'Disruptive and damaging to morale': IfG shines light on abolition of public bodies

Ministers often don’t understand what the organisations they’re planning to axe actually do, report says
Cabinet Office: new guidance required

By Jim Dunton

09 Mar 2023

Hundreds of arm's-length bodies have been scrapped over the past 13 years but a new report says reform is often “misguided or delivered badly” because ministers either don’t understand the organisations they’re planning to axe, or are embarking on reform for the wrong reasons.

The Audit Commission, Public Health England and the UK Border Agency are prime examples of situations in which ministers did not properly appreciate what the bodies did – and why – before scrapping them, the Institute for Government said.

The think tank is calling for the Cabinet Office to introduce better guidance on how ministers, public-body staff and civil servants should approach future changes to ensure reforms are better prepared for.

The IfG said that the number of advisory non-departmental public bodies had fallen from 500 in 2010 to just over 100 last year, with significant drops in the number of executive agencies and executive NPDS in the years following the coalition government’s “bonfire of the quangos”.

It said interviews with officials involved in six case-study abolitions had shown that reform could be a “genuinely transformative process” that saved public money and improved the way services were delivered. It said the abolition of Jobcentre Plus as a separate entity from the Department for Work and Pensions and the demise of the Hearing Aid Council were both success stories.

But report authors Grant Dalton, Nathaniel Amos, and Matthew Gill said decisions to close public bodies were often made and announced too hastily, with ministers and their civil servants often failing to properly understand the legislative basis for a body and why it was created.

“Haste can be mistaken for effectiveness, resulting in chaotic transitions and damaging staff morale along the way,” they said.

The report said “multiple interviewees” reported that the coalition government’s 2011 decision to abolish the Audit Commission was an ideological one that was not based on evidence or an understanding of the regulatory system for local-government audit, with details “backfilled afterwards”.

According to the report, senior figures told the IfG that shutting down the final elements of the Audit Commission’s work were projected in 2014 to be more costly to the exchequer than keeping it running. But the abolition went ahead “to finish the job”.

The prices local authorities pay for auditors have increased significantly since body was scrapped, and there have also been widespread difficulties procuring auditors in sufficient quantities to cover all local public bodies.

The IfG report said 2021’s abolition of Public Health England and the 2012 closure of the UK Border Agency appeared to be driven at least in part by a desire on the part of ministers to effect leadership change after “trust in their chief executives had eroded”.

It said then-health secretary Matt Hancock’s decision to scrap PHE seemed to be “justified with reference to its leadership and perceived failures during the pandemic, along with a desire to bring health protection functions together with testing and biosecurity”.

The IfG said PHE’s main function – which was health improvement – appeared to have been an afterthought because Hancock’s abolition speech merely pledged to “consult” on how those functions could be delivered in future.

“This suggests there was no clear plan for how to deliver health improvement, which accounted for the vast majority of PHE’s pre-pandemic budget, when the decision was made – or even much awareness of the consequences of separating it from health protection,” the report said.

The report added that when she was home secretary, Theresa May had “strongly articulated her aim of greater ministerial control over UKBA” in the case for abolishing the agency. But the National Audit Office subsequently found it was “not apparent” that the new structure would increase operational performance.

“If leadership is the main problem with a body it should be addressed separately,” the report authors said. “Abolishing a body is a very costly way to achieve leadership change.”

The report said decisions to abolish public bodies could have unintended consequences for service delivery. It said one interviewee reported that managing the abolition of PHE took up around 20% of the working hours of senior managerial staff during some of the worst months of the coronavirus pandemic.

It added that much of the evidence base that the Audit Commission relied upon for research was lost when those functions were transferred to the National Audit Office.

Elsewhere, the report said decisions to scrap public bodies often emerged through leaks or media announcements before they were communicated directly to staff, resulting in a “significant negative impact” on morale.

Report authors Dalton, Amos, and Gill said that with reviews into the future of public bodies including Ofcom, the Pensions Regulator and Homes England ongoing, it was “vital” that ministers ask their civil servants some searching questions before any abolition is planned.

They added that officials should answer openly, even if the answers were “inconvenient”.

The IfG report sets out 10 key points for ministers to understand before proceeding – including setting clear goals for the abolition, assessing long- and short-term costs, and understanding what the body in question actually does.

Report co-author Dalton said the recommendations aimed to save money and make the most of opportunities.

“Public body abolitions happen every year, but when done poorly they can be costly to government – wasting public time and money to achieve little change,” he said.

“Clear objectives, sensitive communication and realistic deadlines can ensure that ministers can make the most of future reorganisations.”

How to abolish a public body: Ten lessons from previous restructures can be read here.


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