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No collective government understanding for ALB oversight

There is no collective understanding of what type of oversight is cost effective and appropriate from government departments for arm’s-length bodies (ALBs), the National Audit Office (NAO) has said in a new report.

The NAO carried out an audit of four departments and their relationships with ALBs – the Ministry for Justice, Department for the Environment, Food and Rural Affairs, Department for Business, Innovation and Skills and Department for Culture, Media and Sport. In total, the departments paid £25bn to 116 ALBs.

However, the NAO found that there is no collective government definition of an ALB or list of ALBs.

Additionally, the departments adopted different strategies for managing their relationship with ALBs in response to factors such as funding constraints and initiatives to improve transparency, but a lack of data meant that it was difficult to tell which department’s approach to managing its relationship with ALBs was the most effective.

It also said that there was a lack of clarity about accountabilities, roles and responsibilities for ALBs and that the process for appointing and removing board members for ALBs was time-consuming and bureaucratic.

Departments also focused oversight on financial and administrative issues instead of the quality of services delivered, meaning that they were missing opportunities to make the most of the skills of ALB staff.

Amyas Morse, head of the NAO, said: “If one of the main reasons for having arm’s length bodies is to provide a zone of relative independence, the fact that oversight mechanisms focus predominantly on compliance and control means there is almost certainly room for improvement.”

However, the report found there were some positive areas, with departments demonstrating an appetite for improving their management of ALBs. A survey of ALBs found that 80% felt their department was effective in helping them deliver their objectives, compared to 69% 18 months ago, and 52% said that oversight of their organisation had increased in the same period. However, 28% said they were partially clear or not clear about their department’s objectives in relation to their organisation’s area of work.

The NAO recommended that the Cabinet Office should review the effectiveness of existing mechanisms for sharing good practice and developing capability in the oversight of ALBs, and work with departments to better understand the costs and benefits of different approaches.

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