Stand-alone and deliver? By Nick Comfort

4 Sep 08
More and more civil servants now operate at arm's length from Whitehall as part of agencies. But there are suggestions that a Tory government might reverse this trend and attempt a 'radical realignment'. Nick Comfort reports

05 September 2008

More and more civil servants now operate at arm's length from Whitehall as part of agencies. But there are suggestions that a Tory government might reverse this trend and attempt a 'radical realignment'. Nick Comfort reports

For several decades now, ministers have overseen a steady migration of administrative, executive and even decision-making functions from central government to stand-alone agencies.

The rationale has varied: to transfer routine tasks from policymakers to bodies designed for the purpose; to operate these functions more economically (usually involving a move away from London); to distance ministers from decision-making in certain sensitive areas; and, cynics have argued, to reduce the headline figure for civil service staffing levels.

Now there are signs that the Conservatives are having a rethink, and that Francis Maude, who is heading David Cameron's 'preparation for government' exercise, will set a very different tone when he presents his thoughts to civil service head Sir Gus O'Donnell in January. This is not least because quite a few of the civil servants that Maude has spoken to feel they are being cut out of the decision-making process.

Some of the arm's-length agencies have proved highly successful, others not. The Driver and Vehicle Licensing Agency, centred like many on a bespoke computer system, has acquitted itself well after now long-forgotten teething troubles. So, generally, has the Benefits Agency, data security apart. By contrast, the Child Support Agency has been an unmitigated disaster. Recently, the Qualifications and Curriculum Authority has been found wanting over the failures of ETS, the company sacked from running this year's Sats tests. Others are bound to have their turn under an uncomfortable media and political spotlight.

The range of responsibilities delegated by ministers to stand-alone agencies and quangos is vast, and their nature varies considerably.

The DVLA and the Benefits Agency have clearly specified administrative tasks. Other bodies have a degree of freedom of action, or interpret their remit from Parliament in a particular way. The CSA's political problems began the moment MPs realised it was targeting middle-class divorced fathers who were already paying maintenance for their children, rather than the feckless runaways they thought the agency had been set up to track down and shake down.

Others, again, owe their very existence to the need to be independent of government, for example the Sentencing Guidelines Council.

The trend to reduce the burden on Whitehall departments by transferring much of their work to specialised bodies began under Labour in the late 1960s, and has continued under governments of varying philosophies. It survived Margaret Thatcher's commitment to 'cull' quangos, and also New Labour's original intention to devolve power from Whitehall to the regions. Bizarrely however, the regional development agencies have taken on – in a disjointed form – programmes previously regarded as a national priority, such as aerospace research and development.

The most systematic expansion of such bodies resulted from the 'Next Steps' initiative: a 1988 white paper building on the Ibbs report on Whitehall efficiency, and the financial management initiative that preceded it.

Within a decade, 93 executive agencies were created (or hived off from departments) under Next Steps, such as the Employment Service and NHS Estates, plus 33 that gravitated to the devolved administrations. By the time Labour came to power, Next Steps had become part of a broader trend. More agencies continued to be formed under its banner, among them Jobcentre Plus and the Rural Payments Agency.

The effect of the creation of executive agencies and quangos on civil service staffing levels is confusing. Next Steps agencies remain within the global employment total, which has shown an increase from a 1997 full-time equivalent of 473,540 to almost 500,000. This, however, conceals the fact that a number of civil service functions of a decade ago are no longer in the public sector, for instance the major part of the Defence Evaluation and Research Agency – with some 9,000 employees – which became QinetiQ.

Defenders of New Labour's stewardship also point to a reduction in the number of quangos from 857 in 1997 to 827 now, and a drop of more than 10,000 in their workforce to 95,000. But some of these statistics are contested, and definitions disputed.

The very independence of agencies has disadvantages for government in terms of accountability. The main reason for Chancellor Alistair Darling's abolition of the Strategic Rail Authority and the recapture of its powers by the Department for Transport was that the SRA was taking decisions on the financing of the industry over which politicians and mandarins had no control. It was one thing for Network Rail to be off the public balance sheet – a fiction that Gordon Brown was happy as chancellor to connive at – but the Treasury could not stand for the SRA usurping its budget-setting powers.

It is also a truism that if you set up an independent body to make policy decisions and recommendations, its conclusions might be unpalatable to the government that created it. This was borne out in spades when the independent panel set up to recommend which local authority should receive England's sole super-casino stood logic on its head and opted for Manchester ahead of Blackpool. Ministers thought they were insulating themselves against any suspicion of impropriety, but just made things worse for themselves and were rescued only by Brown's accession to power and his decision to forget about the whole thing.

The establishment of the Electoral Commission to distance ministers from the machinery of democracy seemed a good idea in the post-Nolan climate of 1997. But Labour ministers were soon complaining that the legislation that established the commission was tying their hands in ways that had never been contemplated.

Equally, it was laudable for the Ministry of Justice to set up an arm's-length Sentencing Guidelines Council as a break with the old system – invalidated by human rights' legislation – under which sentencing policy was dictated by the home secretary. Jack Straw can hardly have been thrilled when it recommended that people found carrying knives should receive a caution, just as public concern over knife crime was reaching its height. Fortunately, the council was nimble-footed enough to scramble out fresh advice at the turn of August, with three months' detention now the starting point.

Labour ministers have come to believe that if you are faced with a really knotty problem, you should get someone else to resolve it for you. The ultimate example is the Infrastructure Planning Commission, legislation for which is nearing the end of a troubled passage through Parliament. The government has two motives in setting up the commission. The first is legal – that as long as a secretary of state takes the final decision on major projects such as motorways and nuclear power stations, environmentalists will mount challenges in the courts. The second is political: that if a panel of the great and the good takes a decision, the public will be more likely to accept it.

Unfortunately, it gives off another, more powerful, message: that elected politicians are afraid to take controversial decisions. If they are not prepared to do their job, what is the point of voting for them? And if major decision-making is to be hived off from ministers and senior civil servants, what is the point of Whitehall?

On the Conservative side, Francis Maude and Nick Boles have yet to complete their work on what a Cameron government would expect from Whitehall, and what the civil service can expect from the Conservatives. But they have started pulling the strands together, and Tory insiders are happy to hint that a radical realignment is in prospect. This will not necessarily involve restructuring but a different approach by ministers that will keep more decision-making in-house and policy officials more firmly involved.

One driver for this is the discontent in Whitehall about the way decisions are being taken and how Britain's administrative class is reputedly being cut out of the process. Some senior civil servants have echoed to the Tories the concerns heard in Whitehall toward the end of John Major's premiership: that ministers have run out of ideas and are simply tinkering. But to a greater extent they cite a 'lack of confidence among ministers at taking decisions' which has led them to bypass the traditional government machinery both for reaching those decisions and for implementing them. More fundamentally, they have told the Conservative policy-formers that even in the vast majority of cases where decisions still rest with a minister, they are being excluded.

The Whitehall system has always depended on policy officials giving the best advice, as they see it, on courses of action, with the last word resting with the minister. But increasingly, Maude has been told, they are simply not being asked. 'They don't tell ministers what they want to hear,' one Tory source explained. 'So they don't get invited to the next meeting.'

There is no reason to suppose an incoming Conservative government would be any more willing to see its programme watered down by nervous civil servants than New Labour was. Early in the Blair years, at a meeting in the now Department for Work and Pensions on how to increase the take-up of benefits, one Downing Street staffer was appalled when an official suggested that the leaflet they were planning should include a page on why claimants should not take them up. Yet any government needs to have the implications of policies under discussion put to ministers frankly and impartially.

There is one even more powerful argument on accountability that Cameron will be painfully aware of. Ministers have long nursed the hope that if the implementation of policy is handed over to an agency operating at arm's length, they will not be blamed when things go wrong. Schools Secretary Ed Balls is the most recent minister to fall victim to this delusion. When the Sats tests dissolved into chaos, he said: 'I've operated this at arm's length. I'm not the person who on a daily basis has been dealing with this.' Technically, Balls was right – although there are indications that he had received plenty of warnings of what was brewing. But to the parents of 11-year-olds left without a Sats grade, Balls is responsible, if only because his department set up the QCA and oversees it.

Of course, this argument has been heard before. In 1995, then Home Secretary Michael Howard sacked Derek Lewis as head of the prison service after a damning report from an inquiry into conditions at Parkhurst. Rejecting calls for his own resignation, the home secretary declared that ministers were responsible for setting policy, and if that policy was faultily executed, it was those directly responsible who should carry the can. While Howard constitutionally had a point, his argument was greeted with derision, not just by the Labour Opposition but by quite a few on his own side, including his deputy, Ann Widdecombe. This episode was largely the reason why William Hague, not Howard, was elected Conservative leader after the general election defeat of 1997.

The Derek Lewis affair must be engraved on Cameron's heart: until a short time before, he had been Howard's special adviser. In preparing not just a team and policies for government but also a means for implementing them, he will be bearing in mind the need to rebuild faith in government.

This means not just a genuine devolution of decision-making to local authorities and other elected bodies, but also that ministers are big enough not only to take decisions but to take responsibility if things go wrong.

The corollary of that is that in taking back that responsibility, ministers would end the practice of blaming officials and appointees with whom they now want the buck to stop. And if this forms part of Francis Maude's New Year present to O'Donnell, it could fall on receptive ground in Whitehall.

Nick Comfort is a former Daily Telegraph political correspondent and special adviser to the secretary of state for Scotland, and author of The Politics Book


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