The government needs to go further and faster in absorbing small public bodies into larger organisations, MPs have warned.
A new Public Accounts Committee report on accountability in small bodies says that since 2009 successive governments have sought to reduce the number of public bodies, but have also created new bodies “without always considering whether establishing a new organisation was the most appropriate way to deliver a policy or programme”.
It says the latest review of quangos, launched last year with the aim of "closing them, merging them or reintegrating them into departments if their continued existence cannot be justified", has so far mostly focused on merging large bodies into departments. Examples of this include the NHS England and Valuation Office Agency mergers into the Department of Health and Social Care and HM Revenue and Customs respectively.
The report argues that consolidating smaller public bodies into larger organisations can reduce bureaucracy, deliver savings through economies of scale, and strengthen public bodies’ resilience and internal expertise.
It notes that many of government’s core public functions, from overseeing elections to protecting consumers, are conducted by small government bodies who are required to produce the same annual reports as large organisations who are subject to higher risk.
The financial reporting requirements are “disproportionately onerous” for smaller, low-risk bodies and can divert resources away from an organisation’s core activities, the report argues.
Government should also do more to signpost the support available to small public bodies with the challenges they face in meeting some reporting requirements, as they are reliant on expertise and support provided from departments and larger organisations, the MPs said.
The committee also warns about a "one-size-fits-all approach" to shared services. It says small bodies often rely on shared corporate services provided by their sponsor department or other organisations and are expected to migrate to shared service centres that will provide HR, payroll and other back-office functions.
But it says this approach could hinder the agility of some organisations that would benefit from retaining in-house teams, and government should ensure that bodies are "only onboarded to shared corporate services if this is truly beneficial".
The report's recommendations include providing the committee with more transparency of the review of public bodies as it progresses. It says the Cabinet Office should update the PAC on progress in consolidating public bodies, including smaller ones, in its next Treasury Minutes update, and should then update the committee on an annual basis until it has concluded its public bodies review and implemented the resulting actions.
Once the review is completed, the Cabinet Office should provide a report to PAC, "giving a full and accurate picture of the full range of public bodies still in existence, the date when they were last reviewed, and plans for continuous review to ensure that their existence remains justified and the most effective method to achieve the aims they were set up to fulfil".
Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, said: “Small organisations play an essential part in keeping the machinery of government moving.
"However, for years now successive governments have viewed their creation and existence as a mechanism for policy delivery, seemingly without considering whether this is always the most suitable, cost-effective way to achieve their aim.
"Merging small government bodies could go a long way towards achieving value for taxpayers' money."
A Cabinet Office spokesperson said: "We are conducting a full-scale review of arm's-length bodies, to reduce duplication, improve efficiency, and cut unnecessary costs.
"We have already made significant progress, having closed or merged 16 bodies under the review, including NHS England and ACOBA.
"We will continue to close or merge any that cannot be justified as part of our plans to re-wire Whitehall and create a modern and productive state that delivers for people across the country."
The Cabinet Office said moves resulting from the review so far include:
- NHS England repatriated into DHSC
- Payment Systems Regulator to be merged into the Financial Conduct Authority
- Valuation Office Agency repatriated into HMRC
- Ofwat and the Drinking Water Inspectorate abolished and a new water regulator created (subject to a consultation)
- ACOBA closed and functions transferred
- UK Space Agency repatriated into DSIT
- LocatED merging into DfE
- Building Digital UK repatriated into DSIT
- Committee on Standards in Public Life replaced by the Ethics and Integrity Commission
- Independent Medical Expert Group declassified from an advisory NDPB to an expert committee.