Smaller Government: Shrinking the Quango State - Public Administration Committee Contents

Examination of Witnesses (Question Numbers 42-148)

Rt Hon Francis Maude MP

3 November 2010

Q42   Chair: Minister, welcome. Thank you very much for joining us this morning. I should explain that we're a little short-handed on the Committee, partly because so many of our Labour members have been appointed to the Labour Front Bench, and partly because of the tube strike.

Francis Maude: I can take responsibility for neither of those events.

Chair: IPSA doesn't provide for tube strikes.

Q43   Greg Mulholland: Thank you for coming before us so soon. I shall start by asking you about the consultation as part of what we all acknowledge is a very major reorganisation of government functions. There has been some criticism, as you're aware, from the Public and Commercial Service union, saying that they have a major concern about the lack of consultation, and Christopher Banks, the Chair of the Public Chairs' Forum, said that he believes there's a sense of tokenism and says that the Government's version of involving an arm's length body in the decision about its future appears to be telling it that it's being reviewed and that they will be told the outcome at the end of the process, which is clearly not real consultation at all. Do you recognise that description or do you reject it? And can you tell us what consultation there actually has been in this process with those bodies?

Francis Maude: Well, it will be very varied really, because the lion's share of the work on the reviews was done by individual departments looking at the bodies within their purview and reaching a conclusion; subjecting them to the three tests, the existential tests and then the three subsequent tests to test whether they're needing to be independent. What process each one went through, I suspect, will have varied enormously. These are essentially decisions in principle; these are decisions made where departments will know, or should know and I'm sure do, in a great deal of detail what those bodies do, what their functions are and how they are carried out. The decisions we made during the review are decisions of principle: is this a body or a function that has to be carried out in a way that isn't directly accountable, either to an elected local authority or to a minister.

Q44   Chair: Can I just ask you to stick to the point about consultation, because we're going to come to the criteria in a moment?

Francis Maude: Well, the answer is: it would be very varied and, in some cases, will have been quite extensive; in other cases, will have been very little. But there's a further stage, obviously, a consultation, which is beginning now, which is about the implementation plans—what actually happens in practice—and there are discussions certainly being had at a broad, cross-cutting level between my officials in the Cabinet Office and our Public Bodies Group with the civil service unions, but obviously much more at departmental level with the unions there.

Q45   Greg Mulholland: Was there any reason why the consultation was so different between, clearly, some bodies being fairly well consulted and others not being? Does that suggest, perhaps, a prejudice about the future of those organisations or those functions?

Francis Maude: Well, I don't know the extent to which it was fair. I would not expect to have monitored in intimate detail exactly what consultation each department went— We're talking about 900 bodies here, so there was a lot of reviewing to be done, and departments will have taken their own decisions about how to and the extent to which they would consult.

Q46   Greg Mulholland: To what extent do you feel that there's a danger that, because this was a clear pre-election policy and people talked about I think a rather unhelpful phrase, "bonfire of the quangos"—and it's very easy to say, "Far too many pen-pushers and bean-counters," to use the words of Nick from the last session—some of these organisations didn't really stand a chance and weren't given the proper chance to put their case to the departments?

Francis Maude: Well, as I say, departments should know what each body does, so there should be a high degree of knowledge about it. This was a perfectly public review process. It was highlighted before the election by the Conservative Party. It then appeared as a key item in the Coalition Programme for Government, so everybody knew that this review was going on. The phrase you used is not one that I've ever used, but I have read it in newspapers. So those chairs and chief executives of public bodies who had opinions about whether they should be able to continue were well able to express those views, and did so—some of them in very vigorous terms, as they're perfectly entitled to do.

Q47   Chair: We asked the witnesses we've just had whether they had been formally asked in any shape or form about whether they felt their organisation fitted your criteria, and they said they hadn't. Wouldn't it have been sensible to do so?

Francis Maude: I expect—I don't know to what extent they were asked. Obviously, if they say they weren't asked by their departments, that's obviously the case. Others may have been; I don't know.

Q48   Chair: So, have you set down a procedure for how departments should go about this?

Francis Maude: No, we simply said, "These are the tests which you must apply," and we then have oversight of the results of the review, and we test the conclusions that the departments have reached and, as I made clear in the statement whenever it was—two weeks ago—some of the reviews are not yet complete and some of the bodies are still being considered.

Q49   Charlie Elphicke: On that point, I'm looking through the schedule to the Bill. There are oddities; for example, the British Waterways Board is on that list, but trust ports are not, and yet both are quangos.

Francis Maude: Do trust ports not appear at all in any of the schedules?

Charlie Elphicke: Not that I'm able to see, but the British Waterways Board is definitely there.

Francis Maude: It may well be that the trust ports weren't within the scope of the review, for reasons which I can't now elucidate, but I know that you have some views about that.

Q50   Robert Halfon: Good morning. How did you decide the criteria and come up with the various tests?

Francis Maude: Well, we gave a lot of thought to what a function needs to satisfy in order to justify not being accountable. Our presumption is that something that is done by the state should be accountable; decisions made should be accountable, either through ministers to Parliament or to a local authority. If it's not done by the state, then the accountability doesn't arise in the same way, so there needs to be quite a hard-edged reason for a state function not to be accountable, and we gave a lot of thought to what would justify that, and the three tests we arrived at seemed to us to cover all serious eventualities. If it's a body that is there to measure facts in a way that requires it to be seen to be independent of government, then that meets the test; if it's doing something that obviously requires political impartiality, that oversets the presumption; and if it's doing something that is clearly very technical, then again that would overset the presumption.

Q51   Robert Halfon: How much of your decision was based on whether these quangos were giving value for money to the taxpayer?

Francis Maude: That was a secondary consideration. We've said throughout that the primary consideration here has been to improve accountability. It is our view that, in the past, various public bodies were set up in order to avoid ministers having to take responsibility for difficult decisions, and that seems to us what ministers are for: to take decisions and justify them.

Q52   Robert Halfon: Why wasn't the value for money higher up the agenda, given the state of the economy and the cost of some of these quangos?

Francis Maude: Well, it's a factor, but it's a secondary factor. Certainly it was a factor in taking the decisions to remove duplication where there were bodies which were duplicating their activities, with overlapping functions—sometimes functions which were in conflict with each other—seeking to remove those, driven primarily by the desire to save money and improve value for money, but as I say, the primary consideration throughout has been to increase accountability.

Q53   Chair: Can I follow that up for the moment? Clause 8 of the Public Bodies Bill says, under "Matters to be considered" at (1)(a): "achieving increased efficiency, effectiveness and economy in the exercise of public functions". That would seem to be about value for money.

Francis Maude: I didn't say it isn't about value for money.

Q54   Chair: But that's the first criterion, and then the second criterion is about accountability. The other tests you mentioned are not in the Bill.

Francis Maude: No. Well, those are the tests which we've applied to deciding which category the bodies go into, but the fact that they're listed in a different order does not alter what we've consistently said, which is that this is primarily about accountability.

Q55   Chair: But efficiency and value for money is the first criterion, whereas, initially, it wasn't in your criteria at all. Have the goalposts moved?

Francis Maude: No, they haven't, with respect. Everything we said about this before the election made it clear that this was principally about accountability. If you go back to speeches made about this by the now Prime Minister before the election, the principal objective here was to increase accountability, and that remains the case.

Q56   Robert Halfon: Why is ACPO not included in the Bill, given that it seems to be quite an unaccountable organisation?

Francis Maude: I don't believe ACPO is a public body in that sense. I don't know quite what its formal legal status is, but it's a voluntary association of chief police officers—kind of a trade body that then attracts some public funding because of functions that are delegated to it, I guess, by the Home Office.

Q57   Robert Halfon: On the technical function criterion, couldn't it be argued that all quangos perform some kind of technical function? Can you explain what that actually means in precise terms?

Francis Maude: Well, if it's doing something that does not require—where the decisions being made are purely technical, I think that's the consideration: where you're not making policy judgments. The concern we had was that too many bodies were setting policy in some cases, which, it seems to us, should not be done, unless in a way that's directly accountable. But if it's merely administering a technical process or making technical decisions, that seems to us to overset the presumption. This is not an absolutely precise science; most of these bodies do lots of different things, and what you're doing is making a judgment about: what is this body primarily doing?

In some cases, this is not as simple as some people would like it to be because, in some cases, we're saying a particular function in a body will be brought within a department, because it's a policy-making function, but the Environment Agency, for example, actually has some policy-making functions; Ofcom has some policy-making functions. We think policies should be decided by ministers accountable in this place. But none the less there are continuing functions, which both the Environment Agency and Ofcom have, that are technical but that also will require clear political impartiality, and those functions meet the test sufficiently that they overset the presumption of accountability through Parliament.

Q58   Robert Halfon: Could you give an example of a technical function of a quango?

Francis Maude: The Environment Agency will be taking decisions about the detail of—I'm trying to think what it would be doing—but there must be a range of detailed decision-taking on enforcement of regulations on environmental pollution, which you would not expect a minister to be directly accountable for.

Q59   Robert Halfon: Can't a technical function be done by an executive agency rather than an arm's length organisation?

Francis Maude: Yes, some can, I guess. As I say, it isn't absolutely precise. Our presumption is that things should be done in a way that an executive agency is accountable through ministers to Parliament, and that's why, for example, the Child Maintenance and Enforcement Commission will become an executive agency, because actually that is fulfilling an important public function—not a technical one in that sense—which should be accountable to Parliament. Sometimes, there are technical functions that the public will expect to be clearly not capable of being interfered with by ministers, and some of the pollution-type activities may fall into that category.

Q60   Robert Halfon: Why are no specific reasons given for the retention of some bodies? Because there's some confusion, with some bodies who've gone and some bodies who have stayed, and from what you've described this morning, you could argue that some of the bodies that have gone had some of those functions and some didn't, and I think there's still some confusion about the criteria.

Francis Maude: Well, we don't think we provided an exhaustive explanation of all 901 bodies that were subject to the review, and we made the point as well, consistently, that this is a work in progress. There are 40 bodies of those 901 where decisions are still awaited, either because there's a formal review under way or because simply it wasn't possible in the time to get final decisions made, and we've also said that all remaining public bodies will be subject to continuing triennial review. Circumstances change, the needs change, and this is not set in stone for all time.

Q61   Robert Halfon: Have you made any estimates of the cost savings to government of the ones that are going?

Francis Maude: No, and because, as I said earlier, the decisions we made were decisions in principle of whether particular functions met one of the three tests sufficiently that their continued existence in an independent body was justified, it's then for departments and the bodies themselves to draw up detailed implementation plans. That there will be savings is clear, because all of these are functions that are carried out in an administrative manner, and the Spending Review has placed on all government departments and all remaining bodies a very stringent trajectory in terms of their administrative cost base.

Q62   Chair: One of your criteria is "does it perform a technical function?" as a criterion for maintaining an arm's length body. But you've also said that technical functions can be transferred to expert committees in departments, or executive agencies. Is this really a criterion for judging whether to keep a quango or not? What do you mean by "technical function"?

Francis Maude: What I think we mean is that this is a function that the public would not expect to be carried out—it overlaps into the criterion about political impartiality—a function that requires political impartiality—where you would not expect the decisions on technical issues to be able to be overset by ministers or councillors.

Q63   Chair: In which case, delete "technical function" and stick to "political impartiality". Technical function has got nothing to do with it, has it?

Francis Maude: Yes, I think it has because it overlaps, but there are plenty of these bodies that will continue to exist because they in some way meet more than one of these tests.

Q64   Chair: So, it's important to keep these tests flexible.

Francis Maude: Well, this is not a precise science. These are judgments which we as ministers make and are willing to justify, and I've made the point consistently that these are not set in stone for all time, which is why we're saying there will be triennial reviews.

Q65   Chair: But again, the question of a technical function doesn't appear in the Bill at all. It's not a criterion referred to in the Bill at all.

Francis Maude: These are criteria that are being used—tests that are being used—for the purpose of the review.

Q66   Chair: But what is the point of having criteria unless they help you provide consistency?

Francis Maude: Well, they have helped us to provide consistency. I believe that the results of the review are reasonably consistent.

Q67   Chair: This is a very complex and difficult area, isn't it?

Francis Maude: Well, at the end of it, we're making judgments about whether we think public functions—state functions—have to be delivered in a way that is unaccountable. These are tests that help us to reach those judgments; this is not a precise science. We're making judgments, which we're happy to be accountable for.

Q68   Chair: But impartiality is not a criterion that appears in the Bill.

Francis Maude: No. These three tests are the tests that we applied in the review.

Q69   Chair: But the Bill is to implement the review; one would expect there to be some consistency between what you're publicly saying the criteria are and what appears in the Bill. Can you explain why that's not the case?

Francis Maude: The Bill is to allow the continuing decisions of the Government to be implemented, if that's what Parliament chooses to happen.

Q70   Chair: So, these criteria are more sort of rules of thumb, rather than—

Francis Maude: These are tests to which we submit each function, to see whether it justifies oversetting the presumption that functions carried out by the state should be accountable.

Q71   Chair: Some people have suggested to us that these were tests to justify a broadly predetermined outcome. That would be unfair, I guess.

Francis Maude: Yes, that would be unfair.

Q72   Chair: And there must be one or two public bodies that are such hot political potatoes, whatever criteria they do or do not match, you will not touch them.

Francis Maude: I think there are decisions we've made that indicate a willingness to take on controversial bodies.

Q73   Chair: The Equality and Human Rights Commission—it's not a technical function. Does it require political impartiality? It's governed by legislation that is applied politically impartially by the courts. Does it require to be independent to establish facts? That's what the courts do in those cases. So, why have you kept the Equality and Human Rights Commission?

Francis Maude: Well, there is an argument, certainly, that it meets the last of those tests: that it acts to establish facts, it has an obligation to measure developments in terms of equalities, and certainly an argument that it requires, in some of its functions, to be politically impartial.

Q74   Lindsay Roy: Good morning, Minister. Are you saying quite categorically that the reforms are not being ideologically driven, but have very much a pragmatic focus?

Francis Maude: Well, I don't think they're ideological, nor purely pragmatic. They are guided by some principles, which are set out in those three tests.

Q75   Lindsay Roy: Would it surprise you to hear that the witnesses this morning have indicated quite clearly that they feel highly accountable, that there are clear monitoring procedures, there are success criteria, they have reporting mechanisms, and they feel they're fit for purpose? How are these reforms going to change that accountability?

Francis Maude: Well, where the conclusion is that a function should be made accountable in the way I've set it out, the difference is that a minister can be held accountable in Parliament for how that function is carried out, how the policy is set and how the policy is administered.

Q76   Lindsay Roy: You're saying that's not the case for some of the quangos at the moment?

Francis Maude: Absolutely not the case. They can be summoned in front of a Select Committee, for sure, but the essence of parliamentary government is that ministers are accountable in Parliament, and we think that's good. It's not always comfortable, but it's quite good.

Q77   Lindsay Roy: There's obviously a great deal of interest in this, so when will you be publishing the analysis that was undertaken to come to the decision whether to reform, abolish or retain public bodies?

Francis Maude: Well, I think all of the departments, when I made my overarching announcement, put out at that stage their own explanations for the decisions that were made as part of the review, and such analysis as they chose to accompany the explanation.

Q78   Lindsay Roy: Will you be preparing an overview of that for public consumption?

Francis Maude: I wasn't planning to, but I suppose we could. I don't know—is there an appetite for that?

Q79   Chair: Well, it does seem that you've set out some criteria; you're making a judgment of each public body against those criteria—that's what you've asked departments to do. There presumably should be something in writing about each public body that's been reviewed. Is there any reason why departments shouldn't publish that analysis in the interests of transparency and openness and accountability? I appreciate it might fall into the category of advice to ministers, but these are decisions being made about public bodies which I think the public is entitled to know about.

Francis Maude: Absolutely, and I would expect, as you examine, as I'm sure you will, the individual announcements made by all the departments in relation to the bodies within their purview, you can make a judgment of whether that meets your expectations of the explanations that you think the public are entitled to; if not, I'm sure other departmental Select Committees will want to examine what those departments have decided and the explanations they're giving.

Q80   Chair: But would it be reasonable for us to recommend that each department publish how they've applied the criteria to each public body?

Francis Maude: I'd recommend you looking in detail at what each department has said and see whether you think they're meeting that—what you would like to see. I think you'll find that quite a lot of them have done that.

Q81   Lindsay Roy: Is that not part of your ministerial accountability?

Francis Maude: No. My ministerial responsibility was to oversee the review, to ensure that it was carried out in a way that was reasonably consistent and met the commitment we'd made in the Coalition Programme for Government, and then to oversee the Bill going through Parliament, which is an enabling Bill, not setting out the detail of what will happen to each department, because that will flow subsequently in detailed secondary legislation.

Q82   Lindsay Roy: I beg to differ on this, because, given your role in this—a pivotal role—I feel that the public deserve an explanation as to why these reforms have taken place in different ways.

Francis Maude: Well, I hear you and I'll reflect on that, but as I say, I think the primary— I made a statement to Parliament where I set out both the detail in terms of what broadly we expected to happen with each body—the detail could be worked out and set out subsequently—and primarily we took the view for departments themselves to explain in greater detail and depth what they expected to happen and why the decisions had been reached in that particular case.

Q83   Chair: May I ask very briefly about the scope of the review? We talk about quangos; I think we're talking about arm's length bodies—ALBs—but there are some organisations like, for example, BBC and Channel 4, which are arm's length bodies, technically, but they're not included in the scope of the review. What are the criteria for including organisations within the scope of the review?

Francis Maude: Well, the BBC is a public corporation set up under royal charter.

Chair: I appreciate that but—

Francis Maude: And Channel 4, I think, is in the scope.

Q84   Chair: It is in the review, is it?

Francis Maude: As far as I remember, it is, yes.

Q85   Chair: There is a case for applying these criteria to a far wider selection of public bodies than you have.

Francis Maude: Well, I'm willing to—

Chair: I'm ambitious for you.

Francis Maude: Well, I'm very grateful. I'm very grateful for all the support I can get. Any suggestions of bodies you think we ought to be looking at that we haven't—

Q86   Chair: Executive agencies?

Francis Maude: Well, we deliberately exclude executive agencies on the basis that those are already accountable. Ministers take responsibility for what executive agencies do.

Q87   Chair: Well, we want to talk about accountability, because it has been put to us that we're really just swapping one kind of accountability for another—an identifiable chairman or chief executive for a civil servant. That, it could be argued, is a reduction in visibility in terms of accountability.

Francis Maude: Well, it all depends whether you believe in parliamentary accountability. Call me old-fashioned: I believe in parliamentary government.

Q88   Chair: Doesn't merging some public bodies lead to a reduction in accountability?

Francis Maude: I don't see why. Why would it?

Q89   Chair: Well, because more functions are answerable under one body or one person.

Francis Maude: Well, if they're fundamentally not subject to parliamentary accountability anyway, I don't see that there's a reduction in accountability. No, I wouldn't accept that.

Q90   Chair: There would still be 608 arm's length bodies.

Francis Maude: Yes.

Q91   Chair: Are they less accountable than the ones you've moved into civil service departments?

Francis Maude: Well, yes, because they have met one of the tests for that function continuing to be exercised without direct accountability.

Q92   Chair: In a letter that was leaked about this process, it was stated that you intended "working with the Liaison Committee and the Public Administration Select Committee to strengthen Select Committee scrutiny of public bodies and of appointments to boards of public bodies." Can you expand on that? How do you think we could help?

Francis Maude: On appointments to public bodies? Well, there was a recommendation by the Liaison Committee, as far as I remember, before the election, for looking at the pre-appointment scrutiny process, and we responded to the suggestions they were making—the recommendations they were making—and I think my recollection is that I've offered to meet with the Liaison Committee to discuss how we take that forward.

Q93   Chair: But what exactly do you have in mind?

Francis Maude: Well, part of it was about scope—which appointments are within scope—and I think the Liaison Committee wanted to extend the number, and I think I've indicated that we are willing to consider that and discuss in detail which appointments should be brought within scope. Our view is that Select Committees should not have the ability to veto appointments, because these, at the end of it, have to be ministerial appointments, but we're very content with the scrutiny being carried out in a way that's public and the advice made public.

Q94   Chair: If Parliament wants to scrutinise an appointment, should the Executive be involved in deciding what scope of public appointment should be so scrutinised? Surely, it's a matter for the individual Select Committees themselves.

Francis Maude: Well, there's nothing to stop select committees doing it, but I think the process that was set up was one that was done by agreement, and where there was built into the appointment process a period in which the select committee could look at it before the appointment was finalised. If the select committee just decides it wants to review an appointment and that's not agreed, then it's just going to happen after the appointment is made, which would not be very useful.

Q95   Chair: No, I understand that. Thank you. Finally, we wrote to you on 27 July following your suggestion that the committee should have a role in scrutinising the creation of—

Francis Maude: I think it was your suggestion, in fact, but it was one—

Chair: Well, I think you agreed with it, but we haven't had a reply to our letter yet. Is this something you're giving a lot of thought to?

Francis Maude: I wouldn't say it's occupying every waking hour, but it's certainly something we're thinking about. I think it is useful for there to be a role in scrutinising and advising on the creation of new bodies. Our view is that there have been too few tripwires along the way—too few hurdles in the way of public bodies being set up. They've been set up in a fairly incontinent manner in the past, as I say, with a tendency for ministers to set them up to avoid them having to take difficult decisions, we kind of think.

Q96   Chair: So, when do you think you might be able to give us a definitive answer? Or maybe perhaps we can make some more recommendations in our report first.

Francis Maude: Well, why don't you make some more recommendations? Because I think your suggestion was that this Select Committee should have a role on it. I think one of the things we would want to explore is certainly that, but also whether departmental select committees should have a role in relation to public bodies being set up in their particular arena, so I think there's—

Q97   Chair: That makes sense: select committees in general rather than just one select committee.

Francis Maude: Yes.

Q98   Chair: Let us move on: triennial reviews. There used to be quinquennial reviews, which were scrapped in 2002, after the Alexander report found that they cost about £5 million a year.

Francis Maude: I think we can do it a bit more cheaply than that.

Q99   Chair: Well, we hope you can, but how would your cheaper system differ from previous systems? How will you make it cheaper?

Francis Maude: Well, I don't know how on earth they managed to spend £5 million doing that.

Chair: I know. The mind boggles.

Francis Maude: Yes, I will investigate that. That does seem to me startling—

Q100   Chair: But I notice, again in the Bill, you're not tying yourself to triennial reviews. It's not mentioned in the Bill. Shouldn't it be something that you're required to do by law?

Francis Maude: It could be, and it hadn't occurred to me, and if someone wanted to table an amendment to that effect on the Bill, I'd certainly consider it. I would expect this to be done in a way similar, but at slightly more leisure, than the review we've done in the last four or five months, which obviously had to be fairly rapid. It was done seriously and thoroughly, I think, but we were looking at 900 bodies in a short space of time.

Q101   Chair: But will the triennial reviews just be about whether a body should continue to exist, or will there be a wider purpose to look at the efficiency and transparency and accountability of the body as a whole; to recommend changes rather than just a binary question?

Francis Maude: Well, I'd expect us to set out, in more detail, in the new year, how we expect this process to run, but what I envisage is that the triennial reviews will go through the same sort of process that we've done with this overall review to look at, first, does this function still need to be carried out? One of the things we discovered was lots of functions seemed to be necessary at the time and probably were necessary at the time, but the need for them has now faded. So to look at whether the function needs to be carried out at all, and then to subject it, if the answer's yes, to the three tests to see whether it meets one of those three tests, but also subsequently to look at efficiency, transparency and value for money, so that those factors can be fed into the decision-taking.

Q102   Chair: Who will carry them out? If they're carried out by the departments concerned, that is what was abolished in 2002. Shouldn't they be somehow independently carried out?

Francis Maude: Well, if you start to set up sort of external reviews, then you—

Q103   Chair: Or by the Cabinet Office?

Francis Maude: Well, I think we will be from head office and there to help.

Q104   Charlie Elphicke: Minister, if I may, I'd like to ask you about the bringing-in of the Big Society into the land of quangos to foster a new era of community engagement. There's a lot of talk about the Big Society, a lot of rhetoric, and I'm interested in the reality and how we implement it on the ground. The Government have announced this idea of devolving—creating mutuals, and charities and local organisations playing a role; why have you found it so difficult to transfer functions currently performed by non-departmental public bodies to the voluntary or private sector?

Francis Maude: Have we found it difficult? It's happening in some cases. The expectation is British Waterways Board will become a mutual, which I think is arousing quite a lot of interest among aficionados of the canals. Some of the consumer functions we expect to move to the Citizens Advice Bureau, which are very much in the civil society world. So, I think we've done a certain amount. Have we found it—

Q105   Charlie Elphicke: But isn't it the case that only nine out of 901 bodies are being transferred? This isn't great progress; this is less than one per cent, or about one per cent.

Francis Maude: Well, it's a considerably large proportion of those to which changes are being made.

Q106   Charlie Elphicke: Looking at the British Waterways Board, as I understand it, you said the BBC could not be within this particular thing because it was a statutory corporation, but then the British Waterways Board, as you'll know, was established by the Transport Act 1962 and is also a statutory corporation, and as we visited earlier, trust ports seem to be omitted from this altogether, and they are the worst sort of quangos, which are completely unaccountable to anyone. Is there any kind of method in drawing up this list, and can we have more included in it, as it goes through the House of Commons?

Francis Maude: We'd look at all amendments tabled with care and thought. Going back to your point about how many bodies or functions are being transferred to civil society organisations, it certainly is being considered, and if there are suggestions being made as to how that can be extended, we're very receptive to that.

Q107   Charlie Elphicke: I don't know about colleagues, but it seems to me that we should make change faster, deeper and wider when it comes to delivering the Big Society and fostering community engagement, particularly as a lot of these corporations are very unaccountable. The British Waterways Board is an attractive mutualisation but, in the case of my constituency, I have a chief executive of a quango paid more than the Prime Minister. They've instructed lobbyists like Bell Pottinger to brief against the elected Member trying to foster a Big Society project. Is that how you, as a minister, would like to see a quango behave, or would you like to see the Big Society shine light into the land of quangos to a greater extent?

Francis Maude: Well, transparency is very valuable. It sounds as if you're shining the light of transparency on to that particular body. To be honest, I don't know the exact status of the trust ports and why they're not in the scope of this, and it's something I will undertake to look at with some urgency.

Q108   Charlie Elphicke: But given that nine out of 481 have been changed, I'm just wondering: will you, as minister, be champion of faster, deeper, wider change and modernisation of quangos, so that we can have more of these sort of community mutualisation-type things, and will you be the champion in government for that, particularly if Members of this House are keen on fostering that kind of change to deliver the Prime Minister's vision of the Big Society?

Francis Maude: Well, I'm a huge enthusiast for it; indeed, my department has responsibility for the Big Society programme to the extent that it's a programme, and delivering particular elements of it, including the National Citizen Service, the whole process of sponsoring and promoting mutual spinouts from the public sector, which is a very exciting process and where there's huge amounts of interest within the public sector in pursuing that option. Faster, deeper, wider—I need little encouragement but would welcome any support.

Q109   Robert Halfon: Given what Charles just said about lobbying organisations and quangos, do you not think that quangos should be banned from using taxpayers' money to hire lobbyists?

Francis Maude: Well, there are already guidelines that should prevent quangos from hiring lobbyists to lobby government, which they have done in the past. We don't think those guidelines are sufficiently tight, and we'll be tightening them up. Again, I think taxpayers find it pretty offensive that a quango should hire a lobbyist at taxpayers' expense to lobby the Government—often, to lobby the Government to give it more taxpayers' money.

Q110   Robert Halfon: What about lobbying local councils and businesses and other organisations, private and voluntary? Surely, they shouldn't have any money to hire lobbyists in the first place.

Francis Maude: Well, they're all going to find themselves facing very much more constrained finances in the years ahead, but that's one of the things about accountability and the lack of it in the past. Some of these bodies have spent money in a way that is hard to justify, and we've seen that with the salaries that have been paid, which we've shone a light onto, and as I say, we're going to tighten up the rules. I will look specifically at how widely the constraints on hiring lobbyists are. We're particularly concerned with the tendency to hire lobbyists to lobby for more money and for things which seem to the public to be self-interested by that body, but I'll look at it to see whether it should be cast more widely.

Q111   Charlie Elphicke: Do you think it broadly is unacceptable for public funds to be used to brief against government policy or brief against an elected official?

Francis Maude: Yes, I would say so.

Q112   Charlie Elphicke: And were such a case to come to your attention, would you investigate it and take appropriate measures and give appropriate guidance?

Francis Maude: I'd certainly look at that, yes, and see whether we need to take steps as a result.

Q113   Charlie Elphicke: My understanding is, as you say, members of the public regard that kind of abuse of public funds as simply unforgivable, particularly if it is to further an interest of the public body, rather than accountability or transparency.

Francis Maude: Yes—that's my point. If it looks like it's self-interested, if it's promoting the vested interests of that body, I think people will find that very offensive.

Q114   Chair: Obviously, public bodies don't give money to political parties, but they do take stands at political conferences and pay quite handsomely for those stands. Do you think that's a legitimate use of public money?

Francis Maude: I think it would vary. Do I think it's unacceptable? Probably not as an absolute cast-iron rule. Some of them would say that it's justifiable to make decision-makers more aware of what they do, but I think, in all of these circumstances—

Q115   Chair: But usually it's the minister that's taken to the stand and questioned. Isn't there a bit of a conflict of interest there, where the public body concerned is actually trying to get visibility with their own minister?

Francis Maude: Well, in any event, all of this kind of activity now falls under the advertising and marketing moratorium that I introduced soon after taking office.

Q116   Chair: So there won't be any public bodies taking stands at party conferences from now on?

Francis Maude: I imagine that actually—this is a thought that has only just occurred to me, now that you've mentioned it—it will all have to be approved by me.

Q117   Chair: Well, that presents a conflict of interest, doesn't it?

Francis Maude: It does, doesn't it? I shall have to reflect on that one. I think I only see one way in which that can be resolved.

Chair: Sadly perhaps with a different hat on.

Francis Maude: Yes.

Chair: As a former chairman of the Conservative Party. Shall we move on? Mr Halfon: managing the transition.

Q118   Robert Halfon: Yes, the transition with the machinery of government: how are you going to manage the reorganisation?

Francis Maude: Which reorganisation?

Robert Halfon: The reorganisation from the quangos to the ones that are coming into the department.

Francis Maude: Well, it has to be done by individual departments. They are responsible for the implementation of this. They have the spending constraints, they have the budget, and they have to manage it in their way. We will be available to help and there will be common experience and toolkits that can be made available more widely, which we can facilitate.

Q119   Robert Halfon: What do you expect to be included in the business plan for the reorganisation?

Francis Maude: The implementation plan? Well, it would need to set out what the process is; how the new body, if there is a merger, say, is to be set up. I'm acutely aware of the criticism in the Institute for Government report on arm's length bodies, where they said mergers have tended to cost money, which I completely accept—they've tended to be costly, but plenty of mergers in the private sector have been costly as well.

Q120   Robert Halfon: I was going to ask you about that, to ask you what's going to be the cost of doing this. Is it going to be an incredible burden, as you just pointed out and some are suggesting?

Francis Maude: Well, there is an upfront cost in most restructurings, whether in the private sector or the public sector, and the task that departments will have is how to do that in a way that is most cost-effective, to control the costs, and to ensure, where there is a merger, for example, that the savings are absolutely harvested and they will have to take responsibility for ensuring that, but we will be available to help.

Q121   Robert Halfon: Are you going to publish the costing figures of the reorganisation?

Francis Maude: I guess departments will want to do that as they finalise the plans, yes.

Q122   Robert Halfon: And the Cabinet Office, presumably, approves all the implementation plans. Is that right?

Francis Maude: I can't remember, to be honest. I've generally required most things to be approved by me, and I can't remember whether we've specifically required that, but we are getting departments to submit their implementation plans. My main concern is to ensure that this doesn't drag on—that, when a plan has been outlined for changes to a public body and, therefore, concerns raised in the minds of people who work in those public bodies, that certainty should be created as quickly as possible, because these are people's jobs and lives we're talking about.

Q123   Robert Halfon: Do you recognise the quote from the Institute for Government, which suggests that the ability of departments to manage arm's length bodies is particularly poor? Is that right? Do you agree with that?

Francis Maude: Well, I think it would vary enormously, but most of them don't manage them. The whole point is these are meant to be autonomous and not accountable, so if there's a justification for the function being carried out in a way that's independent of a department, then the ability of the sponsoring department to interfere with its management is strictly limited. I think that has resulted in a lot of waste; for example, I think there's been huge duplication of communications functions. A lot of arm's length bodies have cheerfully gone ahead and spent huge amounts of money on IT projects, when frequently there will be a comparable IT system already commissioned somewhere else in government that they could have used. This is one of the things about accountability that is really important: they haven't been accountable sufficiently for the way in which they've spent public money, so there has been this duplication, and some of these bodies have grown out of all recognition.

Q124   Robert Halfon: Have you got specifics to improve the civil service ability to manage these bodies as they come in?

Francis Maude: Well, as the functions are transferred in, there will need to be managers who can manage them. These are not generally new functions, so there will be someone managing these functions as it is, and people who are carrying out the function in a public body, if that's going to come within the department, the expectation would be that those people will come in and run it in the department. There may be restructuring as a result within the department.

Q125   Robert Halfon: But do you have an estimate of how many jobs are going to be lost specifically from those quangos that are coming into departments?

Francis Maude: No. Again, that would be very much part of what the department's detailed implementation plans would throw up. All departments are going through at the moment, following the Spending Review, a huge amount of detail: how are they going to deliver the trajectory on spending that they have agreed with the Treasury? And this is very much part of that and it'll be very difficult and painful.

Q126   Robert Halfon: Some have suggested that with some of the quangos coming into the departments, in essence, all you're doing is moving deckchairs, and that there actually won't be any cost-saving, or very minimal cost-saving, to the public. What's your answer to that?

Francis Maude: Well, the answer to that is, if it is straightforwardly saying, "Here is a reasonably freestanding function in a quango which is being moved into a department and all you do is pick it up and move it into the department," then there will be neither a cost nor a saving, but it will have fulfilled our primary objective, which is to increase accountability, because that function will then be carried out in a way that's accountable. Separately, but importantly, there will be a trajectory on spending affecting that function, agreed as part of the Spending Review, that will require the department to take out administration cost, and the expectation is, pretty much across the piece, we're expecting to take out a third of administration cost over the period.

Q127   Robert Halfon: Some of these quangos will have their own buildings or have office space. Do you estimate that you'll make quite substantial savings from that, because will the office space then literally come into the department, or will they still be in the buildings that they're in, just under the separtmental aegis as opposed to their own?

Francis Maude: I definitely expect there to be savings in terms of occupancy costs, but it's not particularly driven by this, but this will help. The main tool for delivering property savings is the moratorium we've put in place, and we've just put in place some wider controls on property, but early on, within days of us taking office, we put in place a moratorium on signing leases or on not exercising break points in leases without, again, my approval, and that's for anything in central government, including arm's length bodies. The result of that has been significant reductions in government spending—taxpayers' money being spent on property. We are getting out gradually. It has to be quite slow, because of the points at which leases fall in, but it also enables us to make decisions on property configuration in a way that benefits the taxpayer and the Government as a whole, rather than serving the interests of a particular department or body.

Q128   Robert Halfon: So, in essence, you envisage some of the quango people who are going into the department to be able to work from departmental buildings.

Francis Maude: Well, they may do. It will vary enormously. In general, government offices are relatively under-occupied compared with the best practice more widely, and that's one of the things we're seeking to address, not just in respect of the public bodies review, but in relation to government overhead generally.

Q129   Chair: Can I just press you on two points? Public sector reorganisations have a notorious reputation for costing more money rather than saving money. How are we going to measure, in each case, that there has actually been at least flat funding or, better still, a substantial reduction as a result of the reorganisation rather than just from the squeeze? Are you going to get them to use up all their old stationery, for example?

Francis Maude: Well, I always remember that when the then Prime Minister took the view that the old Department of Health and Social Security was too large and cumbersome, and it was split into the Department of Health and the Department of Social Security, the then Prime Minister said to Ken Clarke, appointing him as the first Secretary of State for Health, "And I don't want you to have any new stationery printed until the old stuff's been used up," and for months afterwards, the letters went out with "and Social Security" carefully crossed out, which I thought was an admirable signal, and I would expect the same approach to be taken here.

Q130   Chair: I remember trying to do the same in Central Office when you changed the logo, but you wouldn't let me.

Francis Maude: That was different.

Q131   Chair: Can I just also press on this question of a skills gap? The Institute for Government says that skills gaps also undermine the effectiveness of arm's length government. "The role of sponsorship is often undervalued in Whitehall, meaning that sponsors receive relatively little specialised professional development, and sharing of best practice is limited."

Francis Maude: What's that a quote from?

Chair: That's from the Institute for Government's submission to this Committee in their evidence.

Francis Maude: Okay.

Q132   Chair: Yes, arm's length bodies are independent, but they do need to be managed by their sponsoring departments, and managed effectively, and that seems to be what's lacking.

Francis Maude: Well, I think I would say in general that there has been too great a— Well, if I'm going to make a wider and rather partisan point, I would say that in the last Government there was a reluctance of ministers to involve themselves in the less glamorous parts of public administration; i.e. ensuring that money is spent well and doing the sort of stuff which I spend my day doing, which I rather enjoy doing, but a lot of people don't find very glamorous. I think that's simply a symptom of it. People weren't concerning themselves with how money was being spent well, and that has to change.

Q133   Chair: Because modern air-to-air missiles are called "fire and forget", but we don't want "fire and forget" quangos, because they just atrophy. Ministers have to hold them accountable.

Francis Maude: This is what all of this is about really.

Chair: Mr Elphicke, you have a question and then we must move on.

Q134   Charlie Elphicke: Just to underline the issue about lobbying, it's a serious concern to all Members of Parliament. Will you consider issuing guidance explicitly banning any public money being used to lobby?

Francis Maude: I will definitely look at that, and come back to you on that, because we are looking to tighten up the rules anyway. I would not want, on the hoof, to say absolutely, as an absolute dogmatic thing, that no public money should ever be spent by any public body on lobbying.

Q135   Chair: But if there's not a reason for having such a ban, would you let us know, because we might recommend it?

Francis Maude: Sorry, say that again. If there's not…?

Q136   Chair: If there's not a reason to have a ban—or if there was a reason not to have a ban, would you let us know before we are in danger of recommending it against your wishes? We'd want to know why you don't want it.

Francis Maude: Yes, exactly. I'll look at that urgently and write to you, if I may. I do understand the point and I understand the—

Q137   Robert Halfon: And the distinction between lobbying government and lobbying business and so on; to me, there's no difference.

Francis Maude: You would take the same view on both, would you?

Chair: I think we're going to have to curtail this bit of the conversation. We'll come back to it, possibly.

Q138   Greg Mulholland: Just going back to some live questions from Mr Elphicke, going back to the idea that perhaps this really is a bit timid and is very much not a bonfire of quangos—I'm not saying that that should be—

Francis Maude: A damp Sunday afternoon barbecue.

Greg Mulholland: Yes.

Francis Maude: As one of our colleagues referred to it in the House of Commons.

Q139   Greg Mulholland: That's an excellent phrase. The Institute for Government produced a list of 11 different types of arm's length bodies: we've got advisory NDPBs, executive NDPBs, other NDPBs, tribunal NDPBs, executive agencies, NMDs, public corporations, independent statutory bodies, special health authorities, parliamentary bodies and the central bank. That's an awful lot of different types of arm's length bodies. Do we really need 11 different types?

Francis Maude: Probably not. It is a very complicated landscape. The first part of this review is trying to find out what's the list. Under the last Government there was no definitive list, and this probably isn't definitive because, as we've heard in the course of this morning, there are arguments about whether particular bodies should be inside or outside the scope. I think you're quite right that there is a huge variety in the ways in which bodies have been set up, the different formats, the different ways in which appointments are made, the different forms of governance that exist.

I'd be a little wary of trying to impose a rigid single uniform structure on them all, because they do exist for different purposes. Something which is a tribunal may be formally an NDPB but would be regarded as a sort of quasi-judicial-type body. At one stage I noticed the Supreme Court came up in the list of public bodies, and we kind of thought that's probably outside the scope. So, the—

Q140   Chair: Technical function, I think.

Francis Maude: Definitely requiring political impartiality. So, yes, it is very untidy, and it has been a random process, actually, of establishing a lot of these bodies, and there are some very complicated ONS-type definitions for what counts as a public body, or an NDPB for these purposes. There are some bodies that have a different format; the Central Office of Information, for example, is a Non-Ministerial Government Department, an executive agency and a trading fund, and I haven't yet fathomed exactly how it has this tripartite status, but it will change.

Q141   Greg Mulholland: The Institute for Government have come up with a model of four different types, based on different levels of impartiality. Have you had a chance to consider that model and pass comment on it?

Francis Maude: No, not at this stage. I'm kind of temperamentally slightly allergic to trying to create a top-down overall scheme of arrangement for all of this, but it is very complex and confusing, and simplification is desirable, but I think not in order to meet the demands of administrative tidiness. But I'll definitely have a look at that, and thank you for raising it.

Q142   Chair: How will the merging of the roles of the First Civil Service Commissioner and the Commissioner for Public Appointments help enhance accountability?

Francis Maude: I don't think it will particularly help enhance accountability. These are both roles that require political impartiality, for obvious reasons. It will help to drive some modest efficiency savings—one person rather than two—so I think it's worth doing, but it's not particularly about accountability.

Q143   Chair: Did you consult about this?

Francis Maude: I think we consulted the First Civil Service Commissioner and the current Commissioner for Public Appointments.

Q144   Chair: And did they agree?

Francis Maude: Yes.

Q145   Chair: Did they have an option?

Francis Maude: They're both very robustly independent individuals, as you would expect in those roles.

Q146   Chair: PASC has previously rejected the idea of a single ethical regulator, and recommended a more collegiate arrangement, but by combining the roles, aren't you effectively abolishing the Office of the Public Appointments Commissioner?

Francis Maude: No, we're simply saying that that function can be carried out by the same person who is the First Civil Service Commissioner. The support functions for a variety of these offices—including the Committee for Standards in Public Life, the Office of the Commissioner for Public Appointments, the Civil Service Commission—all operate in the same building, and there is a certain amount of common support, I think. I haven't involved myself very much in how that's organised, because these are bodies, obviously, which expect to be independent and fairly resistant to ministerial intervention, rightly.

Q147   Chair: My predecessor Committee has previously recommended against a merger.

Francis Maude: Against—?

Q148   Chair: Against such a merger, and Sue Cameron in the FT wrote last week that "this smacks of dismantling an important safeguard for our impartial civil service".

Francis Maude: I don't follow that at all. I haven't read Sue's piece, and I'm sure the reasoning is impeccable, but I don't see how she could reach that conclusion. The role of the Civil Service Commission has just been put in statute, so in fact this is about to be the creation of another NDPB, because the Civil Service Commission, having been given statutory form in the Constitutional Reform and Governance Act, which was passed just before the election, now for the first time ever has a statutory existence, so it has been enhanced, not diminished.

Chair: Minister, thank you very, very much indeed for your time and answers this morning.

Francis Maude: Thank you. It's a pleasure.

Chair: We look forward to preparing our draft Report.

Francis Maude: Very good. Thank you.

Chair: Thank you very much.

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