Poor public sector productivity places quangos in the frame


Close to 90% of our government is carried out now not by ministerial departments, but delegated to a vast quangocracy,  made up of hybrid  organizations,  operating below the waterline, with limited supervision and scrutiny by Parliament .

It is bizarre that in this new age of transparency  our Parliamentarians ,whose job is to scrutinize the Executive and hold it to account, find their expenses are under detailed scrutiny, while  those who run  our quangocracy, the  delivery agents,   largely escape any such scrutiny. Do they deliver public value? Who knows? 

 They operate in various guises and  under differing legal umbrellas , some are statutory public bodies, others charities and some  even  operate as  private companies (allowing them to pretend  that they are not quangos, to avoid too close a scrutiny of the way they spend our money -think SSAT) all with different standards of transparency and disclosure of information.

One thing they have in common though is that they receive taxpayers money and implement Government policy, but are not, for the most part,  being held directly accountable for their outputs (often left free, incidentally,  to measure their own performance) .  Matthew Flinders 2007 book Delegated Governance and the British State: Walking Without Order is a real eye- opener. Flinders  argues that the British state is ‘walking without order’ due to a general acceptance of the logic of delegation without any detailed or principled consideration of the administrative of democratic consequences of this process. He reveals that there are about 5,000 quangos nationwide and some 1,500 centrally.

 For sure, Quangos do some good work. They can organise lavish conferences for starters. They help identify and disseminate best practice. But it is not always clear why, if there is such demand for their services, not for profits and the private sector couldn’t do their work just as well and at less cost. Too often quangos are given work that is not put out to open tender. How does this secure best value for taxpayers? Indeed securing best value for taxpayers is not, it would   seem, high on their list of priorities. Clearly it should be.

 Quangos bring in outside expertise, create a buffer zone round political hot potatoes and cut ministerial overload. They also provide a useful network to  enable Ministers to dispense political patronage as they appoint quango heads. (So much for merit, and recruiting the best manager for the job).  Quangos are responsible for ensuring that centrally driven initiatives are implemented. But many of these have been seen to have failed . They are at arms length from Departments so this  means that if things  do go badly, which they often do, Ministers can create space between them and the offending Quango. In this game of smoke and mirrors and passing the buck the one casualty is accountability. Historically, opposition parties always say that there will be a bonfire of quangos when they win power but the reality unfortunately can be   rather more prosaic. In truth, more barbecue than bonfire.   The Tories cut the quango count by 50 per cent when last in power.  However, the cost of the remaining bodies went from £6bn to £22bn. This Government in its first 10 years in power, then created 300 new bodies as the public sector expanded and the private (wealth creating) sector contracted.(still happening by the way)

 The education sector, of course, has its own alphabet soup of acronyms making up its own quangocracy. But given that we are currently in dire economic circumstances, and public finances have been shot through, there is a growing feeling that the time has come to seriously look at the cost effectiveness of these quangos. Indeed, whoever wins office next year , it is hard not to see how  they will avoid making (big) cuts. Sue Cameron of the FT informs us that the Government (and Tories) have been studying Matthew Flinders book in some detail. The Truth is that they know there is wastage and inefficiencies; Cameron has talked about it in some detail. But knowing it is the easy part. Knowing where to apply the scalpel, without significant political fall out is the hard bit.

More generally our public services have experienced a real terms funding increase of 55 per cent, financed by an increase of 5 per cent of GDP in public expenditure since 2000. Yet public sector productivity has continued to fall: by 3.4 per cent over the last ten years, compared to the private sector’s 27.9 per cent productivity gain over the same period. Some of the blame for this rests with the bloated quangocracy. On education productivity the ONS said on 1 December that the volume of education inputs – how many resources the government puts in – rose by 33 per cent between 1996 and 2008. The volume of outputs – how much the state gets in return – also increased by 33 per cent. As a result, productivity – a measure of efficiency that divides output by input – stayed the same. Implicit in the ONS  report is that increased spending should have led to a sustained rise in productivity and that standards in schools ought to have increased by a significantly bigger margin than they have.

 Measuring productivity in public services can be a challenge and is  an inexact science (though  apparently we pride ourselves in being world leaders in public service productivity measurement) , but there are very few observers out there who believe that the massive investment in education (it rose, at current prices, from £29 billion in 1996 to £63.9 billion last year — an annual rate of increase of 6.8 per cent.) has delivered the expected returns  and the education quangocracy cannot avoid sharing some of  the blame for this .

So, fundamental reforms seem likely. The fact is that, more than piecemeal reform, we need a transformation in how Government does business and a debate about where the boundaries of the state should lie. The challenge is to deliver more with less, getting more resources to the frontline by eliminating intermediary organizations and all processes that do not add value. So where does that leave some of our quangos?


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