A pledge to scrap a number of education quangos underpinned Nick Clegg’s recent announcement to give every child from a poor home a £2,500 funding boost.
The education sector, in which quangos seem to have flourished with impunity in recent years, would certainly appear ripe for some form of restructuring. Yet education is far from the only area to be vulnerable; Paul Carter, leader of Kent County Council, argued in a recent edition of Public Finance that a cross-sector bonfire of the quangos could deliver savings of some £15bn.
In any spending environment, let alone an ‘age of austerity’, such results would find much favour within the Treasury and beyond. And that’s not at all. When it comes to tackling the deficit, the average voter would surely rather see budget cuts to somewhat obscure bodies such as the Architects Registration Board or the Legal Deposit Advisory Panel than see their taxes rise – again.
The Lib Dem initiative, while eye-catching, may just have been the latest salvo in pre-election jousting between the political parties. But Clegg’s decision to target what he views as expensive and unnecessary bureaucracy was hardly original; both Labour and the Tories have expressed their enthusiasm to come down hard on the ‘quangocracy’.
Last December the prime minister announced plans to cut 120 quangos, while David Cameron has vowed to undertake a widespread cull, arguing that ‘too much of what government does is done by people who no-one can vote out’. He’s got a point.
It’s clear, then, that the impending drive to rebalance the public finances will place intense pressure on the UK’s quangos. Some will no doubt continue to thrive. But while many, at best, face an uncertain future, it must be remembered that theirs is a deep entrenchment into public life.
Despite Brown’s pledge to crack down on their growth, a recent survey from the Cabinet Office on non-departmental public bodies revealed that public spending on quangos has surged by nearly £10bn in the past two years. In addition, while the public has recognised the need for public spending cuts, there is also a reluctance to accept poorer services.
A clear strategy is therefore required. For starters, government must agree exactly how many quangos exist. That estimates vary on the number is a damning indictment of Whitehall’s ability to oversee the operations of the public sector.
To streamline the UK’s quangocracy, policy-makers must go further than previous reviews arms-length bodies, including the current OEP and Public Value Programme, by examining the merits of each organisation on an individual basis. Establishing what they do, whether they should be doing it, how they do it, and what government can now afford, is key.
Not only will this help arrest the steady growth of spending by quangos but it will also place financial discipline and affordability at the heart of delivery – a mindset that will be increasingly crucial in the years ahead.
James Close is a partner in Ernst & Young LLP’s government services practice
