Rebuilding the Quango state?

The 1999 referendum that created the Welsh Assembly was partly fought on a programme of scrapping the many quangos that had been used by the Tories to run Wales during the previous four UK Tory governments. These bodies had been viewed as expensive, unaccountable and a handy refuge for Tory bigwigs, who had eschewed the democratic process for careers elsewhere.

The jury is still out on the eventual bonfire of these bodies but it was not a process, as far as I'm aware that was followed in England. Now, it appears that we have come full circle with Keir Starmer's Labour government creating or overhauling 17 state agencies in their first few months in power to help them deliver on manifesto promises.

The Guardian tells us that an Institute for Government report has warned of some of the pitfalls when setting up government agencies from scratch, saying: “Successfully creating a new public body is difficult and entails high fixed costs in terms of time, budget and leadership focus.”

They found the price tag of creating a new government department can be £15m in set-up costs, plus £34m in lost productivity:

Matthew Gill, the author of the IfG report, said: “Public bodies – from the National Wealth Fund to the National Care Service – will be central to the Labour government’s success. But they are hard to build well and many questions about the funding, governance and remit of the 17 bodies so far announced remain unanswered. Our report provides a guide, based on lessons learned that have not been clearly set out before.”

The new government has wasted no time in bringing forward legislation to set up bodies such as the Fair Work Agency and the Armed Forces Commissioner.

However, there is little detail on the costs, with the impact assessment for the new Fair Work body stating: “It has not been possible to estimate … the set-up costs of the FWA associated with bringing together existing enforcement bodies [or] the costs associated with new state enforcement responsibilities including the enforcement of holiday pay regulations.”

Other bodies, such as the football regulator, will ultimately be paid for by an industry levy. The impact assessment for the legislation said: “The set up costs will initially fall to the exchequer. Once the regulator is operational, levy payments are expected to fund the regulator. The levy will claw back the majority of costs incurred during the set-up of the regulator, and will also cover the ongoing running costs of the regulator.”

Some public bodies promised by the Labour in its manifesto, including the Ethics and Integrity Commission, have not yet been established or detailed in legislation yet.

The IFG said most new governments set up new public bodies and that between 2000 and 2023, between two and 12 public bodies were established each year – although a much greater number have been abolished.

Setting out 10 lessons for setting up public bodies successfully, it said it was necessary to define its mission clearly, pointing to the Independent Commission on Civil Aviation Noise (ICCAN), which was abolished within three years because politicians, civil servants and leaders never agreed what it was for.

It also highlighted the need to build support, giving the example of the Trade Remedies Authority (TRA) that was cut back two years after launch because new ministers were less committed to the value of a technocratic body shielding ministers from producer lobbying.

The IFG also said it was key for a public body to be resourced at the right level, pointing to the UK Health Security Agency, which faced financial uncertainty and big cuts in its first year, frustrating recruitment, even at board level.

Promising to set up these bodies is easy, but it is an expensive and time-consuming process and they don't always deliver. We shall have to see if this time will be different.