WIREDGOV

A new Institute for Government study examines demise of improvement agencies and identifies important lessons for those responsible for quangos.

Almost precisely one year from now the Audit Commission will be abolished, and with it the important principle of independent appointment of auditors to local government.

This means that local authorities will eventually be able to appoint their own auditors, which many argue removes important protections that have governed the use of public money for 25 years.

A new study on the closure of improvement agencies by the Institute for Government, ‘Dying to Improve: The fate of the Audit Commission and Other Improvement Agencies’ examines why such functions are created and killed off.

For many, the decision to close the Audit Commission came out of the blue, but its closure has been slow - three years later than scheduled and five years after it was first announced by Communities and Local Government Secretary of State, Eric Pickles, in August 2010.

The report, written by IfG Senior Fellow Nicholas Timmins and Director of Research Tom Gash, also notes that steps to realign the body’s functions were not considered.

It adds that even after official closure, some functions will need to continue: “the timetable for the commission’s abolition has proved insanely ambitious…in practice, most if not all of the commission’s functions will continue, though scattered, probably less effectively.”

But in considering the fates of the Audit Commission, the National Police Improvement Agency (NPIA) and the NHS Modernisation Agency, the study recognises that a number of other factors, including mission creep and poor decision-making within these bodies, also contributed to their dissolution.

For example, the stubbornness of Audit Commission’s board in attempting to secure a salary for its chief executive that was out of step with public opinion at the very least contributed to Mr Pickles’ decision to pre-empt a report by his own government into the future of arms-length bodies by announcing the Commission’s closure during Parliamentary recess.

Bombshell

“The announcement landed like a bombshell. Yet it proved to be a silent explosion. Almost no-one leapt to the commission’s defence.”

The Commission had few friends – only a few academics and professional bodies came to its defence, and the organisation had a testy relationship with the previous government.

And audit doesn’t set public fires burning. Our report says: “It disappeared (or to be more accurate, at the time of writing, it is disappearing) with remarkably little public debate, even though Parliament did eventually engage with the issues and there are at least some who believe that, in some incarnation or other, something like the Audit Commission will eventually return.”

The NPIA was eliminated just three years after it became operational. Mission creep in the form of additional responsibilities and growing staff numbers meant that it developed a reputation as a ‘Christmas tree quango’, lacking focus.

And a similar story took place at the NHS Modernisation Agency, where to some extent it became a repository for ministers’ pet projects. Ultimately this bred resentment according to its then director, David Fillingham.

Our report identifies a number of important lessons and common themes for government departments considering the future of its quangos – particularly in light of recent rows over the Environment Agency and Ofsted:

Creation and maintenance

• Clarity of purpose and governance
• Active sponsorship by relevant department regarding purpose and function
• Measurement and management of cost-effectiveness
• Dangers of ‘mission creep’ and dustbin syndrome.

Lessons for change

• Abolition should not be the first resort
• Think through successor arrangements
• Build central expertise in creation and abolition.

Nicholas Timmins, Senior Fellow at the Institute for Government and report co-author, said:  “Once the Commission is abolished an interim body will be formed for two years that will broadly continue the current audit arrangements. So there remains a chance that a genuinely independent audit function could arise like a phoenix from the ashes of the commission.” 

Tom Gash, Director of Research at the Institute for Government, said: “Dramatic quango culls and restructurings are not always the best way of improving the performance of government agencies. However, given restructurings are so common, the civil service needs to develop greater central expertise in setting up agencies and then managing closures professionally. This means being clear about the purpose, accountability and governance of these bodies and measuring and demonstrating cost-effectiveness on an ongoing basis.”