For those left-urgent need for reforms to ensure transparency, accountability and competitive neutrality
Maude review-a real opportunity for change
The Governments review of quangos aimed to ensure, first that their functions were deemed necessary, secondly to establish whether those functions should properly be carried out at arm’s length to government. There are of course two agendas at work. Cost- cutting and making quangos more transparent and accountable, ensuring that they deliver Public Value. If the quango carries out a highly technical activity, is required to be politically impartial or needs to act independently to establish facts, then it is right for it to remain outside direct ministerial accountability, says the Government. But it must still be accountable. And this is where the Government’s review is incomplete. Francis Maude is due to report early next year on how to make quangos more accountable. Currently many quangos do not publish accounts, and if they do they offer no clear benchmarks to measure their outputs . There is no central list of quangos and there are myriad different types, with different legal statuses. Some even escape the provisions of the Freedom of information Act, though they spend our money on our behalf, so its all a bit of a mess. Some are limited companies, others charities, others non-statutory public bodies and so on . The official list of non-departmental public bodies stands at 679 bodies but excludes a number of organisations that are clearly quangos, like the SSAT, which has for reasons presumably of political expediency , rather than consistency, been excluded from the quango list. Reassuringly though all public bodies will be subject to a rigorous triennial review, to ensure that the previous pattern of public bodies often outliving the purpose for which they were established is not repeated. They will be expected to become more open, accountable and efficient.
There has been a long standing but unmet need for publicly funded bodies to demonstrate that they deliver value for money and do not compete unfairly with commercial, non-subsidised competitors. Quangos, which are under pressure to find other income streams are, if anything, increasing their presence in the market place. Too many, though, have been cavalier about the requirement to explain what they do and how they deliver public value. Some have almost entirely ignored the Nolan Principles. Cross subsidies are widespread in the education market from organisations such as the SSAT, NCSL,TDA and British Council. They can absorb or conceal overheads which is not possible in a commercial operation. They support substantial infrastructures from their core funding which they can, and frequently do, deploy to demonstrate capacity to deliver new projects, with apparent (though not real) cost advantages. Too often contracts are not put out to tender-which seems designed to protect the vested interests of quangos rather than taxpayers. (The Treasury is supposed to be challenging vested interests) They also exploit their privileged access to information, which affords them a competitive advantage. Private and not for profit providers have found literally to their cost that in many childrens services information relating to pricing, costs and performance is not readily available or accessible .Vital information is often designated ‘commercial in confidence’. This obscures the true economic costs associated with service provision and makes it difficult for potential new entrants to determine whether they can and want to provide services within the market. An example of the exploitation of privileged access to information can be found at the NCSL which has a captive audience as every teacher aspiring to headship has to complete NPQH as it is a mandatory pre-requisite – these teachers names then go onto a data base that is then accessed for ‘selling’ other products and services. Commercial traders are of course constrained by data protection laws that preclude them from blanket e-mailing. The SSAT too can similarly ‘trade’ to their membership of Specialist schools and Academies. 90% of Schools now have some form of Specialism (however liberally defined) and the SSAT sells support services to these schools, with competitors, who might compete on both price and quality, largely excluded in practice from this protected market .Protected markets, affording privileges to one provider, we know are extremely unlikely to deliver value for money.
Politicians, thus far, have failed to address the issue of competitive neutrality, despite the damaging effects this has on the education markets both here and abroad .Quangos presence in these markets distorts competition, while undermining ‘contestability’ which was supposed to be a guiding principle, informing the way public and near to government organisations behave in the market. The main premise of the theory of contestable markets is that even with a single provider, the threat of other providers entering the market may force a monopoly provider to contain costs to competitive levels or maintain a specific level of quality in the service delivered, as long as the barriers to market entry and exit are not significant. It is arguable though that barriers to entry imposed by the presence of subsidised providers are very significant. It is no coincidence that UK based education providers are seeking income streams abroad (often finding quangos competing with them there too ,and equally unfairly). Unfair competition puts at risk the whole principle of the best provider delivering services, which means that the consumers of that service , which in education, is largely children and parents, lose out.
The Government must give careful consideration in developing this new framework to the interlinked issues surrounding competition, transparency, accountability and the delivery of public value within the quangocracy. And Education service suppliers should make their views known sooner rather than later to Ministers and officials responsible for developing this new framework.