Whitehall must strengthen oversight of arm’s-length bodies, says PAC

21 Oct 16

Government departments often have weak or unclear accountability for arm’s length bodies, despite spending £250bn through them every year, the Public Accounts Committee has said.

In a report published today the committee found departments often lacked clear oversight over bodies within their remit and missed opportunities to learn from work carried out.

It called on the Cabinet Office to use its position at the centre of government to ensure the way departments manage arm’s-length bodies improved.

There are now more than 460 arm’s-length bodies, through which departments spend around £250bn annually. There is a huge variety in their size and importance. Among them are NHS England, Revenue & Customs, Courts & Tribunals, and smaller agencies, such as the Gambling Commission.

However, the report concluded that “for too long government has had no clear criteria” for deciding on what should be done through a department or an arm’s-length body. The complex, diverse network of bodies was described by the Cabinet Office as an ‘accident of history’.

Although there were examples of good oversight, the quality of accountability was inconsistent, and departments regularly lacked information on how bodies were performing. More benchmarking of performance would improve efficiency by highlighting where there was scope for improvement.

The committee said it was not convinced that departmental oversight was proportionate to the relative risks and opportunities presented by different arm’s-length bodies. Also, departments rarely share knowledge about effective approaches to managing bodies, which can result in oversight systems being inefficiently duplicated.

“The public need to know who is spending money on their behalf and why,” said Meg Hillier, chair of the PAC.

The committee also warned that the process of appointing non-executives to arm’s-length bodies was “lengthy and burdensome and risks putting off good candidates.” It called on the Cabinet Office to apply the recommendations of the Grimstone review on the process of public service appointments by summer next year.  

Hillier said the responsibility to improve the management and oversight of arm’s-length bodies, “some of which are responsible for delivering large and vitally important swathes of public policy”, should fall to the Cabinet Office.

The Cabinet Office was recognised to be “trying to inject more discipline and logic into the classification process” by publishing new guidance for departments in April 2016. But the committee lamented the absence of more progress on this area, “given the importance of arm’s-length bodies to delivering services and the scale of spending through them”.

“The government cannot wash its hands of accountability simply by delegating its business and this committee will expect to see the Cabinet Office taking meaningful steps to strengthen oversight in this area,” Hillier concluded.

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