A Whitehall witch-hunt

Some quangos deserve to go, but not all - the Government is being over-hasty and almost medieval in its disregard for Parliament.

by Denise Kingsmill
Last Updated: 06 Nov 2012

In October this year, 192 quangos were slashed and another 481 were merged, reorganised or reformed in the Public Bodies Bill. This Bonfire of the Quangos was met with such interest that on the day the full list was published, the Cabinet Office website crashed as a result of the numbers of queries.

Politicians have long had a love-hate relationship with quasi non-governmental organisations. On the one hand, it is useful to be able to create an independent public body in response to issues of public concern such as those that arose after the birth of Louise Brown, the first baby to be conceived by IVF, and led to the establishment of the much respected Human Fertilisation and Embryology Authority. But when, on the other hand, something goes wrong and becomes the object of public opprobrium, it is politically expedient to have a quango such as the Child Support Agency to blame and abolish.

There is no doubt that many quangos deserve to go. Some have been established by government out of a misplaced sense that something should be done to help. Take Food from Britain, set up to support exporters of British food and drink. Is it really appropriate for taxpayers' money to be used to assist business, which can take care of itself?

But others deserve to stay - the National Institute for Clinical Excellence is much better placed than politicians to deal with the demands of patients and to resist the lobbying pressures from powerful pharmaceutical companies.

John Kay, writing in the Financial Times, emphasised the need for a distinction between good and bad quangos: 'Good quangos have specific technical expertise and their purpose is to take issues out of politics. Bad quangos have no distinctive skills and are designed to put issues into politics.'

Good, bad or indifferent, some quangos come to the end of their useful life and regular pruning in the interests of efficiency has to be a good thing. But there is a great deal of difference between sensible regular pruning and the kind of wholesale (and apparently arbitrary) dissolution that is sweeping through Whitehall.

Private sector firms such as Capita are expected to benefit by taking over such bodies as NHS Direct, NHS Blood and Transplant and the NHS Business Services Authority. The Government hopes for greater efficiency as business brings financial rigour to bear on the provision of public sector services.

However, the risk must be that many of the activities presently carried out by quangos about to be abolished will continue to be done, in another form and in another part of government, without any cost saving at all. In other cases such as British Waterways, it is envisaged that they will become charities with the in- evitable danger that they may not be able to raise sufficient funds to carry out the required roles and will need to be 're-quangoed' at some future date.

The Public Bodies Bill also raises serious constitutional issues. The majority of these public bodies have been established by primary legislation or Royal Charter after much public debate and consultation to fulfil roles where political independence is deemed to be essential. What is of real concern is that it is now envisaged that they may be abolished or reformed at the discretion of ministers without any Parliamentary or other scrutiny. Some of the reforms envisaged under the bill, in particular in relation to the power to abolish bodies such as the Coroners, the Forestry Commissioners and the Civil Aviation Authority are so far-reaching they have been dubbed 'Henry VIII powers', a term of contempt and derision deriving from that king's notorious abuses of power.

One reform that seems to have been almost universally welcomed, however, is the proposed merger of the Competition Commission and the Office of Fair Trading. Some years ago, as deputy chairman of the former, I made myself unpopular by suggesting that, with the Competition Appeals Tribunal (CAT) set up in 2002, there was no need for both regulators.

I believed, then as now, that the objection to a single regulator could have been overcome by increasing the powers of the CAT to hear appeals on the full merits of a case and not just on process as at present.

The most obvious benefit of a single competition authority is efficiency related. As well as the duplication of overheads and back office functions, more serious doubling up is inherent in the passing of a case on referral from the OFT to the CC, when the investigation starts again from scratch. This means in practice firms have to go through, and pay for, the same process twice.

Although the merger of these two quangos is to be welcomed, it must be done in a way that preserves the best of our current system - the CC is recognised as world-class. Perhaps the most important feature is the impartiality and independence guaranteed by the panel system of part-time members drawn from a variety of backgrounds, including leading lawyers, economists, financiers and business people, which ensures that companies can present their case to their peers rather than to bureaucrats.

Everyone agrees that there is scope to cut the quangos, but as the merger of the CC and the OFT shows, it is important to give careful consideration to how to do it. Like much that the Coalition government is doing, the Public Bodies Bill goes too far, too fast, and risks throwing the baby out with the bathwater in the name of ideological principle.

Baroness Kingsmill CBE has been a non-executive director of various private and public boards. She is a non-executive director of British Airways and Korn/Ferry International

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