Thank you Lord Douro for allowing us to be here today and to enjoy these splendid surroundings.
It’s a little known fact that Wellington was called ‘the Iron Duke’ not because of his prowess on the battlefield but because when he made the probably rash move into politics, he somehow didn’t attract universal support from the public, as a result of which iron shutters were added to the windows here.
There have been certain times in the last few years when I have felt that being protected by iron shutters would be a welcome thing, such is the lot of the reformer.
I’ve always admired the approach of the Duke of Wellington when he became Prime Minister and after his first Cabinet meeting said “they all came in, I gave them their orders and damn me they wanted to stay and discuss them!”
It’s great to be here and have the chance to talk about the progress of public bodies reform which has been good. Not all of it’s been easy and it coincides with the publication of Bernard Jenkin’s committee’s report today and there are a lot of useful conclusions and analysis upon which we can will reflect.
But we have collectively made a big difference. We’ve cut the cost of government for the taxpayer, we’re starting to create truly 21st century public services which are lean and resilient, as well as more accountable.
And that’s been the prime driver of our public bodies reform programme, to increase accountability and to make them more responsive and more capable.
It’s important, 4 and a half years after we embarked on the journey, to reflect on how things were when we started.
The number and remit of public bodies had over decades been allowed to grow unchecked.
It was a chaotic and frankly somewhat complacent approach. There was a failure to look at the bigger picture or stopping to ask whether this was the best way of doing things and consequently, the interests of taxpayers, and the people using public services, was sometimes forgotten.
We couldn’t allow that to continue. The days of uncontrolled spending had met their Waterloo – and where better to celebrate that than the Waterloo Gallery.
So one of the first things the coalition government did after we came into office was to establish the kind of comprehensive and rigorous central oversight that had previously been so conspicuous in its absence.
And the scope was huge – we were facing the A to Z of “big government”, from the Advisory Committee on Packaging to the Zoos Forum.
We launched the biggest and most wide-ranging reform of public bodies in a generation.
The first question was to find them, because there was no central register. We didn’t know how many public bodies there were – in turns out there were over 900.
When we did, the extent of the problem quickly became evident.
First, there were the obviously redundant.
The Aircraft and Shipbuilding Industries Arbitration Tribunal is a good example. Established in the 1970s to settle employment disputes in industries that have long since been privatised, it hadn’t even met in 10 years and yet it was existed. That’s how weak the oversight had been.
Then there were the quirky, like the Government Hospitality Committee on the Purchase of Wines and the Caribbean Board – hard to justify to the public at the best of times, let alone when money is tight.
But besides the inappropriate and the unnecessary, we found plenty of other organisations that still performed useful and important roles but weren’t nearly as efficient or effective as they could and should have been.
In each case we were looking to see if the public body was the best way of delivering the service or performing a function, or whether a better outcome could be achieved through different means.
We determined that a body should only exist at arm’s length from government without the democratic accountability that was our key driver if it met at least one of 3 tests:
- it performed a technical function
- its activities clearly required political impartiality
- or it needed to act independently to establish facts which would command public trust and credibility
This is the most important thing to understand about our reforms – it wasn’t the structures we cared about – it was the services.
Yes, we did want to reduce the total number of public bodies to help save money as part of our long term economic plan. But that wasn’t the main aim. The primary aim was to restore proper accountability wherever possible. And most importantly, our reforms have been about ensuring the public receive the best possible services, irrespective of how they’re delivered.
The needs of the people using public services always has to be the first and last consideration.
It’s not good enough to say “we’ve always done it this way”. No organisation in the public sector has a divine right to exist. We should always be re-examining how we deliver services because it’s always possible to find new and better ways of doing things. All organisations are either getting better or they’re getting worse. There’s no such thing as an organisation in a steady state – if you think it’s in a steady state it’s getting worse.
It’s still by no means completely sorted – by no means – but it’s a lot better than the situation was inherited.
There’s a huge variety of different public bodies – some of them date back way over 100 years, while other models are completely new.
Having now cleared away some of the clutter, we’ve now launched a review of the current administrative classification system which is still frankly overly complex and quite random and arbitrary. There are still some public bodies that still fall into several classifications.
Perhaps we should have done this sooner and made it a little more administratively tidy and neat. But our immediate priority was to restore accountability and to reduce waste. I belong to the JFDI school of government – the Just Do It school. We were more concerned with doing things in practice rather than developing a polished theoretical framework. Now, having done the work we have, we know enough about the landscape to be able to re-establish a better framework in which public bodies can organise themselves.
Frankly, without that sense of urgency, I very much doubt we would have saved the £2 billion that we have.
The first couple of years in government is the best time to make difficult changes, because the reality is that the closer you get to an election, the more vested interests feel able to push back. I’m sure this is a completely unworthy suspicion, but some of the outside bodies lobbying against reform weren’t always completely independent from the body that was the subject of reform.
I’d like to take this opportunity to thank by Paula McDonald and her team of very committed public servants for leading this work, together with those chairs and sponsors of public bodies here today who embraced the spirit of our reforms to help make these achievements possible.
Thanks to the shared efforts, the shape and scale of public bodies in this country has changed beyond recognition with lots of benefits.
The first benefit is improved governance and greater accountability.
To date, 75 bodies have had one or more function brought closer to democratically elected representatives, whether at national level or local level.
So the Legal Services Commission has been replaced by a much smaller body, the Legal Aid Agency, which now sits within the Ministry of Justice where it answers to the Lord Chancellor.
Similarly the Child Maintenance and Enforcement Commission has been abolished and its responsibilities brought back into the Department for Work and Pensions.
It means ministers are now directly accountable for the performance of child maintenance services and ongoing reform efforts; they’re accountable to Parliament, and through Parliament they’re answerable to the public.
The second benefit is efficiency.
We’ve cut out duplication of activity and stopped activities that are no longer needed.
So the Independent Safeguarding Authority, for instance, has been merged with the Criminal Records Bureau to produce a single Disclosure and Barring Service. Why have two organisations performing similar tasks when one will do?
Similarly the eight Regional Development authorities were abolished, and their functions transferred to Local Enterprise Partnerships. It means fewer offices, fewer staff, less IT – and it’s already saved over £500 million.
Sometimes we found the best solution was to bring a function back into central government, rather than letting it continue as an arms-length body. That provides opportunities for greater efficiency through shared services and improved financial management.
But a government-led approach isn’t always the right one.
By far the most exciting part of our reforms has been the opportunity to design completely new models for delivering public services, which is the third benefit of our reform programme.
Over 35 bodies have had at least one function transferred to an alternative organisation such a non-government body, private company or charity.
Take the Canal and River Trust. It’s a brand new social enterprise that has taken over from the old British Waterways.
Because of its charitable status, it’s been able to raise £15 million in donations over the last 2 years, as well as recruiting 2,000 regular volunteers - and who better to protect our waterways than the people who cherish them the most?
It works because people are willing to commit their time and money when they feel their efforts can make a difference – something that is much more difficult to achieve within the public sector.
Designing new models for delivery also makes it easier for public servants to adopt new technologies and exploit new sources of funding.
So the research and innovation organisation Nesta, for instance, has moved from becoming a non-departmental public body to a charity. This has made it possible for them to secure third-party funding from the likes of Nominet, Google and the UN Development Programme, reducing the cost of their work for the UK public sector, but also enhancing its independence.
And by moving away from the Department for Energy to a shared delivery model, the Coal Authority has had greater freedom to adopt digital technology, making its coal mining information more easily available to the public and the conveyance market under Open Government Licence.
Finally, we’ve introduced previously unseen levels of transparency.
For the first time we’ve set out the size, expenditure and membership of public bodies in a single comprehensive publication so taxpayers can see exactly how their money is spent. An updated version is being published today.
This kind of openness helps expose waste, build trust and encourage continuous improvement.
Over 90% of public bodies now have information on their website showing how to make a complaint or submit freedom of information request, so this new emphasis on transparency is already improving services.
So, good progress. Over 95% of planned abolitions and mergers are complete. We’ve reduced the number of public bodies by a third, abolishing at least 185 and merging over 165 others into fewer than 70.
When we said we could save as much as £2.6 billion in administrative costs, many people were sceptical. They said it couldn’t be done.But we’ve already achieved a cumulative £2 billion worth of savings since 2010 and we’re now well on track to reach £2.6 billion by March next year
So let this serve as a lesson to those who say it couldn’t be done – or argue that innovation isn’t possible. Other governments had talked about quango reform in the past, but we meant it. It wasn’t easy – it was prosaic, painstaking work but together we saw it though.
But it is just the start. Often the lot of the reformer is to be asked by people when it’s going to end – but it will never end.
The more we prove it’s possible to do things differently and to deliver better services and save money, the more we know we can – and must – go further. Our immediate priority is to use our experience from the past few years to ensure that public bodies are never again allowed to spiral out of control.
So we will not only rigorously interrogate proposals for new public bodies, but through our system of Triennial Reviews we will review existing bodies every 3 years to ensure they are doing the best job they can or whether they should close or be more radically reformed.
These will be led by an independent reviewer, with additional scrutiny where necessary, including evidence from experts and anyone with an interest. In each case, the final decision will require ministerial approval.
We will also regularly review groups of similar organisations across the public sector, like research councils or scholarship bodies. This will help ensure consistent standards and also identify areas where we can bring services or functions together.
If this sounds like a tough process, that’s because it is – we want be thorough, we want it to be rigorous. Every public body must justify its existence and prove itself suited to the task.
This will end the situation where public bodies continue to exist in perpetuity just because they always have. And it will ensure that those that remain continue to be relevant, efficient, accountable, transparent and capable.
As you will have heard earlier today, over 80% of the 142 triennial reviews from the first round have been completed already.
35% of these have proposed abolition or substantial structural reform and the remaining reviews have all proposed reforms to toughen governance, which goes to show the system is beginning to works.
The next round will shortly begin to review a further 360 bodies between now and 2017.
We’re already working with departments to ensure the lessons from our recent experience carry through to this new phase, including establishing a peer network and online group.
We also have to improve the way the civil service governs arms-length bodies.
Strong sponsorship is fundamental, which is why we’ve established a sponsorship specialism this year for over 500 officials. It benefits from a senior champion, a dedicated training programme and a well-defined career structure.
In the longer term, we want to see stronger, more strategic relationships between public bodies and departments.
Some departments are already implementing risk-based models, under which bodies that demonstrate efficient use of taxpayers’ money can enjoy greater autonomy.
Of course, there’s no one-size-fits all solution. Every arms-length body is different. But there are some common standards that departments should be aiming for, including more senior sponsors together with stronger and more consistent ways of agreeing budgets and assessing chairs and board members.
It also means sponsors focusing on effective management – agreeing specific outcomes and making sure public bodies measure and publish their performance. I welcome the Public Administration Select Committee report published today and we will look carefully at their recommendations.
In particular the PASC report raises important questions about accountability and appointments which we certainly need to look at – it’s confusing that there are different forms of guidance out there and we need to look at how these can be streamlined. I will be inviting Sir David Normington and the Office of the Commissioner for Public Appointments to agree guidance with us so the scope for confusion if removed.
So, in conclusion, by working together we’re increasing value-for-money, improving accountability, embracing innovation and raising the quality of services. We’ve achieved a huge amount, going further than many people thought possible.
But there’s plenty more to do.
The public deserve public bodies which are focused, lean and capable and governments have a continual obligation to ensure this is the case.
So our work goes on.
We now have a plan for extending this work beyond 2015 – finding new efficiencies and saving more money, as well as improving sponsorship and classifications, and I’d like to hear your thoughts on how we can do these things together.
Only a strong partnership between central government and the leaders of public bodies can continue this transformation, so please keep working with us.
It’s a shared effort, but it’s exciting and something to be proud of because this is efficiency and reform at its best – not just cutting costs but actually finding new and better ways of providing the public services people expect and deserve.