Big reforms required to protect taxpayers and the market


According to the LGA the quangocracy now manages and recycles £43.2 billion of public money every year – that’s £2,000 per household. Another estimate claims that there are at least 1,500 bodies with around 700,000 staff and a total budget above £64 billion. Some do an important job, particularly those that regulate and monitor standards.  With others though it is hard to tell what they do that adds value, or whether what they do is effective.

And, what about education quangos?

Across the UK, there are over 80 known quangos involved in the government-directed provision of education, training, or skills services. The combined known budgets of these quangos amounts to around £24 billion (there is some dispute over what is and isn’t a quango which accounts for the differing estimates). The bulk of this is made up £11bn for the Learning and Skills Council (on its way out) and £6.9bn for the Higher Education Funding Council for England. Far from taking the knife to   education quangos the government has recently created three new quangos to replace the LSC: the Young People’s Learning Agency (YPLA), the Skills Funding Agency and the National Apprenticeship Service. The Association of Directors of Children’s Services (ADCS) and the Local Government Association (LGA) believe these three quangos will be unwieldy, complex and costly. They also claim the bodies will employ more staff than necessary. So no surprises there then.

These education quangos come in all shapes and sizes with different legal status’.Two things they have in common though are that they are taxpayer funded, either fully or in part, and they are carrying out tasks for the government. Of course they differ in their role and functions .We probably have five main quango groupings. First  the wholesalers – in other words, the upstream distributors of the money – e.g. Learning and Skills Council and its successors, Higher Education Funding Council, Teachers Development Agency. Next we have the Regulators e.g. regulators or those with an oversight position like the GTC, OFSTED, QCDA OFQAL .Third the advisory quangos. Fourth the tribunal quangos   And, finally, the service providers – these could be or are independent providers to the end customer. Under these one could include SSAT, the NCSL and the British Council.  Quangos are continually being created, occasionally dissolved, merged but relatively rarely abolished, despite successive Governments promising a bonfire of quangos and to cut waste. Keeping track therefore of education quangos is very much a moving target. Even now (see above) more quangos are being created.

But most lack basic transparency and accountability. They report at different times of the year, in different formats, applying different rules for public disclosure.  Frequently, they publish their results in non-searchable pdf formats and lodge these reports with the Charities Commission or Companies House (which must be paid for).  Some are subject to Freedom of Information requirements, some not. They defy easy scrutiny and accessibility. Their web sites are, too often, hard to navigate and often do not publish detailed performance indicators and performance outputs or much detail about how they spend our money. They prefer instead to measure inputs rather than outputs ie how many conferences they run, rather than how their activities directly impact on learners performance and at the chalk face.   What is clear, according to Margaret Eaton, chairman of the Local Government Association is that “ the public want more involvement in decision-making and the quango state is the least accountable part of the public sector. “

The Reform think tank in its pre-Budget report released on 20 April  last year claimed that an education bureaucracy has developed that is “ unresponsive to the consumer and restricts professional judgment”.  The think tank argued that the number of quangos is unsustainable –“To pursue important reforms such as the academies programme expansion and higher education funding change, it is vital that costly central dictation and extraneous activities are removed. This will free resources and capacity for reform.”  Echoing a sentiment expressed in a Times leader at the time, Reform said that money should be spent at school level rather than on (Ministers) ‘vanity projects’. Reform demanded “swingeing cuts” to education quangos. Ministers rather like quangos as a rule. They afford them scope for dispensing patronage and creating distance between them and prickly policy areas ,farmed out to quangos. If things go pear shaped which they often do (think QCA and LSCs funding of colleges) they pass the buck. The nothing to do with me guv-approach undermines accountability of course and Ministerial responsibility leaving stakeholders confused and frustrated but its now part of our system.  A Centre for Policy Studies report also last year authored by Tom Burkard and Sam Talbot Rice said seven of the main 11 education quangos in England should be abolished, with the remaining ones being reformed or turned over to the voluntary or private sectors. On their hit list- the new QCDA (formerly the QCA) to be replaced by a small Curriculum Advisory Board, with the aim of freeing schools from the centralized control they face from the National Curriculum. The TDA, NCSL and BECTA should also go, and Partnerships for Schools re-vamped.  In some cases, they said, the powers the bodies have should be devolved down to schools. Sam Talbot Rice says part of the problem with quangos is that they are set up to tackle a certain problem, but then things move on and they are not needed in the same way but are difficult to dismantle because this sometimes requires legislation.  “It’s easy to reach for a quango when there is a problem,” he said.  “They are easy to set up and hard to get rid of. There might have been an initial reason for them and they have grown, drawing in taxpayers’ money.”

The Local Government Association in a more general  report on quangos  ‘Putting Power into Local Hands’ discovered that some of the quangos  they looked at spend large sums of tax payers’ money to employ senior managers to deliberate policy, strategy and communications, as opposed that is  to managing the delivery functions the quango is actually responsible for. Collectively they are spending much more on communications without though, paradoxically, becoming any more transparent in the process.   Transparency and basic unmediated communications is signally lacking with many quangos. The SSAT incurs the wrath of education journalists by running a significant and expensive in-house PR department, while concurrently sub-contracting an external PR agency to answer any press inquiries, so placing a shield between themselves and the media (and other stakeholders)-fairly typical of the mind set of this secretive quango, which supports Academies and Specialist schools. Quite apart from the expense of it all-it fails the most basic transparency test. My guess is that if the SSAT has a future it will be in slim line form. It will have to change its attitude both to the way it  manages public funds, it measures itself (relying almost exclusively on measurement by contextual added value given its limitations is simply not good enough) and the way it conducts itself in the marketplace. It has managed to alienate most of the large education suppliers in both  the profit and not for profit sectors.

And what about their funding?  All are subsidized by the taxpayer. They are great recyclers of taxpayers money too. The SSAT will claim that it only receives about 20% of its income in grant form. But given that it supports 90% of state schools many of whom pay it fees and it has guaranteed contracts to support schools many of which are not open to competition, the reality is that most of the SSATs income comes via different routes and streams from the taxpayer.

Education quangos have a great predilection for funding each other. Delivering resources to the front line ought to entail a minimum of friction and intermediation between the public sector and the end consumer. Instead, there are often several layers of capital transfers and bureaucracy from central government via other bodies towards education quangos and then to the front line.  This is inefficient and wasteful.

Nor are Education quangos competitively neutral using as they do their grant funded privileged position to compete in the market here and increasingly abroad. Private sector companies claim that Quangos cross subsidise and can conceal the real costs of their bids when competing for contracts, so giving them a competitive advantage while selling themselves on the back of implicit government guarantees and  backed by guaranteed income streams from long term government contracts, many of which are not put out to open tender.  When competing abroad for contracts they receive more support too from UK officials than private companies.  True. Try pitching for education contracts that the British Council is interested in and see how much the local embassy helps you or indeed the British Council (which is supposed to promote British education interests abroad).

This is of great concern because no consideration is currently given to the “crowding out” of private sector education services. Apart from the obvious business of teaching and funding students ,ostensibly  to acquire new skills and improve training or learning,  education quangos also have acquired, and have been encouraged in this respect by the Government, a commercial line in publications, awards ceremonies, consultancy, training, school support advice and improvement services, international offices and networking, membership programmes and even conferences. All of these could and should be competitively contracted out to the private and not for profit sectors and thus have a positive deflationary impact on the cost of state-funded education. With pressure soon to be put on quango budgets many of these functions will be kept in-house to protect   these quango’s income streams and taxpayer quangos will search for business abroad, bringing them up more often against non-subsidised UK companies which by definition have to compete at a disadvantage.  This acts against fair competition, contestability and also stunts the development of the education market as non –subsidized companies find it too costly and risky to compete head to head with quangos.

The fact is it is all a mess and cant continue like this as politicians realize. Lord Mandelson has called for review of certain quangos and the Prime Minister would like some rationalization.

Liberal Democrat education spokesman David Laws has said: “The rise of education quangos has been incredibly expensive and there’s little evidence to suggest they have raised standards. At a time when public finances are being squeezed, we must ask if these quangos are necessary. When infant class sizes are rising and schools need more money to support struggling pupils, we need to be looking at ways to divert more money to the front line rather than to bureaucrats.”

The Tories have pledged to cut quangos if they gain power. The shadow education secretary, Michael Gove, has said every effort had to be “directed to identifying waste and unnecessary bureaucracy” to “concentrate resources where they are needed: in the classroom”.

It would be worth senior quango managers revisiting the Nolan principles. Two in particular spring to mind. On openness – ‘Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands’. And on Accountability - ‘Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.’

And the time has surely come for a proper audit of quangos, and for those that can demonstrate that they fulfil an essential purpose and deliver public value to be held more rigorously accountable, with the rest abolished. Ironically a regulator might be needed to control the activities of quangos in the market or a ban introduced  on quangos from competing in the market for specified services unless they can demonstrate unequivocally that they are competitively neutral.