"The Cabinet Office and departments will have
successfully achieved the largest restructuring of public bodies
for many decades, and provided clearer accountability to elected
politicians for some spending, if they succeed in carrying through
all the changes they plan.
"However, they are not doing enough to secure value for
money. I would expect departments to have a better grasp of the
costs of reorganising bodies and of carrying on functions that have
been transferred."
Amyas Morse, head of the National Audit Office, 20
January 2012
Plans to reorganize central government will bring a range of
functions currently at arm’s length closer to ministers, according
to the National Audit Office. Moreover, the Cabinet Office and
departments are on course to deliver cost reductions extending
beyond the Spending Review period. However, today’s report raises
concerns that government departments do not have a good enough
grasp of the ongoing costs of functions being transferred to other
parts of government or of the one-off transitional costs of the
changes.
Through the Public Bodies Reform Programme, run by the Cabinet
Office, departments are taking over the functions of 65 public
bodies and transferring those of another three to local government.
The Cabinet Office and departments will have secured the largest
restructuring of public bodies for many decades if they succeed in
making all the changes they propose. They are bringing many bodies’
functions directly under elected politicians’ control and are
taking further action to strengthen ministers’ responsibility. They
are also abolishing more than a half of their advisory bodies to
strengthen ministers’ ultimate responsibility for policy decisions.
Departments propose to abolish 262 bodies, by such means as
mergers, transfers out of government and ceasing functions.
The Cabinet Office and departments also intend, through the
Programme, to secure a reduction of £2.6 billion over the spending
review period 2011-12 to 2014-15 in ongoing funding for
administration in public bodies. A third of this (34 per cent or
£0.9 billion) comes from just two changes: the closures of the
Regional Development Agencies and the education body Becta. Annual
estimated savings achieved by 2014-15 are likely to continue at
between £800 million and £900 million.
According to the NAO, departments’ estimates of £425 million for
the transition costs of these reorganisations are incomplete. The
spending watchdog estimates that they will be at least £830
million. Departments will therefore need to find gross savings of
around £3.5 billion if they are to meet the net savings target of
£2.6 billion, after the costs of transition have been taken into
account, from abolishing or restructuring government bodies.
Today’s report also points out that, within departments, there
is an insufficient grasp of the ongoing costs of functions
transferred to other parts of government, accounting for £0.4
billion (or 15 per cent) of the £2.6 billion. Other parts of
government will have to find savings elsewhere to pay for
administering these newly acquired transferred functions. A third
of all money spent by bodies in the Programme (£20.6 billion) will
be subject to greater accountability to elected politicians, but
most (£43.2 billion) will remain at arms-length. Despite greater
accountability being the Programme’s primary intended benefit, only
one of the six departments examined by the NAO had proposals for a
well-defined, though basic, measure of success for it.
Publication details:
HC: 1703, 2010-2012
ISBN: 9780102975338