24.10.16
Government failing to hold arm’s-length bodies to account, MPs say
Government departments and the Cabinet Office are failing to provide oversight of what arm’s-length bodies do or properly hold them to account, the Public Accounts Committee (PAC) has warned.
Overall, there are more than 460 arm’s-length bodies, spending around £250bn a year, varying from large bodies such as NHS England and HM Revenue and Customs, to small bodies such as the Gambling Commission.
The PAC report focused on four departments – the Department for Business, Innovation and Skills, the Ministry of Justice, the Department of the Environment, Food and Rural Affairs and the Department for Culture, Media and Sport – which between them oversee 116 bodies, with a £25bn budget and around 144,000 staff.
It found that there was no consistent, transparent process for holding arm’s-length bodies accountable. The committee said that departments should publish accountability statements to set out how bodies are held responsible.
Meg Hillier MP, chair of the PAC, said: “The Cabinet Office describes today's diverse network of arm's-length bodies as 'an accident of history'.
“While this 'accident' may not have been preventable you would certainly expect any replacement system, designed from scratch today, to look very different.
“It underlines precisely why the Cabinet Office must ensure these bodies—some of which are responsible for delivering large and vitally important swathes of public policy—are subject to consistent and effective oversight.
“That must start with government setting out clear criteria for how business is conducted, with clear lines of accountability on spending and performance. The public need to know who is spending money on their behalf, and why.”
The PAC said that there was no clear criteria for determining what should be done by an arm’s-length body. The Cabinet Office has introduced measures to tackle this, such as publishing classification guidance, and introducing a programme of reviews.
However, the PAC said it was “disappointing” that more had not been done earlier, and said the Cabinet Office should respond with clear criteria departments must consider when deciding if delivery should be through arm’s length bodies, and set out by when it expects departments to have come into line with its guidance.
In addition, the report said the Cabinet Office should work with departments to develop robust but proportionate measures of arm’s-length body performance.
It was found that departments used risk-based approaches to oversee their bodies, which resulted in some being subject to greater scrutiny than others, and departments did not share knowledge about the best approaches to use. The committee said the Cabinet Office also needed to develop a principles-based framework for overseeing arm’s-length bodies.
One of the main means of oversight is departments having the power to appoint and remove non-executive board members, but the committee warned that the “lengthy and burdensome” appointment process was putting off good candidates.
It said the Cabinet Office should provide an update by July 2017 on its response to the Grimstone review, which recommended improving the appointments process.
Furthermore, the committee found that departments did not involve bodies in policy decision-making from an early stage and were missing out on opportunities to use their expertise.
A Cabinet Office spokesperson said: “Cabinet Office has taken the lead in engaging with departments across Whitehall and arms-length bodies.
“We are taking the opportunity to go further than oversight and are collectively working to redefine the relationship between departments and arm’s-length bodies. The government will respond to this report in full in due course.”
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