Friday, 12 February 2010

Will Quangos be decimated: Probably not

Quasi-autonomous non-Governmental Organisations (Quangos) have been part of the UK landscape for many decades and there have often been robust political and managaerial debates about the usefulness (or otherwise) of these public bodies. This debate has been brought into focus by the atrocious state of Government finances in the UK and the need for the next Government (whoever it may be) to make huge real terms reductions in public spending. The impending drive to rebalance the public finances will place intense pressure on the UK’s Quangos. Not surprisingly when there are threats to front line public services such as schools and hospitals many will question whether we really need the large range of Quangos which currently exist and also whether we can afford them in the current economic and fiscal climate.

Politicians of all colours have jumped on this bandwagon. Last July David Cameron made a speech stating the Conservatives would reduce the numbers of Quangos and increase democratic accountability. In December Gordon Brown announced plans to cut 120 quangos which is rather unfortunate given that a recent survey from the Cabinet Office revealed that spending on Quangos has surged by nearly £10bn in the past two years. Now it appears that to give credibility to his pledge to provide Saturday morning classes for one million children on free school meals (by allocating an additional £2,500 in funding for every child), Nick Clegg will aim to fund the £2.5bn cost through cutting back on Quangos.

However, it is not always clear how many Quangos actually exist because of variations in the definition of a Quango. A document produced by the Taxpayers Alliance claimed that in the UK there were a total of 1162 Quangos (and other Agencies) which cost the taxpayer a total of £63.5 billion. These figures seem to chime with similar figures used by David Cameron in his July speech but differ markedly from other claims which put total Quango expenditure at £124 billion. Thus when considering cuts in Quangos we really need to be clear about what we are counting as Quangos. For example, the £124bn figure quoted above included in its list of Quangos all of the NHS Trusts in the UK which deliver hospital and community services. It seems unlikely that many people would regard NHS Trusts as being Quangos in the usual meaning of the world. Furthermore, the TPA report includes in its list of Quangos the following organisations:-

• The British Museum
• The BBC
• Kew Gardens
• The National Library for Wales

I am not sure many people would regard these high profile, popular and well known organisations as Quangos in the pejorative sense of the word.

Firstly let’s clarify what Quangos actually do. Perhaps Quangos can be considered in four main groups:-

• Service providers – some Quangos such as the British Museum provide services directly to the general public.
• Funders – some Quangos distribute public funds to relevant external organisations. Thus the Arts Councils distribute funds to arts projects and the Higher Education Funding Council for England (HEFCE) distributes funds to universities for teaching and research. Thus it is misleading (as the TPA report does) to claim that HEFCE spends £7billion per annum. The vast bulk of that money, with the exception of £20million for internal administrative costs, is distributed to universities for teaching and research. Also in this category might be included Regional Develop Agencies which spend the bulk of their funds on local projects to improve the economy of the region.
• Regulators and Inspectors – some Quangos are charged with inspecting and regulating public sector service providers. Thus OFSTED inspects schools and the Healthcare Commission inspects hospitals. The Audit Commission audits and inspects a range of public bodies. Also in this category might be included Quangos such as the Equalities Commission.
• Advisors – there are a myriad of bodies of varying size which provide advisory services to various parts of Government.

In addressing the question of Quangos I suggest there are some key questions which need to be asked including:-

• What benefit do Quangos actually generate? For example, have schools really improved as a result of OFSTED? Have inequalities really reduced as a consequence of the Equalities Commission. Some Quangos make great claims about their own role and effectiveness in improving public services but the real evidence is very thin.
• What is the real total cost associated with Quango activity? People often talk about the costs of running the Quangos themselves but forget about the impact on, and costs to, those organisations being inspected by Quangos.
• Could the work of Quangos be done by other existing organisations? For example, many of the roles of the Learning and Skills Council (LSC) in funding post-16 education used to be done by local authorities. Also, much economic development work is done by local authorities. Do we therefore need these Quangos when local authorities might do the same work for less?
• What public accountability is there for the work of Quangos? The Boards of Quangos are not elected but appointed by Ministers who seem to closely control what they do in great detail. For example, it is easy to see that Regional Development Agencies have the potential to help their local economies but how can they do an effective job when they are micro-managed from London by people who probably never set foot in the regions themselves.
• Why are so many Quangos based in London when their work could be just as easily done in other parts of the UK with consequent benefits for local economies? Is it so they can be near to Ministers who wish to control closely what they do and say?
• Are there too many Quangos doing similar things? For example do we need a Quango to fund higher education (HEFCE) and a Quango to fund post 16 education (LSC)?
• Are Quangos just devices for Ministers to reduce civil service head count and to avoid direct responsibility for public services?

At first glance the picture looks gloomy for Quangos. Even if one thought that Quangos were really effective in what they do, the question still has to be asked whether we can afford them in the current fiscal climate. Are Quangos doomed then – probably not. The future of Quangos probably depends on how much time and energy Ministers can devote to the issue given the vast financial and economic problems which will face the next Government. Some savings can and probably will be squeezed out of the QUANGO system through cosmetic changes but it is probably much less than currently imagined. Furthermore, in a crisis most Ministers resort to centralisation and it is difficult to see the new Government doing anything different in spite of what they say at the moment. Many Quangos will probably be seen as too useful to Ministers to be abolished.

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