England & Wales Democracy, devolution and governance

The quango question


This article was first published by Public Finance.

Local government seems to have a love/hate relationship with quangos.  On the one hand, councils have in general been supportive of the current government’s efforts to reduce the number of quangos (or arms-length bodies as they’re more correctly known).  But back at the town hall, councils are actively considering setting up local ALBs to run services in key delivery areas, especially in housing and children’s services.

The Local Government Information Unit report The future of arm’s length bodies, produced with support from the Carnegie UK Trust, explains this trend and provides recommendations to help ensure that new ALBs are a better fit for an increasingly localist UK.

Our research suggests that local government has supported reductions in the number of ALBs in part because they have often been imposed by central government.  To meet the previous government’s Decent Homes target, for instance, local authorities were required to choose one of three investment options: stock transfer, PFI and arms-length management organisations for high-performing authorities.

What grates on councils is that central government has, in some cases, used ALBs to ride roughshod over local government’s historic role.  In Scotland, in the 1980s, Richard Parry has argued that the creation of local public spending bodies by central government was used to create ‘an alternative territorial system to the local authorities whose political affiliation in Scotland moved completely away from the party’.

In England, meanwhile, regional and national bodies involved in planning and housing, such as the Planning Inspectorate, have been seen by some commentators to undermine the role of local authorities in determining local policy.

That’s not to say, however, that the efficiency benefits of the ALB model should be negated by the transfer of functions to local government.  It would be expensive and pointless for local government to duplicate the work of a small and specialist body like the Gambling Commission. Rather, it’s an argument for ensuring that ALBs are accountable to politicians at the right level.

At present, a number of ALBs that relate to the core business of local government are accountable to central and not local politicians.  The Homes and Communities Agency, for instance, is the most important local government ALB but local politicians do not have powers over the appointment of chief executives and board members.

To tackle this issue, there should be a new obligation placed on government to ascertain the lowest level the function and accountability of an ALB could be delegated to, within the bounds of efficiency, when proposing the creation or reform of a public body.  ALBs created under this system would have a clear rationale.  Meanwhile, it would leave the way clear for proposals, such as those from Kent County Council, for local government to create sub-regions to take on ALB functions.

This reform, coupled with a new regime that demands the highest standards of transparency from ALBs, would create quangos that are a better fit for an increasingly localist UK.  This will, of course, require governments at all levels to engage with ALBs as an important part of our public policy landscape and depart from the current damaging trend of benign (and in many cases not so benign) neglect.

Whether the political appetite exists for this is questionable.  The LGIU research, however, leaves us in no doubt that this change in approach is absolutely necessary.

Laurie Thraves is a policy manager at the Local Government Information Unit