabinet Office Francis Maude argued that their pay was out of control: ‘we can’t just have a half life, a world of bodies which exist in the public sector, financed by the taxpayer, with no, or very little, financial accountability’.

Hunt’s proposals for reviewing salaries in health quangos are the latest in a raft of reforms to the way that government works with its arm’s length bodies. Shortly after coming to power in 2010, Maude and his Cabinet colleagues initiated the Public Bodies Reform Programme, which proposed the abolition and reform of almost 500 non-departmental public bodies – NDPBs – the dominant type of quango in the UK. In December 2012 the Cabinet Office reported that, to date, the number of NDPBs had reduced by 220, demonstrating the rapid progression of the programme which aimed to achieve ‘increased efficiency, effectiveness and economy in the exercise of public functions’, and to secure ‘appropriate accountability to Ministers in the exercise of such functions’.

The programme has involved abolishing bodies and bringing their functions back into government departments, or turning them into executive agencies – bodies which are far less independent from government than NDPBs. For the NDPBs that remain, there are Triennial Reviews – three yearly reviews which question their continued existence and operational effectiveness; and also a detailed spending controls process which applies across the public sector and provides Government with greater control over administrative spending at arm’s length.

The logic of this reform programme is that increasing control over the functions exercised by quangos, and over quangos themselves, will drive greater accountability – because functions are moved under the direct responsibility of elected ministers, who also have more direct control over the affairs of bodies that are not abolished. This increased control is also assumed to drive greater efficiency, on the basis that keeping a closer eye on quangos will prevent them from overspending.

These kinds of assumptions are questionable. Does accountability improve when functions are moved back into departments and so under direct ministerial control, or could accountability be greater when functions exist in separate organisations and are therefore more visible to the public? While abolishing organisations and their functions may save money, where functions continue will it necessarily be more efficient to bring them back into government departments, or can the delivery of these functions through quangos which often draw on private sector expertise in itself deliver efficiencies?

These debates over how to maximise accountability and efficiency lie at the heart of a contradiction in the coalition’s relationship with quangos, and one that is particularly evident in relation to health bodies. At the same time as abolishing NDPBs, government is pursuing a programme of reforms to the NHS which has seen the creation of NHS England, the largest quango in the country which is responsible for £12.6 billion of healthcare spending; and the expansion of other health quangos such as Monitor and the Care Quality Commission.

As such, the very bodies that Jeremy Hunt is targeting in his critique of quango salaries are those that have been recently created or expanded by the coalition, and have seen staff costs rise as a result. For example, it is estimated that the new NHS Commissioning Board is costing £400m in staff costs. The health example is illustrative of this tension which is observable across government, as the coalition pursues an alternative models agenda aimed at spinning off functions into different organisational forms such as mutuals while at the same time seeking to abolish NDPBs and increase its control over those that remain.

Moves to more closely control the actions of quangos, while at the same time creating new organisations at arm’s length from government, suggest a contradiction in how the objectives of increasing accountability and efficiency are to be achieved, and as a result a turbulent relationship – where quangos find themselves simultaneously a popular choice for delivering functions through ‘alternative models’, and under fire for lack of accountability and inefficiency – between the coalition and quangos is evident.

Katherine Tonkiss is a Research Fellow in the School of Government and Society at the University of Birmingham. She is part of the ESRC funded ‘Shrinking the State’ project which explores the Coalition Government’s attempts to reform arms’ length bodies.

 

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