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Public Bodies Reform

Today, the Government have taken decisive action to restore accountability and responsibility to public life. For too long, this country has tolerated Ministers who duck the difficult decisions they were elected to make. For too long, we have had too many people who were unaccountable, with a licence to meddle in people's lives. For too long, we have had quango pay spiralling out of control, so that seven people in the Audit Commission are paid more than £150,000 a year at a time when the average civil servant's pay is £23,000. The landscape for public bodies needs radical reform to increase transparency and accountability, to cut out duplication of activity and to discontinue activities that are simply no longer needed. My written statement this morning outlined the start of a process to curtail the quango state. I have led an intensive review into public bodies, subjecting each to four tests. The first test was existential and asked, does the body need to exist and do its functions need to be carried out at all? The answer to that question in some cases was no. For example, we decided that the Government probably do not need an independent body to deliberate on the purchase of wine. If, as in most cases, the body's functions were deemed necessary, we then sought to establish whether those functions should properly be carried out at arm's length to government. If the body carries out a highly technical activity, is required to be politically impartial or needs to act independently to establish facts, then it is right for it to remain outside direct ministerial accountability. That is the case with bodies such as the new Office for Budget Responsibility and Ofgem. However, any quango that does not meet one of these tests will be either brought back into a Department or devolved to local authorities—in both of which cases, there will be democratic accountability—or its functions will be carried out outside the state altogether in the private or voluntary sectors. We have gone through an extensive process to determine the outcome of the review. Our first task was quite simply to identify how many quangos there are and what they do. It may sound absurd but it was and remains incredibly difficult to gain firm information on such bodies. Many do not publish accounts, there is no central list and there are myriad different types all with different statuses. The official list of non-departmental public bodies has 679 bodies, excluding those in Northern Ireland, but that does not include non-ministerial Departments, Government-owned public corporations or trading funds. Our review covered 901 bodies and we believe, but cannot be certain, that that is the true extent of the landscape. I stress that departmental agencies—Executive agencies—are not in the review's scope. They are directly controlled by Ministers who are accountable to Parliament for what they do. Once we established the overall lists, each Department went through a rigorous process to determine whether each of its quangos met any of the tests. The list I have published today is not complete but is a work in progress. The House will note that a number of bodies are subject to a longer-term review—for example, the Children's Commissioner and the Office for Fair Access. Of the 901 bodies in the review, substantial reforms are proposed for more than half. We propose that 192 should cease to be public bodies at all and that 118 should be merged down into 57 successor bodies, removing wasteful and complicating duplication of effort. Some 171 bodies are proposed for substantial reform while retaining their current status. For those bodies that we are abolishing, I stress that in many cases that does not mean the end of the function. Abolishing the regional development agencies, for example, does not mean that we no longer care about promoting regional business—[Interruption.] The Opposition's response is very revealing, because it suggests something fundamental about what we are trying to change: the assumption that one can prove that one cares about something only if one sets up a quango. We think that there is a different and a better answer, and that we can promote regional business in a better way. Since the introduction of RDAs, regional imbalances have become not better, but worse, and the development agencies carried a staggering £212 million in administration costs. We believe that local businesses and local authorities are better placed to decide what they need, not highly paid executives imposed on them by Government. An activity does not need an unaccountable bureaucratic structure to signify its importance; the exact converse is true. If something is important, someone who is elected should make decisions about how it is done. That is why we are bringing a host of functions back into Departments, such as those of the Child Maintenance and Enforcement Commission and the Renewable Fuels Agency to name but two. All remaining public bodies will be subject to a rigorous triennial review to ensure that the previous pattern of public bodies often outliving the purpose for which they were established is not repeated. They will be expected to become more open, accountable and efficient. In the new year, I shall outline to the House in more detail the new framework for those remaining quangos. All proposed changes will be delivered within Departments' spending review settlements. Those bodies whose status is being retained may be subjected to further reforms following the spending review, in the same way as all other parts of the public sector. I want to acknowledge the dedication and hard work of those who work in public bodies. We are committed to working with the chairs and chief executives of those bodies to ensure that change is conducted as fairly and as smoothly as possible. To enable the proposed changes to be implemented, the Government will shortly introduce a public bodies Bill, which will give Ministers power to make changes to named statutory bodies. Other forthcoming legislation, such as the education Bill and the localism Bill, will also be used to make changes directly. I believe that these reforms are the first and necessary step to restoring proper democratic accountability to public life. They signal a complete culture change in government, from one that ducks difficult decisions, is opaque and allows profligacy, inflated salaries and waste, to an Administration who are open and transparent about what they do, with Ministers who take responsibility for their actions and are mindful of every penny of taxpayers' money. I commend these reforms to the House.