§ 3.6 p.m.
§ Lord Bonham-Carter rose to call attention to the increase in the number of quangos, non-departmental public bodies and executive agencies, the size of the resources at their disposal and the extent of democratic control and representation; and to move for Papers.
§ The noble Lord said: My Lords, we are fortunate that this debate follows yesterday's debate on the Police and Magistrates' Courts Bill. We shall discuss themes which arose in that debate, in particular the removal of responsibility from local authorities and the concentration of power in Whitehall. In addition, we shall discuss the issue of patronage and the accountability of quangos. Those four issues are grave and important constitutional issues and it is high time that your Lordships turned your attention to them.
The trigger that prompted this debate was the Answer to a series of questions that I asked about the number of peers on quangos. When I confine myself to the number of peers on quangos who receive salaries, it emerges that in all there are 44, of whom 31 are Conservative and 10 are Labour; there are no Liberal Democrats and three are Cross-Benchers. The Home Office appoints six paid peers, three of whom are Conservative, one is Labour and two are Cross-Bench, the Cross-Benchers being the noble Lords, Lord Chalfont and Lord Wyatt of Weeford. The Department of Health appoints 12 peers, 11 of whom are Conservative and one who is the right reverend Prelate the Bishop of Peterborough. The Department of the Environment appoints 15 peers, 11 of whom are Conservative and four are Labour; there are no Liberal Democrats and no Cross-Benchers. I give just specimen answers. The salaries range from £92,000 a year to £230 per diem. That is not a scientific sample, but I suspect that it is not altogether unrepresentative of the political complexion of a number of quangos.
The questions also elicited an unusual hierarchy of values. The part-time chairman of the Horserace Totalisator Board receives £92,000 a year and the part-time chairman of the Parole Board (an office of some considerable responsibility) receives £45,000 a year. I do not know what one can conclude from that. It demonstrates how unsuccessful governments have been in carrying out the undertaking made in 1980 by the then Prime Minister who said,
There will always be pressure for new bodies … We shall be robust in resisting them".
I do not propose to become involved in a metaphysical discussion of the precise meaning of "quango", about which much has been said. In the course of my remarks, when I refer to a "quango" I shall be referring to organisations with executive powers appointed by Ministers or by bodies appointed by Ministers which spend public money. The members of those bodies have come to be known as "the new magistracy" and almost without exception they remove powers from local authorities democratically elected; they transfer those powers to persons appointed by Ministers; they reduce public accountability and they increase party patronage. They also dispose of an increasing proportion of public expenditure now amounting to around one-fifth.
That process has gone on quietly and steadily with little public awareness of what was happening. The main steps have been analysed comprehensively by Professor Stewart of the Institute of Local Government Studies at Birmingham University. I will not weary your Lordships with the various steps in that process which have taken place over the years but prominent among them is the removing of responsibility from local authorities in the fields of education and health in particular; the abolition of the GLC and metropolitan county councils; and the removal of further education and sixth form colleges from local authorities. The planned changes in the composition of the police authority is another example and we discussed that yesterday. The Education Bill and the Railways Bill will introduce new quangos and the national lottery will be directed by a quango.
So the process continues day after day in all the legislation which passes through your Lordships' House. What does the scene look like today? Estimates are that by 1996 there will be 7,700 quangos. Today 40,000 people are appointed by government. Expenditure by those largely non-elected and largely unaccountable bodies has increased since 1979 from £6,150 million to £13,750 million per year.
In Wales one sees an almost extreme example of what goes on. As your Lordships will be aware, in Wales 71 per cent. of the people voted against the Conservative Party in the last general election. The response of the Government was to outflank Welsh institutions, though democratically elected —local authorities—by letting loose on Wales 100 quangos largely manned by government supporters. According to the University of Wales, 34 per cent. of all Welsh 612 Office expenditure will be through quangos. The people responsible for that are 1,400 people appointed by the Secretary of State.
Among those quangos is a notorious body known as the Welsh Development Agency, funded by £170 million of taxpayers' money. In the words of Mr. John Redwood, that quango was responsible for,
a catalogue of serious and inexcusable breaches of expected standards".
In the words of the Financial Times—they are significant in relation to what I shall say later—those practices,
might have attracted little attention in the private sector, but were not acceptable in a government funded agency accountable to Parliament".
They included £1.4 million on an unauthorised redundancy scheme and £228,000 for a retiring international director preceded by (a peculiar provision) eight months' gardening leave. So much for value for money! Its chairman was Dr. Gwyn Jones and he is now, surprisingly, Welsh governor for the BBC.
Those are appointed bodies and one might therefore suppose that their public accountability would be particularly rigorous. But as Professor Stewart shows in another study, that is not the case; indeed, it is the reverse. For example, they are not required to hold meetings in public; they are not subject to the jurisdiction of an ombudsman and neither are the members liable to surcharge.
The most sophisticated defence of quangos was made by the Chancellor of the Duchy of Lancaster, Mr. William Waldegrave. His argument rests on two legs. First, accountability has been strengthened by making services responsible to consumers; in his words,
by making public services directly accountable to the customers".
Secondly, the accountability to Parliament remains unchanged. But it is the first argument on which he really rests his case.
While it is perfectly true that some government services can be looked at in that way, it is not true of all. The argument is based on the assumption that public services should follow the private sector model. That, of course, was the assumption on which the Sheehy Report was built and yesterday we saw the consequences of making such an assumption in inappropriate circumstances. There is a difference, and it must be faced, between the ethos of public service and private sector business and the practice, as the Financial Times comment on the Welsh Development Agency indicated.
There can also be some difficulty in the public sector in identifying precisely who is the customer. To take an extreme case, who is the Army's customer? Is it the enemy? Or is it the nation? To take a more relevant example—education in schools—who is a school's customer? Is it the pupil? Is it the parent? Or is it the nation? If it is not the nation, why do we have a national curriculum?
The fact is that in many cases the customer cannot be precisely identified. Therefore, the analogy and argument is not quite as powerful as might strike one at first sight. With regard to ministerial responsibility, as the Scott Inquiry indicates, it is often difficult to identify who is responsible for what. It is certainly difficult to 613 exercise responsibility over 4,400 bodies and 40,000 individual people. Therefore, the use to which the quangos have been put by a government which preaches subsidiarity abroad and practises centralisation at home has been the perversion of a brilliant idea and a clever device. The classic quangos —the BBC and the Arts Council—were invented in order to keep the Government out of an extremely sensitive area where governments had no right to be; to provide a buffer between the broadcasters and the artists and interfering, ignorant politicians. Quangos are now used for the reverse purpose: that is, to introduce government into areas where previously democratically elected local authorities operated; to introduce central government into areas where it has no right to intervene and to give central government more power than any of us think they should have.
In this country we have no written constitution. We have no Bill of Rights and we have no constitutional court. But we have a sovereign Parliament. In those circumstances, our liberties and the liberties of our communities and the freedom of our lives depend on self-restraint by Parliament and by government. I do not believe that the present Government have exercised adequate self-restraint and as a consequence Mr. Waldegrave, who claimed that he joined the Tory Party because he wanted a limited government, is now facing a situation of unlimited government, and that is greatly to be deplored.
If quangos are to continue—and I assume that they will in some shape or form under any government—we have to take steps to see that they are made more accountable to the public, to see that the mode of appointment of people to quangos is more open and is by rules and regulations which we understand, and above all to see that the opportunities for party political patronage are limited. That is what we must do if we are to avoid a situation which would have made Lord Rockingham green with envy. My Lords, I beg to move for Papers.
§ 3.20 p.m.
§ Lord Morris of Castle Morris
My Lords, in the beginning was the quango. And the quango was small and advisory. And its members were appointed by a benign Minister from the ranks of the good and the great, and the fairly good and the slightly great. And it was given a vague remit, and a budget of tuppence halfpenny, and left to get on with its job, and to publish an annual report, with recommendations which Ministers often implemented. And behold, it was very good. And it went forth and multiplied.
There are still a few such bodies in existence, doing a necessary and blameless job rather well, and they are a good buttress to central government. Their members are all unpaid, and claim only expenses "actually and necessarily incurred" in attending meetings. Until quite recently, I had the honour of serving on one for more than 15 years, and of being its chairman for the last five: the Museums and Galleries Commission. That body, under my infinitely more distinguished successor, Mr. Graham Greene, advises government on everything to do with 2,000 and more museums and galleries in the 614 United Kingdom. It speaks, quietly, but with experience, knowledge and authority. It has recently created a registration scheme for museums which has greatly raised standards and which is the envy of Europe. It is up-to-date, and it has always been in the "sponsorship game", since one of its original terms of reference in 1930 was,to stimulate the generosity and direct the efforts of those who aspire to become public benefactors".It distributes small amounts of public money, principally to the very cost-effective area museum councils, and it is, itself, very cheap to run. Not all the commissioners of the Museums and Galleries Commission have been members of the Conservative Party; indeed, it is rumoured that quite recently one was spotted surreptitiously reading the Guardian.
That is what a quango ought to be: independent but accountable; at "arm's length" from government, made up of members selected without reference to their party political opinions, who work part-time and unpaid in a tradition of public service. And the Museums and Galleries Commission is not unique. The National Heritage Memorial Fund, under the noble Lord, Lord Charteris of Amisfield (who I am delighted to see in his place), and his successor, the noble Lord, Lord Rothschild, operates in precisely the same way, and is universally acknowledged to be one of the most successful and efficient non-departmental public bodies in existence.
While they were few they were good. But they went forth and multiplied and the members became paid, and Ministers began interfering with their day-by-day working, and they were given large budgets and things got out of control. And in 1980 Mrs. Thatcher said of them:There will always be pressure for new bodies. We shall be robust in resisting them".True, at that time some quangos were put down; but many new ones were set up, too; and they were given greatly increased resources. NHS trusts arid the reform of district health authorities, the plans for new police authorities and for schools and colleges all hinge on transferring £54 billion of taxpayers' money. It seems likely that £25 billion of spending has already passed from local authorities to non-elected quangos. Cardiff Business School suggests that some 40,000 quango appointments are at the personal disposal of Ministers. Think, my Lords, of a battalion of soldiers, if you can remember such a thing—40 of them.
Education in this country is now controlled by quangos. If you are in a university, you do exactly as you are told by the Higher Education Funding Council, and the School Curriculum and Assessment Authority dominates what is taught in English schools and controls the testing of pupils. The new Funding Agency for Schools will direct government money to opted-out schools, and in areas where 10 per cent. of pupils are in opted-out schools it will have enormous education planning powers. And these bodies are responsible wholly, and solely, to the Secretary of State. These bodies are merely a smokescreen to cover complete governmental control from the centre of education in England and Wales.
615 If I may turn to Wales for a moment, not all your Lordships may be aware of the investigation by the Select Committee on Welsh Affairs into nominated bodies. According to official government figures, the Secretary of State for Wales was responsible for appointments to 81 public bodies in 1991. Their overall expenditure in that year amounted to over £1.4 billion. They employ 57,000 staff. The Welsh Office has appointed a total of 1,261 people to those bodies; and, not surprisingly, 82 per cent. of those appointed were male. Even when a token woman is occasionally appointed it often gives rise to the suspicion that it is another party political appointment, as when a constituency secretary to a Welsh Office Minister was appointed to the board of the South Glamorgan Health Authority, and, after protests in Parliament led by Welsh Labour Members, felt obliged to tender her resignation. The remark attributed in the press recently to the noble Baroness, Lady Denton, to the effect that she had never knowingly appointed a Labour supporter to any of the jobs under her wing would cause very little surprise in the hills and valleys of Wales.
Your Lordships' House has before it this very week further examples of quango-making with complete political control vested in the Secretary of State for Wales in the creation of the Residuary Body for Wales and the Staff Commission for Wales in Schedules 11 and 12 to the Local Government (Wales) Bill. Schedule 11, on the residuary body, begins:What greater control could anyone have, short of putting them on a lead and taking them for "walkies"? The Secretary of State shall also determine what remuneration, pension, allowances, compensation and gratuities members shall receive. I am sure that they will all be truly thankful.
- "(1) The Residuary Body shall consist of not less than 4 nor more than 7 members appointed by the Secretary of State.
- (2) The Secretary of State shall appoint one of the members to be chairman.
- (3) The Secretary of State may by order alter either of the numbers in sub-paragraph (1)".
And all this is perfectly public—though its meetings will not be—and the Government are neither discomfited nor abashed. Indeed, if he is reported aright in the press, Mr. William Waldegrave, the Citizen's Charter Minister, defends the replacement of local authorities by quangos. He is not ashamed to do so.
The present situation puts democracy in peril. There are far too many quangos, and they are far too powerful. Many should be abolished and their functions restored, wherever possible, to local government. All of them should be made more accountable and more responsive to their main users, not to a Secretary of State alone. Mr. Geoff Mulgan, the director of Demos, recently suggested an innovative reform which might do something to check the present Gadarene headlong rush to centralise every aspect of Government under the total control of the Secretaries of State. He suggested a new approach to appointment, and a new public power of dismissal. Appointment to bodies like the health authorities would be the responsibility of an "appointment commission" representing the set of democratically elected institutions with a legitimate 616 interest in the make-up of the relevant organisations. Similarly, it would be possible, in his submission, to sack a quango that under-performed. Security of tenure is a luxury that no quango ought to be allowed.
I, personally, would add further proposals for the urgently-needed reform of quangoland. Every quango should have an agreed, public, regular form of rendering account to its users; no quango should be created to usurp functions which can efficiently be performed by local government; the "arm's length" principle should be restored and revered wherever possible; and, to encourage the old, basic virtue of service to the community, members of quangos should be entirely unpaid. The need for reform is there, and it is urgent. Democracy in this country is under threat. The present burden of quangos is intolerable, because as the right honourable John Smith wrote recently of the present Government:Having aggregated unprecedented central power in Whitehall, they now impose their will through the new magistracy of Ministerially appointed quangos. The only qualification for membership is to be 'one of us'. The only purpose is to carry out Ministerial instructions. Any sense of a political plurality—that it might be proper to recognise differing interests in the community—has been ruthlessly abandoned".
§ 3.31 p.m.
§ Lord Skidelsky
My Lords, the Motion tabled by the noble Lord, Lord Bonham-Carter, expresses concern that is felt by both supporters and opponents of this Government about the growth of an apparently unaccountable appointed bureaucracy, especially in the public services, and also concern about the seemingly inexorable growth of regulation under a government whose watchword was deregulation.
I would like to concentrate on the first matter because many of the problems to which both noble Lords alluded are the result of the attempt, laudable in itself, to make the public services more accountable to their users and to the elected government, than they used to be. It is that paradox, which is the attempt to make services more accountable and then setting up bureaucracies which seem to make them less accountable, which is really at the heart of the problem.
I have two serious reservations about the arguments which we have heard so far. The first is the view that public service reform has made the services less democratically accountable than they used to be. That suggests that the best model for the public services is the direct central management of services by their elected representatives. There are big problems in that. Aneurin Bevan, the Minister of Health in the 1940s, used to say that the clatter of bedpans in hospital wards ought to resound in the office of the Minister of Health.
Today MPs complain that when they write to Peter Lilley with an inquiry about benefit delivery they get a response from Michael Bichard, head of the Benefits Agency, rather than from Mr. Lilley. The suggestion is that the creation of the Benefits Agency under the unelected Mr. Bichard, has reduced accountability. But who do we think wrote the letter in answer to the complaint before the Benefits Agency existed? The answer is that it was written by a civil servant without involvement or responsibility in the area concerned, and 617 simply signed by the Secretary of State. At least we can now identify Mr. Bichard's role, hold him accountable through his pay arid contract renewal, and hold the Secretary of State accountable for the action for which he is truly responsible; namely, the appointment and supervision of Mr. Bichard.
A layer of hypocrisy at least is removed by making accountability more transparent in this sense. It does not of course stop enormous abuses and it does not stop enormous mistakes being made, but at least one does not have to seek for redress through a system which is nominally accountable but in which accountability is almost impossible to identify.
The other more serious flaw in the argument of the noble Lord who introduced this Motion is that the answer to the perceived unaccountability of quangos is to make them more democratically accountable; to increase democratic control over their management. However, the political system at whatever level is an extremely blunt instrument for ensuring that users get what they want out of services or that governments get value for money.
I have had considerable experience of the unaccountability of local authorities. Their system of control over education has been praised by both speakers. But I have had experience of the gross abuse of power by nominally accountable local education authorities. I got involved in the education debate myself out of a sense of great injustice at what was done to people who spoke out against the tyranny of local government.
My argument is not that local elections are not decided on local issues, but on the national standing of governments and therefore cannot be represented as votes of confidence in the delivery of local services. My stand is simply on the old liberal principle that majorities do not have powers to coerce minorities when there are issues of conscience and principle involved. That is exactly what was happening in local education services up and down the country.
That is where I entered the debate. So I am not a great supporter of local government as an accountability mechanism, which does not mean to say that I do not believe some services are best administered by local government.
Another suggestion is that the democratic accountability of quangos might be increased by having their members nominated by professional bodies who are themselves democratically based or having them representative of interests. That would at least avoid the problem of their appointment at the whim of an individual Secretary of State. That sounds very plausible. It is the idea that they would be more representative if appointed in that way. But the danger in that kind of system of appointment is that they simply become representatives of the producers of the service.
It is a problem often disguised by the notion that bodies must be representatives of professional interests. Professionals should always be a very important element in the management of any service with a strong professional component. But they should not be the only element. Winston Churchill said that professionals should be on tap, riot on top. There are other interests; 618 the interests of consumers and users are very difficult to get represented on bodies of this kind through that method of appointment.
Noble Lords have worried not so much, I believe, about the democratic failure in some of the appointments, but more about the lack of independence of many of the quangos. They are worried that the Secretary of State reserves to himself the right to appoint whoever he wants. But the argument of independence—I believe that that is a very important requirement—is not overcome by simply saying that we must have more democratic accountability. Perhaps I may give an example. The Liberal Democrats are in favour of setting up one of the most powerful quangos I can imagine. It is called an independent central bank. Its purpose is not to increase democratic control over monetary policy, but to remove monetary policy from the discretionary control of politicians. I am not against that. I think that it is a very good idea.
There are other examples of what used in the past to be called "the arm's length principle", and very valuable that principle was. "My hero", as some would say, Lord Keynes, set up the Arts Council in 1945 exactly on that principle. He was a fervent Liberal, but was not unduly enthusiastic about democratic control over the arts. The University Grants Committee used to be a quango of that kind, designed precisely to keep the Secretary of State at arm's length.
However, there was nothing democratic about those bodies. What was valuable about them was that they were independent. They were staffed by people who, in their characters and in their experience, would be independent of the wishes of a particular Secretary of State. The problem is to get appointments which guarantee that kind of membership. No one has solved that problem. One cannot get that degree of independence simply by suggesting that the representative principle should be applied to such appointments.
The public sector reform programme has not made the problems of accountability worse. It has made them more transparent. They were always there; now they have come to light. When public services are broken down into operating units and put under the acknowledged leadership of the people who have been running them for years, the problems of accountability that have always existed are revealed for all to see. Where I think that the noble Lord, Lord Bonham-Carter, is right is in suggesting that the Government have given inadequate thought to the problems that that new transparency reveals. Indeed, they have begun to dismantle the democratic model by appointing non-elected managers without properly designing alternative means of accountability.
I should like to end by suggesting a way forward. I was much influenced by a book by Albert Hirschmann called Exit, Voice, and Loyalty, in which he suggested that there were two models for the accountability of firms and services to their users. He called the first "Voice", which means kicking up a fuss and exercising democratic control over the service, and he called the second, "Exit", which is the market alternative. It is simply the right and ability of people to choose not to 619 use a service which they find unsatisfactory. It is the choice model which operates over a large range of economic activity.
I think that in education particularly, which is something in which I have been involved, the most direct way of establishing the accountability of schools to their users is to give parents not only the right of exit, but the power of exit. That means that parents can choose for their children any school from a whole range of schools. They are given the financial power to do that through, for example, the operation of a voucher system. That has been tried in Sweden recently. I do not know how that experiment will work out, but the Swedes have abandoned their long-established method of democratic control over education in order to explore that route to accountability.
I think that it is an important route to explore. Unless we explore it, we shall be burdened with more and more regulation and more and more quangos. Provisions affecting the national curriculum, the testing system, the funding authority and the regulations governing the entry of schools into the system will all grow and will arouse the opposition of the professionals and the teachers. There will be a never-ending quarrel between the Government, the producers, and the users. Therefore, I recommend those alternative methods. I am extremely grateful to the noble Lord, Lord Bonham-Carter, for introducing this very important debate.
§ 3.34 p.m.
§ Baroness Robson of Kiddington
My Lords, in opening this debate my noble friend Lord Bonham-Carter outlined the great concern that is felt by people all around the country and not only in this House about the ever-increasing number of non-elected agencies which are being created to run key services in our economy. I agree with the noble Lord, Lord Morris of Castle Morris, that at the moment those bodies are responsible for administering something in the region of £54 billion of taxpayers' money with very little opportunity for ordinary citizens to make an input into the selection of the people running those services. There is undoubtedly a lack of any real obligation on those quangos to account for themselves to the community on a regular basis. Under the present system of ministerial appointments, there is a natural inclination—and it is a natural inclination—to appoint people of compatible political views.
I should like to take the opportunity of this debate to concentrate on the National Health Service and the changes that have taken place since the introduction of the internal market and the creation of health service trusts. I shall refer also to the diminution of community involvement and of accountability which that has created.
With your Lordships' permission, I should like to go back in history to make my points—back as far as the first re-organisation of the health service in 1974. I am not saying that the establishment of the regional health authorities, the area health authorities and the district health authorities in 1974 was an ideal set-up. They were too large and cumbersome for efficient 620 decision-making. They did, however, have a very valuable asset. They contained members who were much more representative of the community than the present DHAs and NHS trusts. Their boards contained between four and six members who were appointed by the local authorities. There was, therefore, a certain amount of elected representation on the boards. The boards also comprised one university appointment—or two where teaching hospitals existed in the region. They also comprised a hospital consultant, a general practitioner, a nurse, a midwife or a health visitor and a trade union representative as well as representatives of voluntary organisations. It is possible to find people from the community to become members of such bodies through the voluntary organisations. Even then, however, it was an appointment system although there was much greater nomination input from the community as a whole.
Here I should like to pay a special tribute to the noble Lord, Lord Joseph. He was the man responsible for the first appointments under the new system in 1974. During that selection process, I was certainly not aware of any political bias on his part. He concentrated on finding people with knowledge of the health service and with a contribution to make.
However, since then things have changed. In all the reappointments and reorganisations that have taken place since then under whatever government, Labour or Tory, the political bias has been increasing. I have personal experience of that. When I retired from the regional health authority for family reasons in 1982, I was asked if I had any suggestions to make about who might be my successor. I went to see the then Secretary of State to recommend a man whom he might appoint. I expected to be questioned about why I was putting that person forward. When I saw the Secretary of State he asked me whether I knew what that man's political opinions were. I said, "No, I am afraid that I have not asked him. I think that it is irrelevant". The Secretary of State said, "But you do realise that almost every MP in your region is a Tory MP and we have to make certain that there is compatibility". That seems to me to be the last thing that anybody should consider when appointing a regional chairman. Even today political allegiance seems to be the overriding factor. That is not the right way to find the best man or woman for the job.
Since 1974, reorganisations have taken place more than once, but since the introduction of the principle of provider-purchaser the picture has changed completely. DHAs and NHS trusts are much smaller. They consist of five executive and five non-executive members plus the chairman. We all agree that small authorities are likely to be more efficient, but they must not become closed shops. The NHS belongs to the people and is funded by them through taxation. Taxpayers have the right to know how their money is spent.
The only statutory requirement on those new bodies—the DHAs and the NHS trusts—to communicate properly with the community that they serve is to hold one public meeting a year. That is not enough. There is no statutory requirement upon them to allow representatives of the CHCs, who represent the local communities, access to their local hospitals. That is a 621 denial of the right of communities to know what goes on in their hospitals and what decisions are taken about the provision of services. I know that some trusts are enlightened and act differently, without a statutory requirement, and communicate with CHCs and voluntary organisations, but they are not in the majority, and there should be a statutory requirement to do so.
While I recognise that the NHS management had to become more businesslike, there is great concern about the make-up of the membership of DHAs and NHS trusts. It is estimated that three quarters of the non-executive directors have had no previous NHS experience and have come mostly from the business world or from professions, such as accountants and lawyers; about 12 per cent. only have come from voluntary organisations or community group organisations. That balance cannot possibly be right.
It is not necessary to hold up the previous organisation of the NHS as a model of accountable, accessible efficiency to question the present non-accountable, non-accessible structure set up by the present Government.
§ 3.54 p.m.
§ Lord Taylor of Gryfe
My Lords, we are indebted to the Liberal Benches for introducing this important subject this afternoon. It should be clear that the debate is not about abolishing quangos: some quangos are good, useful and necessary. The debate is about the impact on our society of a vast increase in the number and power of quangos; their effect on the democratic structure; the consequences of increased centralisation; the dangers inherent in a system which places so much power and patronage in the hands of a Minister; and the lack of accountability. That is what the debate is about.
As the noble Lord, Lord Bonham-Carter, said, some quangos are extremely useful. I have had the pleasure of serving on a number of them. Indeed, I have served on so many that I used to think that I was the statutory Scot among the Minister's appointments; but I also had the opportunity many years ago of sitting on the Glasgow City Council. In those days, the local authority was responsible for health, education, housing and for the police—all the things that impacted seriously on the daily lives of the people of Glasgow. We held our meetings every two weeks. We had our committees. There was a public gallery to enable people to see what we were up to. There was a direct accountability to the people who had elected us.
Today the situation has changed. Those responsibilities are handled now by quangos appointed by the Secretary of State for Scotland. As was said by a previous speaker, there is inevitably political partiality—that happens in all parties—with regard to some of those appointments. That means, of course, that the people of Scotland—75 per cent. of whom voted against a Conservative Government—now find themselves governed in those basic and essential services by the nominees of the Secretary of State who happens to be a Conservative. So one can see that there is a feeling in local government that the powers and influence of local government have diminished substantially. That means 622 that fewer and fewer people are prepared to do the necessary work of rubber stamping on local authorities. That is serious for the democratic structure.
The trouble is that only 45 per cent. of the people vote in local authority elections as compared to 75 per cent. at national elections. In France, the participation is 70 per cent.; in Italy 85 per cent.; and in Sweden 95 per cent. Why? Why do the people participate in municipal elections in those countries? It is because local authorities have a constitutional position within the government of those countries. They have constitutional rights laid down which cannot be impinged upon by a centralised government.
I am sure that all in the House applaud the Prime Minister's insistence at his European meetings on the principle of subsidiarity as being essential in democratic government. All we are asking is that the same principle of subsidiarity and decentralisation be a basic feature of our democratic society. Our democratic society is diminished by anything that centralises power. So I want to look at one or two of the things that have happened under the present arrangements.
The Financial Times has pointed out that one-fifth of all public expenditure now is spent by quangos. Excluding the NHS and the TECs, there are over 100,000 board members; a million members of staff serve those quangos. The general public has little knowledge of what goes on in that vast bureaucratic system. So I feel that it is time that we looked at that growth of quangos as being a serious threat, to the whole basis of our whole democratic government. By 1996 it is expected that there will be 7,700 non-elected boards in this country, and one-quarter of total government expenditure will be spent on those non-elected boards. That cannot be a healthy development in what we claim to be a democratic society.
Perhaps I may mention the experience of some of those business-orientated boards. There is a report in the Library on a recent survey into the operation of TECs—the training and enterprise councils. I commend that to your Lordships for reading. The survey indicates that the study of TECs is a quango; a business-led body mainly doing the Government's job for the unemployed. The deflection of TECs from their economic purpose of focusing on the workforce to the social problem of targeting the unemployed is seen as a central failure. The councils have become the dumping ground for government problems.
A report of the survey in The Times stated that a scheme to pay firms up to £2,340 for every job created for the long-term unemployed, which is being discharged by the TECs, has become a flop. The system is not working.
We are in for another collection of quangos following privatisation; their members will run our railways. On Monday 22nd November the Daily Telegraph outlined that in the same breath and on the same day as the Government were criticising red tape in government they appointed a giant environmental agency, a coal authority and the Teacher Training Agency. There are now in addition the British Rail organisations, which are to be overseen by quangos. Presumably "Ofrail" will be the title of the new quango. The Daily Telegraph also 623 reported that Mr. John Swift QC, rail regulator, needs a chief economic adviser at a salary of £57,000; a director of freight regulation, a technical adviser and a pair of assistant directors at a salary of £49,000 each; a handful of economic and financial analysts and several senior managers all at £41,000. And so the figure multiplies. Mr. Horton, who is responsible for Railtrack, will draw £120,000 per annum.
There has been a proliferation in the number of quangos and the cost must be met by the taxpayer. There will not be a charge against British Railways because it will be privatised. Such expenses are multiplied each time the number of quangos is increased. The Government must look seriously not only at the economic justification of the quangos and whether they are working but at the democratic implications of the loss of power at local level and the greater centralisation that is taking place in our society.
§ 4.4 p.m.
§ Baroness Miller of Hendon
My Lords, the issue is not how many quangos there are, but whether they do an effective job. The issue is not how much they cost, but whether they give the taxpayer value for money.
I begin by declaring an interest, or perhaps three interests. I am, or have been, a member of three quangos. I also wish to apologise because a previous engagement may mean that I am unable to stay until the conclusion of the debate.
My experience in each of the quangos is relevant to this debate. For two years, until last December, I was a member of the Monopolies and Mergers Commission. Immediately my elevation to your Lordships' House was gazetted, I was removed from an inquiry into the recorded music industry because that inquiry had its origins in the report of a Select Committee of another place, and there was a clear potential for a conflict if the MMC should come to a different conclusion.
After discussion with my honourable friend the Minister I tendered my resignation so that there could be no suggestion about the independence of the MMC both from Parliament or any political party—as indeed, considering its quasi judicial role, it must be. That is how for the first time in my professional and business career I had the traumatic experience of being handed my Form P45!
Speaking of salary, on my appointment to the MMC I was told that the time required would average about two days a week. What a joke that was! After my first inquiry, I returned to shred a pile of documents eight feet high that the commission had had to consider. That was apart from about 20 meetings to take oral evidence or to conduct internal discussions between members of the inquiry and one out-of-town site visit. The result of that inquiry was an immediate reduction in the price of contact lens fluids. The Historical on Line Data inquiry filled a complete filing cabinet drawer and the recorded music one was getting that way before I was taken off it.
This is an appropriate time for me to pay tribute to the hard work, skill and professionalism of the staff of the MMC in preparing and analysing the mass of material 624 received or researched by them in the course of an inquiry. I also can confirm that once the evidence is in the report and conclusions are those of the members, uninfluenced by the staff. The MMC performs an important, efficient and effective public service, which gives the public considerable value for money. The cost of each inquiry is a matter of public record.
As the chairman of a family health service authority I am responsible for the primary health care of about 300,000 people. The budget for which I am responsible is some £40 million a year, which in industry or commerce would be regarded as a pretty large company. The salary is based on the assumption that I would have to put in only two half days a week. That is another joke! That does not take into account the statutory bi-monthly open public meeting, all the reading of everything that involves the NHS, conferences with region and others and recently four separate evening consultations with the public on local health service changes where, for the first time in my life, I met rent-a-mob. I can say, even to those of your Lordships who have experienced being heckled on the hustings, that there is nothing quite like it.
In the interests of efficiency, my authority is unofficially combining with our district in a joint health agency. My responsibilities, together with a colleague, now include secondary health care. My budget increases to £162 million, but because my position does not exist officially, despite all my increased productivity, I still receive the same salary as in 1991, which for fun I worked out to be less on an hourly basis than our cleaning lady.
Please do not misunderstand me. I am not complaining but merely wish to point out to your Lordships, and to the noble Lord, Lord Bonham-Carter, in particular, that membership of a quango is no cushy sinecure or job for the boys—or in my case, job for the girls.
The Crown Agents, of whom I am a non-executive director, has an unparalleled international reputation for integrity and efficiency. Strictly speaking, it is not a quango but a statutory corporation whose directors are nominated by the Minister for Overseas Development. Among other things, it is the channel for overseas aid for the World Bank, the European Development Fund, the EC, United Nations, the Japanese Government, the Overseas Development Agency and others. We had a turnover of some £37 million last year, and although we are not only involved in the supply of British goods and services our work has resulted in £2 billion in exports for British industry in the past 10 years and is probably worth 6,000 jobs in the country.
All of this is done without costing the Government a penny and despite being severely constrained by statute from doing many profitable things; things that we are well equipped for. It is also despite the fact that the Overseas Development Authority, a department which the noble Lord shadows, and other government departments which could use our services more, insist that we are given no special preference in the award of contracts. The Crown Agents were responsible for the 625 earliest shipments of food aid that were sent to prevent a disaster in the disintegrating Soviet Union. We led and organised the delivery of aid to the former Yugoslavia.
In case any of your Lordships should think that that too was a cushy job, my son went along with one convoy to film it for the Crown Agents' archives, and found himself in the midst of flying bullets and being confronted, along with the rest of the drivers, by very angry, heavily armed militiamen. Incidentally, following what seems to be a family tradition, that job was unpaid, and he even had to buy his own flak jacket. I have arranged for the full details of the unsung efforts of the Crown Agents to be left in the Library for your Lordships' further information.
The noble Lord who initiated this debate has in the course of his very distinguished career of public service himself been the chairman of two quangos for no fewer than 11 years. I refer to the Race Relations Board and Community Relations Commission. That is apart from six years as vice-chairman of the governors of the BBC. He was also a director of the Royal Opera House for almost a quarter of a century, and has been chairman of the Royal Ballet for some eight years.
Those two organisations receive a great deal of public money, for which they are, of course, indirectly publicly accountable via National Heritage. I am certain that from all that vast experience the noble Lord is well aware of the considerable degree of close supervision that is exercised over quangos by Parliament or by the relevant government department and Minister. They, in turn, are fully accountable to Parliament.
I am also certain that the noble Lord, with all his vast experience, knows that the criterion for a public appointment is not mere "democratic representation", which means political intrusion into what should be the performance of non-political duties. Public service of that sort does not require placemen and political time-servers. The noble Lord does less than credit to those who, in a public spirited manner, give of their time and expertise for a reward that is less than their qualifications would earn them in a board room.
Anyone who thinks that he or she is qualified can ask the Public Appointments Unit to be considered for service. In 1987, the Women Into Public Life Campaign—supported by all parties, and of which I am the chairman—presented the Public Appointments Unit with a pile of CVs of highly qualified women. I am pleased to say that the number of women receiving public appointments has risen dramatically. It is not yet enough, I might add, but we have run out of campaigning money. I know very well how carefully the Public Appointments Unit vets all candidates and I know very well from personal experience how people of different political persuasions work together and perform their duties in an absolutely impartial manner. I should like to remind your Lordships what the word "quango" stands for: quasi autonomous non-governmental organisation. In my view, quasi autonomy is better than no autonomy at all.
This Government are dedicated to minimising government intrusion into the life of the country. What better way to do it than by taking responsibility away 626 from the mandarins of Whitehall and putting it into the hands of those who have expertise in the real world of commerce, medicine, science or industry.
§ 4.13 p.m.
§ Lord Desai
My Lords, after that excellent speech, I am relieved to say that I have no interest to declare. Either because of my youth, or because of the party to which I belong or because of some other deep flaw in my character, I am involved with no quangos whatever.
§ Lord Desai
My Lords, I am a complete failure but, thank God, it gives me time to do something better. The noble Baroness, Lady Miller, made one extremely interesting comment when she said that when she was elevated to the House of Lords, she asked her friend, the Minister, what she should do. That is interesting. Why should one have to ask one's friend, the Minister, whether or not one should continue or resign? I should be master of my own judgment. No doubt I shall never be appointed to a quango.
A great deal has been said about quangos. I believe that there has been a misunderstanding. It is not the case that quangos are bad. Indeed, as a youth I remember studying the British constitution in India and there was a great deal of pride in quangos such as the BBC, the UGC and so on. Those organisations were not quasi-autonomous; they were autonomous. They were made to be autonomous because they were a buffer against the arbitrary interference of political power. Those models—the BBC, the UGC and so on —were used by many other countries as examples to follow.
Today we have something very different. It is not different by accident. If you read the analysis carried out by the Peterhouse intellectuals and Sir Keith Middlernas and others of the political foundations of Thatcherism, its first programme was to discredit those autonomous organisations. They were discredited as being powered by the elite (the great and the good) who were not representative of society. They were considered to be part of the British disease. They were a problem rather than something to be proud of in our British constitution.
Having undermined the credibility of those independent institutions, and having attacked civil society in that way, later, under the same kind of shell, a completely different type of organisation was created. Those are the organisations about which we are complaining today. They are not autonomous or quasi-autonomous. They are the servants of the Ministers who appoint them. They do not exercise independent judgment or authority. That is our complaint.
Indeed, one wonders sometimes when one reads about the people on the quangos, whether they be on an Essex health authority or in the Midlands. Not only do they prove to be massively incompetent and waste a lot of public money, but they also resist admitting that they have wasted public money. There are many inquiries in the press and by the Public Accounts Committee before 627 they admit to the gigantic mistakes that have been made. But they have no shame. They continue or go on to something better.
The case of Dr. Gwyn Jones has been mentioned. How is it that after the Public Accounts Committee has criticised that person openly for a massive mismanagement of public funds—and it has not been denied—that same person can occupy a position representing Wales as a governor of the BBC? Why does he not resign? Why does not the Minister concerned make him resign? How many mistakes must one commit before it is admitted that one is incompetent to occupy a position of public trust. The BBC is extremely important because the Government are never slow to criticise the BBC for failing the great British public on questions of morality. They complain about the violence and sex that is shown on television. And yet, there is a certain moral corruption taking place, and I am surprised that such matters are allowed to continue in the name of quasi autonomy.
The trick here is very simple. First, you say that you want to take the power back to the people and away from local government. You say, "local government is terrible. Why is that? Because most councils are Labour-controlled; but we will not go into that". That power is then shifted but it does not go to the people. It goes back to the Ministers. A Minister then makes his own arbitrary little creations, and all the people serving that Minister know that they hold grace and favour appointments. They know that they are to obey only the Minister and they dare not oppose him. It will be a great day when a quango does oppose the Minister. We are all waiting for that day. There is a misuse of rhetoric as regards power to the people.
Secondly, there is the question of accountability. By creating such quasi autonomous bodies, we are allowing the Minister to be unaccountable. Therefore, when questions are asked Ministers can say, "It is nothing to do with us; they are autonomous things and therefore I cannot answer questions about them". Indeed, we have heard many examples of that during Question Time. The point is that although accountability has gone the power remains with the Minister; in other words, the Minister now has power without responsibility. Noble Lords opposite may recall what a former Conservative Prime Minister said about whose privilege it was to have power without responsibility.
What we have is a fundamental undermining of the constitution. It does not matter very much to me how much money is spent or how many people are employed. However, what does matter is that such money is being spent by people who are neither accountable to Parliament nor to the people. Therefore, they are getting away Scot-free. Indeed, we have seen that the Government's claim, so to speak, as regards competence has been proved to be wrong. Moreover, their claim to hold high moral office has also been shown to be defective.
Not only would I like to see the name of every person involved in quangos being publicly available for anyone to check, but also, if anyone is found by a parliamentary process or in any other way to have committed some 628 sort of misdemeanour, they should be disqualified from holding any such office for ever. That is the minimum action required to ensure that we get some decent government in this country.
§ 4.21 p.m.
§ Baroness Williams of Crosby
My Lords, perhaps I may first congratulate my noble friend Lord Bonham-Carter on introducing this very important subject to the House today. I must also say how pleased I am to follow the noble Lord, Lord Desai, who made an extremely interesting contribution. I should like to address most of my remarks to three subjects very briefly: first, the subject of accountability, which was touched upon by the noble Lord, Lord Skidelsky, in a very interesting way; secondly, the independence of quangos; and, finally, the civic society which we in Britain have for so long been proud to uphold.
However, before I begin, I should like to say a few words about one of the aspects of quangos that we saw literally during the past few days. In this House yesterday we agreed to the Second Reading of a Bill which, as we all know, will create a new set of quangos. It will take away at least in part the final remaining major responsibility of local authorities; namely, the police. Noble Lords on all sides of the House expressed with much justice their anxiety about the decision to replace the power of local authorities with at least the partial power of appointed men and women.
A few days previously, we heard a remarkable speech made to the Conservative Way Forward society by the Chief Secretary to the Treasury, Mr. Michael Portillo. I have that speech with me this afternoon. In it, Mr. Portillo referred to his fear about those who,hold our national institutions in contempt".He went on to talk about the fact that those to whom no respect is offered lose respect for themselves. The Government must ask themselves how far they are putting some of our greatest and finest national institutions into contempt, not least the police service which was throughout the world one of the most admired institutions for which this country was responsible in its history.
I could give your Lordships other examples. For instance, the reaction of a distinguished physicist who said to me a few months ago in the United States that we had succeeded in destroying one of the finest university systems in the world. I do not know whether I would agree with him; but I can certainly say that that kind of attitude of concern about this country, its institutions and what is happening to them is not uniquely one that I alone have heard.
Perhaps I may now turn to the three issues to which I referred; namely, accountability, independence and the civic society. There have already been several contributions on the issue of accountability, and I do not wish to duplicate them. However, as my noble friend Lady Robson said, one of the striking aspects of the quangos is how little accountability they have. My noble friend referred to the fact that in the case of the health service it is possible for a district health authority in its new guise—that is, that of a community health 629 association or a National Health Service trust—to hold only one meeting a year. It is also possible for quangos to issue no public reports about what they do.
Moreover, it is widely unknown throughout the country just who members of quangos are and, as the noble Lord, Lord Desai, pointed out, there is no public list available anywhere from which one can check such membership. There is also no direct structure of accountability to the Minister. Increasingly, for the reasons so eloquently given by the noble Lord, Lord Skidelsky, Ministers are able to argue that they no longer follow the details of cases, and therefore cannot be held responsible for them. What the Prime Minister said Ito the Scott inquiry a few days ago is something that most Ministers today would echo, and that is even more so where their powers have been devolved upon a quango.
Accountability does not need to be as obscure and difficult as it is in this country. In the United States—a country to which Mr. Michael Portillo especially pointed to as sharing with us the peer position with regard to the establishment of democracy—there is a straightforward system of accountability for quangos. The chairman of every quango has to be confirmed by Congress; every quango can be questioned by a committee of Congress; and, every quango must make public its objectives and what it does about them. There is no need for the extraordinary obscurity and secrecy that shrouds quangos in our country. I do not believe that the people of Britain deserve to be treated like children from whom the facts of what is happening must be concealed.
Secondly, I turn to the subject of independence. My noble friends Lord Bonham-Carter and Baroness Robson, and other speakers, pointed to the fact that there is no such thing as independence for members of quangos. When I was a Minister, I appointed that incorruptible and fine public servant the noble Lord, Lord Cockfield, to be chairman of the Price Commission because he was the best person available for the job. I knew that he was not of my political view and that he was unlikely ever to be so; but I also knew that he was a man who would carry out his public service without fear or favour.
There are other instances of Ministers selecting for their merit men and women who do not share their political views; but, alas, it is increasingly being seen as a kind of extraordinary idiosyncrasy to speak of public service as if it is not directly related to political activity, political contributions and political donations.
Finally, I should like to speak about something which fills me with growing concern. More than any other country in the world, the UK has built up a civic society to which our citizens believe that they contribute. They believe that they participate in it and that they share responsibility for what our society is like. Seeing citizens as customers wholly misses the concept of public deliberation, the concept of participation and the concept of shared responsibility. For useful though the market is, it cannot capture in its psychology the concept of a civic society.
Like other Members of this House, I quite often go and speak, lecture and conduct seminars in Russia, in 630 the Ukraine, in Czechoslovakia, in Poland and in Hungary. Looking at my notes, I notice how often I refer to the civic society that is the ideal that we want such new democracies to move towards. But how can I talk about the ideal of the civic society as realised in my own country when the latter is constantly limiting the abilities of ordinary citizens to contribute to policy, to ideas, to the development of their communities and to this society? That is the final tragedy, and I do not say that with partisan spirit. I have tried to indicate that I do not think that should be the ruling force in our discussion on these matters. I say it because I am sad to see my country losing the capacity to involve citizens, to be accountable to citizens and to recognise the responsibility of citizens. That is what the multiplication of quangos says in the most eloquent language every day that we create yet another one which takes powers away from elected officials.
§ 4.30 p.m.
§ Lord Moyne
My Lords, I have always thought we should be grateful to the noble Lord, Lord Bonham-Carter, for introducing this important subject and the course of this debate has made me even more grateful to him. I am also grateful to the noble Lord, Lord Morris of Castle Monis, for his splendidly biblical speech. I wish a few of the Bishops had been here to hear the speech as it might have convinced them of the grace and beauty of the Authorised Version.
There is such a thing as society—I believe that is the point the noble Baroness, Lady Williams, was addressing—and in this country it is a democratic society in which power rises and falls in a circular motion. This was recognised by my own party when we invented the term "quango" as a tease on Labour during the premiership of the noble Lord, Lord Wilson. The quango system is essentially socialistic and it sterns from the authoritarian streak inseparable from socialism. Government and Civil Service, under the quango system, reach down into all parts rather like Heineken beer. In 14 years of Tory rule—we should be ashamed of this—we have pushed quangos to the point where they now take (as someone mentioned) £54 billion of public money. Soon that figure will rise to one-quarter of public expenditure.
Ever increasingly quangos replace elected local authorities who dispose of fewer resources and fewer responsibilities. Yes, the noble Lord, Lord Skiclelsky, is right in this matter. When local education authorities were riding high, they sometimes exerted a tyranny. I remember that from my time in local government. There was a case for the move towards quangos in the days when militant, conspiratorial caucuses of wreckers could hijack local authorities. But thanks in equal measure to Neil Kinnock and Mikhail Gorbachev, times have now changed and our party can afford to reduce the number of quangos and increase the participation of the people, knowing that the people have now become more responsible. There is no sign now of any great extremism in any party in this country. We are fighting a dead enemy in proliferating these quangos and trying to save ourselves from the danger of extremist local authorities.
631 The danger now is different. It is that if the Government were by any chance to change, Britain could become like America with its spoils system. If all the members of all the quangos were replaced, I suggest that chaos would result. If the present Opposition were to take advantage of their new power—if they were ever to get to power—and if we were to protest against such abuses, they could say, "You did it too". If that were to happen, how would we reply to that accusation? I believe that this danger should be taken seriously by Ministers. We should remember that we do not necessarily have a permanent lease on power. I also believe that our permanent lease on power becomes the less likely the more we try to rule the country as if we were trying to do everything for everyone. When I first learnt to ride a horse I was told, "Riding is 90 per cent. balance and only 10 per cent. grip". I believe that the art of government is similar.
§ 4.35 p.m.
Lord Bruce of Donington
My Lords, it is a great pleasure to follow the noble Lord, Lord Moyne, on this matter and to note, very properly, that he has now taken out an insurance policy against the defeat of his Government in the next election. I have a non-interest to declare in this matter. It has been my fortune over my fairly long political career—it extends back to 1931—to have been appointed to two non-governmental organisations. Perhaps one cannot class my first post as such as I was the Parliamentary Private Secretary to Aneurin Bevan. That was an unpaid post and therefore it does not bring any grist to the mill. Later, from 1975 to 1979, I was appointed to another unpaid post, which in those days was the European Parliament. Therefore I can talk about this matter with some experience, albeit with experience that was not gained at a high remunerative level.
I also have some experience of working at the Ministry of Health with the right honourable Aneurin Bevan. I am minded to mention that by the remarks that passed through the lips of the noble Lord, Lord Skidelsky, who mentioned my colleague. I well remember when Aneurin Bevan was appointing the regional hospital boards in those days, that there were loud lamentations in the parliamentary party that we were appointing Tories to those posts. Indeed, there was much acrimony between some members of my party, notably the late Mrs. Bessie Braddock, as regards the composition of the Liverpool regional hospital board. In point of fact my right honourable friend adopted the principle—this was referred to in the excellent speech of the noble Baroness, Lady Williams of Crosby—of selecting the best person for the job.
There is one thing about which I am quite certain. I do not think we have yet heard, or will ever hear in today's climate, any complaints from the Benches of the party opposite that Labour people are being appointed to these various quangos because of course they can have no complaint on that ground at all. I implore the noble Earl when he replies not merely to refer to non-departmental quangos, for which the comparative figures are given in Public Bodies 1993 which is 632 published in a glossy form and at a cost of £12, but to refer also to the departmental quangos where comparative figures have not been provided. If he challenges the figures that have been produced by the noble Lord, Lord Bonham-Carter, he would be wise not to refer to the restricted version contained in the Government's own publication on public bodies which, as I have said before, contains no comparative figures in respect of departmental quangos. The noble Earl will be aware of that.
I very much agree with some of the remarks made by the noble Lord, Lord Skidelsky. I believe that there is scope for these non-governmental organisations. I do not believe it is always possible in respect of very specialised functions to have related bodies; but what is important is the political climate in which these quangos are established. Immediately following the war and almost up to the time that the present Government came into office there was a political climate in this country which broadly—I speak across party—believed in "fair do's" for all parties. A genuine endeavour was made by all Prime Ministers of whatever party to ensure that no accusation could be made against them that they were being partial in respect of their supporters. I doubt whether that condition exists today. Since 1979 we have had a progressive politicisation of the Civil Service of which there have been many examples, notably the recent court hearing in the Matrix Churchill case. In that case civil servants were forced to admit that they had been party to the deception of Parliament. All one has to do is read the proceedings to appreciate that. That is not the kind of climate in which public accountability flourishes.
Moreover, there has been a general growing tendency on the part of a government that has become arrogant after 15 years in office to assume that people who are to be given responsibilities are "one of us". That process has gone on to a considerable extent and has accelerated over the past few years. I do not wish to give too many quotations involving such instances. However, I must refer to a report that appeared in one of the remaining newspapers which are faithful to the present Government. I have not thought fit to make any quotations from the Guardian which I realise is highly suspect in government circles, although I draw your Lordships' attention to an article in that newspaper on 17th November last which contained a detailed examination of quangos. I refer your Lordships to a short feature which appeared in the Sunday Express of 16th January of this year:The newly-appointed chief of a hospital trust in Derbyshire is to earn £20,000 a year for working as few as seven hours a week. David Dawson will start work as chairman of the Derbyshire Royal Infirmary Trust this April. He already earns £50,000 a year in another job as chief executive of the Government-funded Derby Pride Ltd".This gentleman is a former managing director of Rolls-Royce and Associates in Derby.
If the noble Lord, Lord Dean of Beswick, were here he would have been able to refer your Lordships to the reports of the Public Accounts Committee in another place which showed the gross incompetence and inefficiency of the Wessex and West Midlands Health 633 Authorities. There is no reason to suppose that these are by any means isolated instances. This cannot go on. We must have far greater accountability than exists now.
The attitude of the Government has been made quite clear: it has either deliberately abolished local authorities with which it disagrees or severely limited them. Your Lordships will recall the abolition of the GLC. That was done on the somewhat spurious grounds that some of its expenditures of very minor amounts were eccentric in nature. In point of fact, the reason why the GLC was abolished was that after its enlargement it still obstinately refused to vote Conservative.
I may be wrong, but I predict that exactly the same thing will happen in relation to Kent County Council. That body is due to be abolished despite the resistance of all parties, including that of noble Lords opposite. In its place are due to be inserted seven independent f ld10district councils at an estimated extra cost of £26 million. On the basis of what has happened in the past, I predict that the district councils will be found to be inefficient—indeed, that is bound to be so because of their number and duplication—and the situation will resolve itself into another reorganisation that will further limit the powers of the new councils.
Exactly the same thing has been done to local authorities throughout the United Kingdom. From the point of view of the Government they have a titular responsibility, but in reality they cannot carry out the responsibility because the Government deliberately cap and limit them in every conceivable form. Instead, we have a plethora of quangos responsible to no one who are charged with getting value for money out of services that were never conceived as anything other than public services. I do not believe that this is an atmosphere that the country will put up with for very much longer. In the past few weeks there has been much talk about "back to basics". We have to get back to honour, integrity, justice, fairness and compassion, not merely the naked cash nexus 'twixt man and man.
§ 4.48 p.m.
§ Lord Lester of Herne Hill
My Lords, it is a particular pleasure to follow a speaker such as the noble Lord, Lord Bruce of Donington, with his robust common sense and manifest sense of dedicated public service. I am sure that we are all grateful to my noble friend Lord Bonham-Carter for having drawn attention to the almost tropical luxuriance of growth of quangos under this Government.
I wish to speak about the serious problem of partisan political patronage and the breach of the arm's length rule, to which the noble Lord, Lord Skidelsky, referred earlier. I am sorry to say that party connection and personal favouritism are eroding the back-to-basic or great Victorian principles of a public service based on individual merit, integrity and trust. The massive scale of abuse through political patronage is, I believe, unprecedented. We have seen example after example of political bias in appointments to quangos and executive agencies. (The lights are going out all over the House; I hope they will come on again before long).
I wish to give just one example of a gross misuse of a Minister's powers of appointment of patronage. Three 634 years ago the noble and learned Lord, Lord Woolf, published a thorough and comprehensive review of the causes of the prison riots. One of his main recommendations for greater justice in prisons was the creation of a prison ombudsman. In his report he emphasised the vital importance of the independence of that new public officer. He or she would have to deal with complaints and appeals concerning the rights and liberties of prisoners vis-a-vis the public prison administration. In their consultative paper, the Government accepted the recommendations of the noble and learned Lord, Lord Woolf. The Home Secretary of the day, Mr. Kenneth Clarke, authorised a selection procedure using the Civil Service Commission. The selection procedure was based upon public advertising and one of the newspapers used was the Guardian. Those who took part in the Civil Service process were the Civil Service Commissioner, Mr. Michael Geddes, a Home Office Deputy Under-Secretary of State in charge of personnel, Mr. Terry Platt, and an independent expert in the field, Mrs. Mary Tuck who, until 1989, had been head of the Home Office Research and Planning Unit. She was described in the report as a particularly well versed person.
After considering the response to the public advertisements, the names of three people were submitted to the new Home Secretary, Mr. Michael Howard: Professor Sean McConville, a well respected academic who has spent many years teaching in Chicago, and I believe that he favours prison privatisation; Professor Rod Morgan, the Dean of the Law Faculty and professor of criminal justice at Bristol University and a magistrate of some 30 years' standing; and Stephen Shaw, the much respected director of the Prison Reform Trust.
However, the new Home Secretary, Mr. Michael Howard, rejected all three candidates as being too Left-wing or, in the Home office euphemism, because he wished to consider candidates from "a wider range of backgrounds". Apparently Mr. Howard even refused a request by his own Permanent Under-Secretary of State to meet one of the candidates in person who could not by any stretch of political language be described as Left-wing. The Home Secretary cannot have acted on the basis of an informed view of the objective merits of those well-qualified candidates, each of whom had been independently selected on the basis of public competition, public advertisement and objective criteria. Mr. Howard exercised a political veto because he did not like the political views which he ascribed to the three candidates.
Your Lordships will be interested to know that selection is now under direct Home Office control. The post has been readvertised, this time in the Daily Telegraph rather than the Guardian, and not by the Civil Service Commission. A firm of accountants—my own accountants—Coopers & Lybrand Executive Resourcing Limited have been retained to find a list of candidates more to Mr. Howard's liking. Given that history, whoever is chosen will be widely regarded as the Home Secretary's placeman, or woman, diminished by the political manner of the selection and appointment. The essential confidence of the public and 635 prison population, and of prison staff, in his or her vital independence will have been gravely undermined by this misuse of the power of patronage.
As the noble Lord, Lord Bruce of Donington, pointed out, it was not ever thus. My noble friend Lady Williams of Crosby has already reminded us of her arm's length ministerial record. However, perhaps I may mention another. When I served in the mid-1970s as special adviser to the Home Secretary, my noble friends Lord Jenkins of Hillhead and Lord Harris of Greenwich were careful to appoint well qualified candidates on their merits to important public offices on quangos irrespective of their politics. Prominent Conservative supporters were appointed, like Lady Howe as deputy chairman of the Equal Opportunities Commission and Sir David Lane, the former Conservative Minister of State at the Home Office, as the first chairman of the Commission for Racial Equality. It was well understood that those responsible for independent public authorities should be selected for their individual qualities from all political parties and from none.
Members of this or any future Government would do well to remember, in the words of the noble Lord, Lord Moyne, that they are only temporarily in office: that they enjoy power, not for its own sake but only in the interests of their fellow citizens. Government would do well to remember that public appointments are not the personal property of Ministers; that public officers occupy positions of public trust; and that appointments to those positions should be based on merit and ability rather than upon a positive answer to Mrs. Thatcher's famous question, "Is he one of us?". If Ministers continue to abuse their powers of appointment, to fragment public authorities and to sap their independence and morale, and to breed a mood of public cynicism about the corruption of patronage then I, for one, fear for the health of the great public service of this country.
§ 4.58 p.m.
§ Lord Monkswell
My Lords, I, too, am worried about the political patronage of members of quangos, the high pay that they seem to attract, and their control over public resources.
As tail-end Charlie yet again in one of your Lordships' debates, I shall consider the matter from a slightly different matter—the erosion of democracy. As a supposedly democratic Government, it does them no credit to go about their business in a way that does not esteem the democratic process, as they have done for 15 years, and as they continue to do so.
One of the issues that worries people about quangos is the direct control that Ministers can exercise because members of quangos tend to be accountable to them. They are picked by them, appointed by them, paid by them and disposed of by them. One of the intriguing matters about which we have learnt this week is that Ministers are not in a position to exert such control because they cannot read all the papers that pass across their desks. They do not know what all their placemen are doing. That is critical. If a system has developed over the past few years whereby those men—it is 636 predominantly men, and some women—who exercise power, spend public money and run public or quasi-public institutions are not accountable almost to anyone, we run grave risks. The problem of the Wessex Health Authority is one such example. There is so much of this going on that it is impossible for Ministers to direct those placemen in their activities. We need to think in terms of a structure, of the devolution of decision making. It must be a democratic structure which enables accountability to the people. We must recognise that that accountability is important and we are talking predominantly about the expenditure of public money—though it goes wider than that—which is provided by taxation paid by everyone.
With this structure which could be developed to provide accountability, I suggest that we start at the lowest level with the parish or town, a level that is responsible for dealing, for example, with nursery and primary education, the community and the family doctor health services, local roads and similar matters. At the next level, we could think in terms of the city, borough or district which would have responsibility for high schools, further education, tertiary colleges and the local district general hospital under the health service. Then going up another level, we may come to the metropolitan counties, the counties or regions of our country. That level would have the accountability of universities, teaching hospitals and other institutions which serve at county or regional level. At national level, there would be responsibility for national research and the equalisation of resources which will be disbursed.
If we had a structure built up in that way with various levels of accountability, we may then realise that all the activities currently carried out by quangos could be fitted in at one level or another and therefore they could be held accountable. It is sad that the noble Lord, Lord Skidelsky, is no longer in his seat because I was going to make a point about his anxiety over politics overriding professional judgment. Another noble Lord commented that it was important that professionals should be on tap and not on top. Most confident accountable politicians are happy to take the advice available from professionals and to use it wisely in the furtherance of public service.
One of the difficulties we have at the moment is a government in retreat who have no confidence particularly in the people of the country and the democratically expressed will of the people. While it is not in our hands to give the Government that confidence, I hope that they will realise that if they were to trust people more and trust democracy more, they might receive more support.
§ 5.4 p.m.
§ Lord Holme of Cheltenham
My Lords, this has been an extraordinarily interesting debate, with several notable contributions during the afternoon. It is probably invidious to single out one particular noble Lord, but I should like to mention the aplomb with which my noble friend Lord Lester—who is relatively new to the House—dealt with the flickering lights, reassuring those of us with a nervous disposition that the 637 debate would continue. Our principal thanks are due to my noble friend Lord Bonham-Carter, not just for prompting the debate and putting down the Motion, but for the extremely spirited introduction which he gave and which set the tenor for our subsequent discussions.
Several noble Lords mentioned the Cardiff Business School projection that there will be 7,700 quangos of one kind or another by 1996. We know that that is true from personal experience because there is hardly a debate in the House, hardly a Bill put before your Lordships which does not have as one of its provisions the creation of a new public body or quango. My noble friend Lady Williams mentioned yesterday's debate. What we have been witnessing over past years is a massive transfer of power from elected government to this new magistracy.
As we have been reminded this afternoon, the noble Baroness, Lady Thatcher, when Prime Minister, set herself as one of her objectives the defeat of quangos, to roll them back. We all know what happened; we can see what happened—the quangos defeated her. The party opposite is nothing if not pragmatic in its pursuit of power; when it realised that it could not beat the quangos, it decided to join them. So the members have, in their thousands. I agree with the noble Lord, Lord Skidelsky, who sadly is not here now. What we need in a member of a quango is independence and sound judgment. I add another criterion to which several noble Lords referred—we need people who are public spirited, who look to the wider public interest.
I am not saying that many members of the Conservative Party do not have that public spirit, that wisdom or do not have some independence. But we need to look at what is happening in terms of appointments to those bodies. It has been estimated that 40,000 are in the gift of the Government. It is difficult for that process to be seen as reinforcing independence, if it is against a background of a government which used to be led by a Prime Minister who asked the question: "Is he or she one of us?"; where a government Minister is reported as having said as recently as March last year: "I can't remember knowingly appointing a Labour supporter".
We should make no mistake, what we see here is a veritable fountain of patronage. Many Conservatives bathe in that fountain; some may come out cleaner, but most of them come out wealthier as a result. We in this country have created a comprehensive system of social security for the Conservative Party—supplementary benefit for the boys. Despite the remarks of the noble Baroness, Lady Miller, they are mostly boys. It is a kind of welfare state within a state.
As for the recipients, what we have is what used to be called in the 18th century, "placemen". My noble friend Lord Bonham-Carter referred to Lord Rockingham and I would say that we have a spoils system now which would have made even the Duke of Newcastle's mouth water.
There is only one bright spot; this is not all gloom. With the increasing demand for places on quangos and what I understand is the rapidly declining membership of the Conservative Party, at some point the 638 Government will run out of dependable friends. Demand for those close students of the market will begin to exceed supply.
More seriously, there are only three possible motives for the fact that the "one of us" philosophy has become so comprehensively entrenched in appointments to quangos. Two of them are disreputable and the third is unbelievable. The first has been referred to in this debate by the noble Lords, Lord Desai, Lord. Moyne, and others. It is that appointing Conservatives and Conservative supporters to the bodies allows Ministers to retain control through shared loyalty and shared ideology at the very point where they should be seeking independent judgment. It is government by stealth. It is Conservative government by other means, rather than part of the pluralism of the civic society to which my noble friend Lady Williams referred in her most interesting speech.
The second motive is perhaps even more disreputable. It is that membership of such bodies is a reward of some sort for faithful party support—a sort of pay-off for services rendered.
The third possible motive strains credulity to the limit. It is that Conservative Ministers might—and I ask noble Lords to entertain this proposition—actually believe that Conservatives have a monopoly on wisdom and civic virtue, and that those qualities are not to be found in members of other parties and people of no politics at all who do not support the Conservative Party. But perhaps even that motive is hot as incredible as it should be. After 14 years in power, with all the inevitable creeping arrogance to which the noble Lord, Lord Bruce of Donington, referred, the Conservative Government seem very often to confuse party interest with the public interest, and the Conservative Government with the British nation. They are not the same.
I ask noble Lords opposite—I do not expect the noble Earl, nor indeed the Front Bench, to agree, but I include those who have made such thoughtful speeches this afternoon —to reflect whether this drift to the assumption that Britain is somehow a one-party country, and the arrogance that accompanies it, do not help to create the very cynicism to which Mr. Fortino referred last week.
We need new definitions of the proper best practice for quangos which will deal with questions of appointment; of arm's-length relationships with the sponsoring Minister and ministry; of responsibilities for their report and the form in which they measure progress against their given objectives; and of their independence of judgment. Then, we need the equivalent of the Public Accounts Committee in Parliament to ensure proper parliamentary supervision of quangos. Public confidence must be restored. I believe that that will need greater wisdom and restraint on the part of the Government in the way that they select members for such bodies and the way in which they allow them to proliferate. It will also need a greater willingness on the part of us all, on the part of Parliament, to exercise the responsibility of ensuring independence and proper operation.
§ 5.13 p.m.
§ Baroness Hollis of Heigham
My Lords, much of the Maastricht debate was about the democratic deficit—yet it took place in a country which, as has been said today, has seen the disappearance of its Civil Service and the destruction of local government. Taken together, they generate a democratic deficit that is infinitely more damaging. Like other noble Lords, I thank the noble Lord, Lord Bonham-Carter, for today's debate.
The Civil Service is increasingly fragmented into next-step agencies which are at one remove from ministerial and parliamentary scrutiny. By next year they might well cover two-thirds of the entire Civil Service. There has been a managerial revolution based on market testing, contracts and eventually competition; changes which, as Vernon Bogdanor has said, are subverting our constitutional understanding. The assumption that public services may be delivered more effectively along business lines is misleading. Many services are public, as the noble Lord, Lord Rayner, said, precisely because no sane business would undertake them—as the absurdities of the Railways Act have taught us all, except perhaps the Government.
In that process we have discarded the public ethic in a Civil Service that is unrivalled in Europe. We have discarded the idea of ministerial responsibility, the unity of the Civil Service, and the consensus governing its integrity, objectivity and impartiality. The doctrine of ministerial responsibility, as "Iraqgate" should tell us, is not (the noble Lord, Lord Skidelsky, notwithstanding) that Ministers are blamed, but that a Minister takes the blame; that is, that he rectifies mistakes and corrects situations that have gone wrong. It is designed not to protect a Civil Service from criticism, but to locate accountability for the actions of government where in a democracy it should be located; namely, in the hands of elected politicians.
Let us look at the Child Support Agency, which decided to maximise its yield and improve the performance related pay of its chief executive not by targeting those who paid nothing, but by hounding those who might be pressed to pay more. That was a shift of policy dictated by commercial considerations. That is financially very sensible if what matters is Treasury support and not child support, but it is utterly at odds with the intentions of Parliament. Yet there is no way for Parliament to hold the agency to account for that policy shift.
Let us take the Benefits Agency. How can it be considered to be a business when its 20 million customers cannot shop around, cannot remove their custom, cannot use market mechanisms to demand different services and cannot ensure increased expenditure on benefits in any way save through the ballot box? When, one commentator has asked, is a business not a business? The answer is: when it cannot go out of business.
In the past 15 years, and increasingly now, we have seen the Civil Service become increasingly fragmented, 640 privatised, commercialised, more secretive and less accountable. And all that has long been happening to local government.
The Thatcher years placed their tanks on the lawns of dissent, gunning at trade unions, universities and, above all, local government. Local government failed the only test that the Government cared about; namely, that it should do as it was told. It is precisely because local government had its own democratic mandate, spoke for its local communities and reflected local differences that in the past 15 years the Government have introduced 150 Acts of Parliament in order to bring it to heel. They have done so because in government eyes it said too much, did too much, spoke too much, spent too much, and it was "Labour" too much.
Therefore, the Government capped and controlled local government finances and insisted that no matter what local citizens were willing to vote for and pay for, the Secretary of State would determine what they got—citizens had to be protected from the consequences of their own democratic judgment.
Did too much! Said too much! "Labour" too much! That is the core of today's debate. Government have removed local government responsibilities to central government and to quangos, placing them beyond local scrutiny and local accountability.
In consequence, as many noble Lords have said, spending on quangos is now far greater than that of all the local authorities put together. In East Anglia, at the last count, nearly 30 major quangos were spending my money in my name without my knowledge, my consent, my vote or my scrutiny. We have regional government in this country but we do not have regional democracy.
Let us take London. In 1985 the GLC was abolished. But London continued to have a government; it was merely not a democratic or an elected one. It was replaced with a corporate elite: the London Regional Transport Authority; the London Docklands Corporation; the London Residuary Body; the London Arts Board; the London Tourist Board; the London training and enterprise councils; the Housing Corporation; the London health authorities; the London city challenge boards. They all spend, without a vote, some £7.5 billion. Efforts are now ahead to bring them together in a London forum, which the Secretary of State, being the man he is, insists on calling London Pride.
Who replaces the elected representatives? Why, it is businessmen, of course. Thus, the three objectives of government are met: business methods, however inappropriate; the imposition locally of central government policies; and, as the previous Minister for the Environment said in this House, being "never knowingly Labour". In Professor Stewart's phrase, they are the new unelected magistracy.
Who are these bodies? A year ago the Financial Times survey of the 40 largest quangos showed that 38 of the 40 people who chaired them were men; 36 of the 40 had been to public school; and not one was identifiable as a Liberal Democrat or Labour supporter. It also showed that most of the companies from which those men were recruited donated to Tory Party funds.
641 As an article in the Local Government Chronicle of 3rd December 1993 records, the London Docklands Development Corporation has four board members linked with companies donating to Tory party funds, as do four of the 11 members of the British Coal Corporation, the boss of London Transport and the chairman of the Housing Corporation, who is also chairman of Sun Alliance and who just happened to donate £50,000 to the Conservative Party in 1992. I could go on in the same vein.
As Phillip Holland wrote:Ministers have discovered that the system of quangos can be used for shedding personal responsibility, rewarding friends, expanding the corporate state, diminishing the authority of Parliament (and local government) and enabling them [the Ministers] to retain a measure of control over the interpretation of their own statutes".The growth areas into which quangos have moved—local government, health and education, as we have heard tonight —are precisely those areas where there has been strong ideological support for Left of Centre and often Labour Party policies. The more that the Government have lost local elections, the more they have stripped power and functions from elected bodies to give to unelected bodies run by their friends and financial supporters. It has become an extension of the honours system. It is another way of giving "gongs" with pay to loyal supporters of the Tory Party, whose firms in turn contribute to Tory Party funds. As the Economist noted (quoted in the Local Government Chronicle):What power Ministers have taken for themselves they are giving to their friends".Such cronyism, as my noble friend Lord Bruce suggested, may be the path to corruption.
When, in the last years of the 19th century, Gladstone, Chamberlain and Lord Salisbury corralled the unelected quangos of their day—the improvement commissions, poor law boards, health boards, school boards and the Metropolitan Board of Works—into elected local government, they did so for three reasons that are as valid now as they were then. The first reason was the issue of public probity. In most cities local government have annual elections, visible councillors, a register of their interests, annual reports and comparisons with other authorities, and performance indicators by which those who pay for the services may judge them. Councillors must declare financial interests and then not vote. It is much tougher than any code of conduct operating in this House or the other place.
The public in turn have a right to information, to attend meetings and to see documents. What angers me about the Westminster City Council scandal is not just the wretched way in which they treated the homeless, nor just the social cleansing for political gain but—to paraphrase Michael Portillo—the deliberate cynicism which has destroyed the civic values of public probity.
Quangos, by contrast, are deliberately secretive. The public and press have no right to attend any meeting other than an AGM. They have no right to inspect documents and no right to know. Private arrangements are made for audits. They have no district auditor and, except for the health authorities, they have no ombudsmen. They are not locally accountable and not 642 even locally known. Their names, addresses and telephone numbers are kept anonymous, precisely to ensure that what they say and do cannot be scrutinised by the people who pay for them. To be accountable is not why such people joined a quango. Notwithstanding the noble Baroness, Lady Miller of Hendon, at best there is a long, opaque and uncertain line of accountability from such quangos to the Minister who appointed them or appointed the people who appointed them.
But if the first objection to quangos foreshadowed by Gladstone and Salisbury was the issue of public probity, the second was that quangos make bad policy. By definition they are single service bodies, confined to and blinkered by the boundaries of their formal responsibility and therefore with no responsibility for interconnecting with other organisations. So water authorities disconnect. They disconnected 21,000 properties last year and there has been a threefold increase in dysentery and hepatitis. Houses become unfit and families become sick. The bill for health, social services and housing rises. But so do the profits of water companies because they have exported their costs and their problems to other people. Who, in a world of individualised quangos maximising their profits, has an eye to community need or community interests.
Consider the police. We are in a time of rising crime and desperate need for policing by consent—for community policing. Yesterday's debate showed that we shall be destroying the old police authorities and snapping their links with local communities. They are bad policies. Or consider housing and the outrage at single mothers who lay back and thought of a council house. Precisely because rented housing is being bought by individuals and transferred to quangos and trusts, local authorities do not have the resources that they need to meet the needs of the homeless and those on waiting lists. As a result, the Government have turned the homeless, who are the victims of its housing policy, into the villains of the Government's moral decline.
Consider planning. There have been enterprise zones, UDCs, city action areas and urban regeneration agencies required to act commercially. They have declared UDI from local planning and thereby local authorities have lost the power to ensure that the benefits of economic regeneration are recycled back into local government. So for every three jobs created by a UDC, two jobs are lost elsewhere. They have often stripped rather than strengthened the economic fabric of their communities.
Or consider health. At just the point in time when Care in the Community needs networking and connectedness between health, social services and housing, it has been fragmented into free-standing trusts. We have removed local councillors from health authorities and joint planning has been fractured. It is the sick who are hurt.
The third and final reason that the quangos were corralled, and it still applies, is the democratic deficit. Public probity—yes; better policy making—yes; but above all what matters is the democratic deficit. In a quite extraordinary lecture last summer, the Minister for open government, William Waldegrave, insisted that the 643 development of quangos strengthened public accountability because they were more responsive to their customers. Apparently, for him democracy is simply mass consumerism; citizen means customer; and public accountability means the market. We hope to heaven that the hidden hand in politics, as in economics, will deliver the community good. Turn citizens into consumers and customers and you empower the powerful and magnify the voices of the big spenders; but you render invisible those with little access to the market place: the old, the poor, the sick and the inarticulate.
Democracy is about representation and accountability. As Professor John Stewart, said: those who exercise power in society should be answerable for it, because the power does not belong to those who exercise it but to the citizens on whose behalf it is exercised.
Monetarism has helped to wreck our manufacturing economy. Quangos have done the same to our civic economy. Cronyism and corruption, as at Westminster Council, will wreck our moral economy. The evidence is around to see and has brought politics into contempt.
§ 5.28 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)
My Lords, the House will undoubtedly be grateful to the noble Lord, Lord Bonham-Carter, for tabling this very interesting debate. It has stimulated some eloquent and indeed forceful contributions. I shall endeavour to cover as many points as I can in my reply.
First, we ought to be clear about what the Motion asks us to do. It has been said that every list of quangos is as long as a piece of string. That is because of the difficulties of definition and classification. "Quango" is an American term in origin. As my noble friend Lady Miller reminded us, it is an acronym for quasi-autonomous non-governmental organisation. The Motion yokes quangos with those more definable animals, non-departmental public bodies and executive agencies, which are in fact part of government departments.
The Motion is a blunderbuss. In one discharge it sprays with shot such very diverse organisations as the Benefits Agency, the Housing Corporation, the Patents Office, the Passport Office, the Arts Council, the British Council and a whole host of tribunals and advisory committees. Some noble Lords who have spoken want to add new forms of organisations in the education sector; others want them in the NHS. We are debating an amorphous list within which is an immense variety of organisations in terms of size, purpose and spending power. Can sensible generalisations be made about such an aggregation of different purposes and functions? I doubt it.
What would perhaps be useful therefore is to home in on the more definable terms in the Motion and, more specifically, to non-departmental public bodies, or NDPBs. By that we normally mean those public bodies which have a part to play in the processes of national government and which, although part of the public sector, are in some degree distinct from and independent 644 of government departments. The number of such bodies has been recorded on a consistent basis since 1979—that is to say, on the basis of definitions broadly corresponding to those set down by Sir Leo Pliatsky in his report on the subject. The count of such bodies does not therefore include individual educational establishments; it never included universities, for example, and does not include grant-maintained schools.
If we look at NDPBs in the context of the Motion, there is a simple fact which deserves stating: it is that numbers, far from having risen, have fallen substantially. Certainly it is true that within those lower numbers expenditure has grown. Among the big spenders we find the funding bodies for housing associations, legal aid and many of the arts, sports and heritage funding bodies. We find also the regional health authorities, the bodies through which resources for much of the health service are channelled and the higher education funding councils. It is therefore worth asking noble Lords opposite a question. Do they really deplore the size of the resources at the disposal of bodies such as those? I will expand on that theme in a moment.
Then we come to executive agencies. As the noble Lord, Lord Bonham-Carter, is aware, executive agencies are those units within government departments which have been set up as a result of the programme of reorganisation of the executive functions of government under the Next Steps initiative. That programme has been very successful. It brought into the open whole areas of the executive which were previously submerged in Whitehall departments and made them more accessible. Ministers are accountable for their functions now as they always have been. And if we look at the substantial resources at the disposal of those bodies, there is nothing sinister about them. Their size is simply a result of transposing a large range of functions from the traditional departmental Civil Service into a new form of organisation. The principles of the Next Steps agency have been extensively debated and to a great extent have bipartisan recognition and support. It is perhaps due to the blurred focus of the Motion that the agencies are included in what must be one of the most extensive charge sheets ever placed before the House.
Lord Bruce of Donington
My Lords, before the noble Earl leaves that point, perhaps he will refer to page viii in the document Public Bodies 1993, which refers to another category which has not yet been touched upon. I refer to the number of departmental appointments by gender to boards and tribunals. Included in those are NHS bodies which he himself included in the previous category. The total number of people employed there in 1993 was 42,606. No comparative figures are put in for 1979.
My Lords, I am coming to the detailed numbers in a moment. If we look in more detail at NDPBs during the period 1979–1993, as I said, there has been a reduction in their number from 2,167 to 1,389. That is a fall of 36 per cent. The 1993 total includes 829 advisory bodies which cost little and provide specialist advice, as well as 68 tribunals which protect the interests of the individual. Those figures were published 645 last month in Public Bodies 1993. The figure quoted by the noble Lord, Lord Bruce, of 7,700 quangos by the year 1996, has no basis in reality.
Executive NDPBs are set up generally under specific legislation to operate at arm's length from government. That has always been their purpose. They include bodies which provide useful functions such as the housing corporations, museums, English and Scottish National Heritage and funding councils such as the Arts Council. Similar bodies have existed for a long period; for example, the poor law boards in the 19th century. I fail to see why we should condemn the existence of NDPBs as the Motion invites us to do. Indeed, as I shall explain, everything points to the opposite view.
The noble Lord, Lord Bruce, looked at me disapprovingly when I dealt somewhat briefly with the figure that he mentioned. That figure was lifted straight out of an article in the Guardian. How did they purport to arrive at it? They did so by including executive agencies which do not fall into the category of NDPBs. But, more significantly, they did it by including an estimated future total of 5,000 grant-maintained schools. If one includes every grant-maintained school as a quango, one begins to distort the English language.
Lord Bruce of Donington
My Lords, I trust the noble Earl will forgive me for interrupting him again. I did not quote any figures from the Guardian. He may be confusing me with another noble Lord who spoke either before me or afterwards. If the noble Earl looks at the report tomorrow, he will find no figures from the Guardian in my speech.
My Lords, the figure was quoted. I apologise if it was not the noble Lord, Lord Bruce, who quoted it.
Executive NDPBs have governing boards whose members serve out of a sense of public duty, some of them receiving little or no remuneration. Whatever noble Lords opposite suggest, appointments to the boards of those bodies are made solely on the basis of suitability.
I want to pay tribute to noble Lords and others who give their time and expertise to those duties. As a number of noble Lords have dwelt on this topic in an air of some unreality, let me briefly put reality on the record. The names of potential candidates for appointments may be drawn from a variety of sources. They may come from the public appointments unit; from professional and representative groups; from self nominations; from advertising; from executive researchers; or they may be names already known to the Minister or senior officials involved. But wherever the names come from, selection is on merit and aptitude and depends on the careful appraisal of candidates against the specification for the appointment.
Ministers need always to be satisfied that the successful candidate has the qualities and expertise required, and the necessary time to give to the appointment. As for political bias, the public appointments system is an open system. Individuals are free to nominate themselves or other people to be included on the databases of people willing to serve on public bodies. Opposition parties regularly nominate 646 such people and prominent posts in public bodies have been and continue to be held by those who do riot support the Government.
§ Baroness Williams of Crosby
My Lords, perhaps the noble Earl can name one chairman of any of the 40 leading quangos who has an association with any party other than his own.
My Lords, I do not carry names in my head but I shall gladly write to the noble Baroness. What I say is correct.
My noble friend Lady Denton was mentioned in the debate. The quotation given was accurate, but only because my noble friend never inquires into a candidate's political affiliations. As she said at the time of that quotation, and as the newspaper which quoted her conceded in a correction, she aimed always to appoint the best qualified person for the job. That is as it should be.
That said, it is right that every proposal for new NDPBs should be examined very carefully. In fact, a new body is set up only if it can be demonstrated to be the most appropriate and cost-effective instrument for the task. The relationship between each NDPB and its sponsoring department is clearly defined in a way which supports the appropriate degree of delegation and independence of the NDPB, while assuring the accountable Minister and departments that financial management arrangements are as they should be.
Furthermore, each executive NDPB is subject to a comprehensive review at least every five years. The review addresses the continuing need for that body, the scope for privatisation or contracting out, the body's objectives and its financial and other management systems. In order to take account of the views of those outside parties which may have an interest, Ministers have agreed that the reviews of each large executive NDPB will be publicly announced so as to allow an opportunity for discussion about its future structure and status. Advisory and other bodies are also reviewed every five years. And of course bodies which have completed their task or are no longer needed are wound up.
The Motion invites us to assume that most NDPBs were once under democratic control and are no longer so. That, as it happens, is by no means true. But the idea that NDPBs are not accountable for the use of public funds because they are not elected is completely misconceived. I remind noble Lords opposite that the Minister responsible for an NDPB is accountable to Parliament for the degree of independence which that NDPB enjoys, for its usefulness as an instrument of government policy and so, ultimately, for the overall effectiveness and efficiency with which it carries out its functions.
As I previously said, most executive NDPBs operate under powers laid down in statute. That is an important point because their role is thereby restricted to specific purposes designed to serve national aims and objectives. Every executive NDPB publishes annual reports and accounts which enable Parliament, the taxpayer and customer to judge whether that NDPB is securing value for money. As the noble Lord, Lord Bonham-Carter, 647 well knows, accountability does not stop there. The accounts of executive NDPBs are subject to audit by the National Audit Office which reports to Parliament on their operations. The Public Accounts Committee scrutinises the activities of NDPBs closely and may summon the chief executive of an NDPB to give evidence if there is any suggestion that it is not conducting its operations as economically, efficiently and effectively as it should. Those are very real controls.
There are, however, ways of improving accountability, both to Parliament and to customers. The Government are committed to applying Citizen's Charter principles to NDPBs and encouraging executive NDPBs to prepare management statements—similar to Next Steps Agency framework documents—as a means of clarifying respective roles and responsibilities. We also want to see increasing emphasis placed on the use of performance targets covering financial performance, quality of service and efficiency; and publication of how well those targets have been met.
During the past year, the number of NDPBs has fallen by 23. Expenditure and government funding have gone up. It is worth just saying that the rise in funding has been confined to a small number of bodies and relates to increases in programme expenditure—in other words, resources that are distributed—not administrative costs. Between them, the Housing Corporation, the Legal Aid Board, the Scottish Legal Aid Board and Scottish Homes accounted for more than two-thirds of the total funding and expenditure increases in 1993.
The noble Lord, Lord Bonham-Carter, has criticised the Government's public service reforms on the alleged grounds that they have transferred power from elected and therefore accountable bodies to a range of appointed and therefore unaccountable quangos, trusts and other organisations; and instead of increasing the control of the individual citizen over his or her public services, he contends that the reforms have reduced it. That theme was echoed by many noble Lords. When one hears that kind of criticism it is generally accompanied by a call for more power to local authorities, particularly in the fields of health and education. Indeed, so it proved today. Of course, these issues are not new. There has always been some tension in the boundaries between central and local government. However, far from there being a loss in accountability of this country's public services to the electorate, there has actually been a gain.
Let us take education. Education is often regarded as a prime example of the loss of accountability because of the removal of grant-maintained schools from local authority control. But what the Government have actually done is to break crucial new ground in strengthening real accountability. The establishment of the national curriculum enables parents to be clearly aware of the distinct and separate responsibilities for this fundamental element of their children's education. The Government are accountable for the framework of the curriculum and the ground rules for its application; while individual schools are accountable for the standards of teaching within that framework. That is a considerable gain over the previous arrangements, where accountability for establishing and following a 648 curriculum was effectively shuffled and lost between the schools themselves, the local authorities, the then Department of Education and what one might call a broader education establishment. In the old system there was no real accountability and no open debate about the most crucial element of all in schooling—the curriculum.
In other respects, the Government have made schools directly accountable to parents through the provision of information. Because of the Parent's Charter, clear and comprehensive information about schools is available to parents often for the first time, enabling them to make fully informed decisions about their children's education: a full written report at least once a year; comparative tables of exam results; truancy levels and information on the career paths of former pupils. I associate myself with the pertinent remarks of my noble friend Lord Skidelsky on this subject. In providing parents with information, the Government are ensuring that control is genuine. I do believe that a school's headmaster and governors are more likely to be able to run a school more efficiently and effectively, and with a greater sense of responsibility to pupils and parents, than are local councillors.
If the noble Lord, Lord Morris of Castle Morris, really thinks that this is all a smokescreen for complete government control, I suggest that he has not spoken to many parents, head teachers or governors. I agree with the noble Baroness, Lady Williams, that citizens are more than just customers. They are active participants. They have a say in the running of the services which they enjoy.
The noble Lord, Lord Morris, made a most eloquent but somewhat misleading speech. I point out to him that the process of becoming a self-governing school is in itself a democratic one. No school becomes self-governing without a parental ballot. The Funding Agency for Schools will take on an executive and operational function, a function which incidentally I believe is inappropriate to a department of state. It will pay grants to self-governing schools and the functions that it has are defined in statute. It will not get involved in the day-to-day running of schools. That is for individual governing bodies. Governing bodies of self-governing schools contain more elected members than all but the largest of their LEA counterparts.
The noble Lord, Lord Moms, referred to the Higher Education Funding Council. He said that it is there to ensure that universities do as they are told. He knows that that is not correct. For a start, the Higher Education Funding Council is not a new principle.
§ Lord Morris of Castle Morris
My Lords, I am most grateful to the noble Earl for giving way. I did in fact say that if you are in the universities you do as the Higher Education Funding Council tells you. That is a slightly different thing.
My Lords, I accept that that is what the noble Lord, Lord Morris, said and I apologise for not paraphrasing him correctly. But the point is still valid, because it is precisely to ensure that higher education is at arm's length from Ministers, and thus that the independence of universities is strengthened, that the 649 HEFC has been created. As I said a moment ago, it is not a new principle in itself. Again, the funding councils do riot direct in detail how the grant should be spent. That is a matter for the individual universities. The legislation prevents the Secretary of State from imposing conditions of grant on the funding councils relating to individual institutions or to matters such as the curriculum.
The other area of most frequent debate is the NHS. The noble Baroness, Lady Hollis, referred in her speech to a long, opaque, uncertain line of accountability. Before the Government's reforms started to take effect the NHS was a prime example of confused accountability, dissipated between too many half-responsible interests—that is to say, the hospital administrator, the district health authority, for a time the area health authority, the regional health authority and the Department of Health.
The NHS reforms have retained the Secretary of State's ultimate responsibility to Parliament for the service as a whole. Once again, the purpose has been to clear up the confusion below. We have established a firm division between purchaser and provider, which has been absolutely fundamental in clarifying responsibility. And we have delegated that responsibility down to individual units. As a result, management accountability has actually never been clearer.
§ Baroness Hollis of Heigham
My Lords, I am grateful to the noble Earl for giving way. In his remarks will he explain in what way accountability has been enhanced with health authorities by removing democratically elected councillors from them?
My Lords, I am glad to do so. If the noble Baroness will bear with me I hope to satisfy her on that point. When there are problems in an individual hospital, it is now the chairman or chief executive of the trust board who answers. Not surprisingly, this encourages the feeling of local ownership. In the NHS, public debate and accountability is being increased for the first time by clear, published information at all levels. Strategic purchasing plans from regional and district health authorities are published, allowing debate for the first time about health priorities. Reports on the performance of individual local hospitals and ambulance services are available. Quality standards and maximum waiting times under the Patient's Charter are produced throughout the service. National priorities, openly debated in the Health of the Nation process, can be set where necessary.
The noble Baroness, Lady Robson, complained in particular about the accountability of NHS trusts. I remind her that trusts are accountable for the delivery of care through contractual relationships with purchasing authorities. Those authorities are accountable to the public for the care they purchase. Both the authorities and trusts are accountable, through the NHS management executive, to the Secretary of State, who in turn is accountable to Parliament.
§ Baroness Robson of Kiddington
My Lords, how is it accountable to the community in which it functions under the present set-up?
My Lords, as I said, trusts are accountable for the delivery of care through contractual relationships with purchasing authorities, who in turn are accountable to the public for the care which they purchase. As the noble Baroness knows, trusts have an annual general meeting open to the public. As she said herself, many go much further than they are legally required to do. Their annual report and accounts are published; health authority meetings are open to the public; both trusts and health authorities are subject to independent audit by the Audit Commission. These are real controls.
§ Baroness Hollis of Heigham
My Lords, the Minister is always courteous in giving way. Perhaps I may emphasise a point with which I am sure he will agree: to simply increase information is not the same as being accountable to the public for the policies pursued. Will the Minister tell us how the public has control over the policies by the accountability of those trusts?
My Lords, I believe that the noble Baroness was advocating passing back the control of services to local authorities. If that is the case the question has to be asked: how can it strengthen accountability to pass to local authorities unfettered control of services for which they do not raise the money? There is the idea that local authority control will solve everything. Control should rest with those who manage the services and with those who use them. Those who use them now have a voice because they have the necessary information on which to base a judgment about the standard of those services.
Alongside these changes there also has been a democratic gain in the Civil Service. In the Civil Service, executive agencies are not independent organisations, nor are they hived off, but are fully accountable to Parliament through their respective Ministers. They are not therefore the same —not remotely the same—as NDPBs or quangos.
Let us remind ourselves of what an agency is. An agency is a government department, or semi-autonomous unit within a department, headed by a chief executive who is accountable to Ministers, which carries out executive functions within a policy and resources framework set by Ministers. I stress, particularly to the noble Baroness, Lady Hollis, that agencies are part of the Civil Service.
The creation of agencies stems from a recognition that the executive functions of government, as distinct from policy advice, should be carried out by clearly defined and designated units within departments. Our policy since 1988 has been to put that principle into practice. There are now 91 agencies, with responsibilities ranging from weather forecasting to managing prisons; issuing driving licences and providing support services to the Armed Forces. If you count the 31 executive units of HM Customs and Excise and the 33 executive offices of Inland Revenue (which also operate on Next Steps lines), then it is true to say that agencies now cover some 60 per cent. of the Civil Service, or 350,000 civil servants. This percentage should rise to 75 per cent. within the next 18 months to two years.
651 This rapid programme is not being undertaken just for the sake of it. The Government's aim continues to be the best long-term value for money in the delivery of services. That is why, before any agency is created, Ministers conduct a thorough review of the activity in question to ensure, first of all, that it is needed; and secondly, if it is needed, that other possible ways of carrying it out, namely privatisation or contracting out, are not appropriate.
Then, once an agency is up and running, it is subject to a regular and equally rigorous review by its parent department —with the benefit of public consultation—to ensure that it continues to offer the best long term value for money. The benefits of the Next Steps initiative are plain to see.
Next Steps has increased accountability by making the workings of government more visible and more easily understood by the public. Publication of framework documents, annual key targets, annual reports and accounts has significantly increased information available to Parliament and the public; thereby allowing more thorough parliamentary scrutiny. Through the framework documents, the links in the accountability chain are clarified, with a particular emphasis on the respective responsibilities of the Minister and the chief executive.
Ministers remain fully accountable to Parliament for their respective agencies. It is Ministers who remain responsible for setting strategy and key targets. Chief executives are civil servants (or military personnel in some MoD agencies) and as such are bound by rules on political impartiality. Like other civil servants, chief executives help explain government policy, but they do not decide policy. The chief executive is accountable to Ministers and Parliament for the performance of the agency and the efficient use of resources. He or she may be required to appear before the Public Accounts Committee and other parliamentary Select Committees to account for the discharge of his or her responsibilities.
Accountability to the "customer" by means of responsive services does not, however, replace accountability to the public through elections, it complements it. That is why we have ensured that the fundamental structure of accountability to Parliament has been maintained. As I have already said, some critics have suggested that public accountability through local government needs to be rebuilt. In fact, local democracy—real local democracy—has been strengthened. There has been a democratic gain throughout locally provided services.
The gain lies in clear divisions of responsibility, and contracts which make explicit the performance targets and standards expected. It lies in the Citizen's Charter and its derivatives for parents, patients and others, which promote consultation of service users and effective methods of redress. It also lies in greater openness or, as my noble friend Lord Skidelsky said, in greater transparency.
The Government's White Paper on open government took forward a key area in making the working of 652 government more accessible and hence more accountable. This is, of course, one of the main principles of the Citizen's Charter. The White Paper's proposals include a new code of practice on access to information held by central government and public bodies, and consultation on the introduction of similar codes for the NHS and local authorities; independent policing of the new code by the parliamentary ombudsman; and statutory rights of access to a range of official information.
The key point in these arguments is not whether those who run our public services are elected, but whether they are producer-responsive or consumer-responsive. You do not necessarily ensure that services respond to the public simply by giving citizens a democratic voice in how services are delivered, which would in any case be a distant and diffuse voice. Services can be responsive by giving the public choices or by instituting mechanisms which build in publicly approved standards and redress when they are not attained. That is the essential guiding principle in the accountability argument.
Let me conclude by summing up the central points which rebut this Motion. The number of non-departmental public bodies (or quangos) has not increased, but in fact has decreased by 36 per cent. since 1979. Although their expenditure has increased over the years, I hope that noble Lords will agree that the use of public money for functions such as the provision of housing, legal aid and support for the arts is very important. Moreover, by improving and clarifying the lines of accountability, the Government are not weakening democratic control, but strengthening it.
Equally, my Lords, the increase in the number of Next Steps executive agencies, which, as I pointed out earlier, are quite different from quangos, has in no way diminished democratic control or representation. On the contrary, the agency programme has brought tangible benefits and clearer accountability. It has done so within a framework of tough financial and commercial disciplines which have helped to ensure the best possible use of taxpayers' money.
I hope that I have said enough to convince the House that the noble Lord's Motion should be rejected.
§ Lord Lester of Herne Hill
My Lords, before the noble Earl sits down, I wonder whether he can answer one point and shed a little more light on it than was available to me during my brief intervention. The Minister has not dealt at all with the allegation of political bias and political patronage. I gave one detailed example which I took the trouble to investigate and check with the Home Office—the allegation being that at the moment a judicial officer is being selected on politically partisan grounds by the Home Secretary. I should be awfully grateful if the noble Earl could deal with that.
My Lords, the only reason that I have not dealt with it is because the clock is against us and I wanted to give the noble Lord, Lord Bonham-Carter, an opportunity to sum up. I should be very happy to write to the noble Lord, Lord Lester, but I can tell him that a 653 selection board will meet in early February and that an announcement will be made shortly thereafter as regards the prisons ombudsman.
§ 6.4 p.m.
§ Lord Bonham-Carter
My Lords, I always think that the last words in such debates cannot usefully be employed in responding to the answer that the Minister has given, particularly as the noble Earl took 36 minutes and covered a very large area of ground. Before saying anything about that, however, I should like to thank all those who have participated in the debate for their contributions, to which I shall refer in a moment.
I shall say only this on the Minister's response: he is the only noble Lord to participate in the debate who has found any difficulty in deciding what we were talking about. We were talking about quangos. He talked about a large number of things that had nothing whatsoever to do with quangos. He did not really touch on the question of centralisation. He avoided the issue of patronage. He did not face up to the importance of the transfer of powers from local authorities, except to say in some fashion which I could not follow that it did not matter because that is not a good way of representing the people's voice. I must confess that I have found his answer extremely unsatisfactory.
I have come to the conclusion at the end of the debate that there is substance in the point made by my noble friend Lord Lester and the noble Lord, Lord Bruce of Donington, that the convention which obtained for many years—in fact, until 14 years ago—whereby appointments by government to public bodies attempted to he impartial and exercised what I call self-restraint, has now gone. That is a grave loss. When the noble Earl says that these matters—
§ The Deputy Speaker (Baroness Hooper)
My Lords, the time allotted for this debate has now elapsed. Does the noble Lord wish to withdraw his Motion?
§ Motion for Papers, by leave, withdrawn.