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

Written evidence from Sir Gus O'Donnell


  Further to my appearance before the Committee on 28 October, you asked for a note on the details of the financial and headcount savings associated with public bodies reform. I know that the Minister for the Cabinet Office, Francis Maude, has given evidence on this topic since my appearance and this note reiterates what Mr Maude outlined to the committee.

  First of all I would like to emphasise the point we both made about accountability. The primary reason for the reforms to public bodies is to ensure that accountability rests in the right place—either with ministers, by bringing functions back into departments, or with local communities, by devolving functions to local government or moving them into the private or voluntary sector. We do, however, expect that the exercise will reduce duplication of effort and activity, either by stopping functions that are no longer vital to the delivery of public services, or by streamlining activities and reducing administrative costs.

  As you know, the Chancellor announced significant measures in the spending review to reduce waste in Whitehall, and the administrative budgets of government departments and their public bodies will be reduced by 34% over the spending review period, saving £5.9 billion a year by 2014-15. The reforms to public bodies will make a contribution to these savings. Departments are still working through the implementation details of the proposed reforms and will need to allocate budgets to their public bodies accordingly. This process will need to be complete by the start of the next financial year. Nevertheless all costs, including redundancies, will be met from within each department's spending review settlement.

  Previously, all spending on public bodies was accounted for from within departmental programme budgets. From April 2011 this will change so that the running costs of public bodies will be included within departments' administrative budgets, placing a much stricter savings regime on public bodies for the next spending review period than would otherwise have been the case.

  For each of the announced changes, individual organisations will be working with their staff to make sensible plans about how the workforce will need to change, and until that work is developed further it is not possible to give accurate information about the level of headcount reduction. Where changes to public bodies are proposed that will have an impact on staff, the government and the public bodies themselves will of course work to ensure that appropriate implementation planning takes place and that staff are treated fairly.

  We are looking forward to moving into implementation stage, and will be taking steps to ensure we can demonstrate our progress. They key milestones are set out in the Cabinet Office's draft business plan which was published on 8 November, copies of which have been provided to you.

  During the session you also asked about the negotiations that we are having with the largest Government suppliers and I thought it would be helpful to set out the latest position. So far 15 MOUs have been signed and final negotiations are currently underway with four other suppliers and we are confident that MOUs will be signed with them in the near future. Once all MOUs have been signed and delivered, the overall in-year savings from this phase of the project are estimated to be in excess of £800 million.

December 2010

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2011
Prepared 7 January 2011