§ [Relevant documents: Sixth Report of the Select Committee on Public Administration Session 1998–99 HC 209 and the Government's response thereto Session 1999–2000 HC 317.]
§ Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Kevin Hughes.]2.30 pm
§ Dr. Tony Wright (Cannock Chase)
It is a great pleasure to kick off the debate on quangos, which arises from the report of the Select Committee on Public Administration.
One would have thought that, with all the attention focused on quangos in recent years, there would be queues at the door for our debate this afternoon with people wanting to weigh in with their views on something that has been a running theme in our political life for a long time. It is distressing and revealing that that is not yet the case.
I shall start by remembering some of the contexts. Even as a word, quangos is pejorative. It has a bad name, rather like call centres, theme parks and breakfast television. It is the sort of word that makes one want to dive under the bedclothes, but it has been at the centre of political debate in Britain for 20 or 30 years. We refer to quangocrats and quangocracy and when we wanted to attack plans for the second Chamber, we said that the intention was to create the biggest quango in the land. It has entered the language, but it seems unfriendly. In fact, it is a neutral term that came into existence in an attempt to describe the way in which whole stretches of government have been organised in recent times. Governments here and elsewhere have required new kinds of machinery to develop and deliver services. We have had to invent new sorts of bodies for a new range of activities: to distribute money, to provide a range of services, to provide advice to Government, to regulate, to inspect, to investigate, to adjudicate and so on. Whenever a Government want to do any or all those activities, they set up bodies that have tended to become known as quangos.
The word had a respectable academic origin 20 years ago, before politicians got hold of it. It was simply a word to describe the new bodies, but politicians were suspicious of unelected bodies that did not fit into the normal pattern of elected politics. However, quangos are hugely important. The core quangos—executive non-departmental public bodies—were accounting for around £24 billion of public money a couple of years ago. The current spread of quangos accounts for more than 70,000 public appointments. That is a lot of people being appointed to public bodies and half of them are appointed by Ministers, sometimes by Ministers alone.
We cannot avoid entangling ourselves in description and classification as we struggle to find a term for the curious beast that we are trying to get our minds around. 116WH These are appointed bodies performing public functions, using public money. They come in all shapes and sizes and have a variety of purposes. The original core quangos, the executive non-departmental public bodies—NDPBs—have been added to in the past 10 years or so by many more bodies. Through the 1980s in particular there was the development of what the Nolan Committee and then the Neill Committee started to call local public spending bodies. These bodies arose out of the Government's desire in the 1980s to displace local authorities over a range of functions in education, health, training, urban regeneration and elsewhere and replace them with appointed bodies. Therefore, we saw the development of local public spending bodies which are not, in Government terms, officially quangos; yet in any common-sense meaning they clearly are, because they come under the broad definition of appointed bodies performing public functions with public money. More latterly, particularly since 1997, people have looked at the development of task forces, pointing to the large number and wanting to bring them under the quango rubric too. I am sure that hon. Members will want to say something about that as we go on.
Whatever the variety or history of the bodies that we seek to identify, it is clear that they are a fixture of British government—a fixture of all Governments. Many of us have had considerable fun with this debate over the years. It is normal for the Opposition to attack the Government because they like setting up quangos and it is normal for the Government to defend themselves by saying that all Governments do those things. We certainly attacked the Conservative Government for having invented so many quangos and when Mrs. Thatcher came to power in 1979, she had been attacking the Labour party for inventing quangos. Indeed, in 1980 she set up a review under Leo Pliatsky to review quangos. Apart from producing some new definitions, it did not get far in terms of the cull that had been promised. We directed much of our energy to attacking the development of quangos during the long Conservative years, yet in office we have presided over their continuation, if not their extension.
That seems to tell a story, which is that quangos are a fixture. They are part of modern government and they perform a variety of functions that all Governments find useful. It is not helpful—this is perhaps the burden of my remarks and also the burden of what the Select Committee said in its report—to conduct the discussion about quangos in terms of a numbers game, saying, "How many are there? How many did you set up? How many did we set up? Have you set up more than we did? Are there more or fewer now?" The consistent evidence is that all Governments do it, but it does not go to the heart of the issue. In fact, it is a distraction from the central issue, which I shall define in a moment.
It is fairly well known now that quangos exist for a variety of reasons. They exist because it is useful to have bodies that operate at arm's length from Ministers and the Government to carry out the activities to which I have referred. It is useful to have bodies with that flexibility of operation and with a concerted focus on a particular task. It is not difficult to find a range of arguments why the quango model has developed and been found useful; at the same time it is not difficult to find arguments why it creates difficulties too.
117WH Quangos can be fragmenting. When we want services to be integrated, a model that deliberately fragments can cause difficulties. When we are talking about joining up government, the quango model, which disaggregates government, could be a source of difficulty. "Reaching Out: The Role of Central Government At Regional And Local Level", the recent report of the Cabinet Office's performance and innovation unit, shows the difficulties of joined-up government at a regional level. There are issues about delivery forms and quangos that might make joined-up government more difficult.
Legitimacy is a key issue. People rightly ask what the quangos are, who they speak for, where they get their money and why they are entitled to do what they do, as they do not arise from the elective process and cannot be booted out. Also, there are questions of accountability. To whom and how are they accountable? I pay tribute to the Government for struggling with those issues since 1997, as they promised that they would. The Cabinet Office produced a report, "Quangos: Opening Doors", which sought on a variety of fronts to make quangos more open and accountable. It disappointed those who thought that a great quango cull would happen. Such culls do not take place. At best, one can try to control quangos' growth.
The Cabinet Office has a difficulty with that. It would like a quango cull to take place, as it deals with the questions about whether there are more or fewer of them. It would be nice if it could say that there were fewer, but Ministers have always had a terrible natural propensity to want to create more of them within their programmes and initiatives. That is a permanent tension within Government.
The issue is not whether quangos should exist, as they do, but their accountability and transparency. Only through asking about that can we get answers to the big question, which is about legitimacy. I shall touch on some of the issues referred to in the report of the Select Committee on Liaison. I am a member of the Committee, and our key suggestion was the need for a map that would bring together the mess of public bodies. It should deal with how and why they are formed, under what legal framework they exist, what public money they receive, who appoints them and other issues of that kind.
We drew attention to some inaccuracies in the annual public bodies publication. The information needs to be collected in a more comprehensible form, as that document is inadequate at giving a broad picture of the range of public bodies inside Government. We need to start bringing together all the information that we have about executive agencies, the advisory agencies, the regulators, the local public spending bodies, the task forces and so on.
The Government have cautiously welcomed our proposal, but I hope that they can act on it, as the present situation is not satisfactory. The classifications do not work; some are bewildering. Our evidence raised questions such as why, until devolution, Historic Scotland was an executive agency, but English Heritage was a non-departmental public body. What is the explanation for that? Why is the Royal Parks agency an executive agency, but the Countryside Commission a 118WH non-departmental public body? There may be good reasons for such distinctions, but they are not apparent to anyone who receives the reports of those organisations. Why is the British Potato Council classified as a non-departmental public body, but the British Wool Marketing Board is not? Such mysteries defy explanation. The present classification system does not work. It is so confusing.
§ Mr. Andrew Lansley (South Cambridgeshire)
I am enjoying listening to the hon. Gentleman, but does he agree that it is difficult to work out why classification occurred in the first place? Looking at the matter from a different angle and at the consequences that flow from classification of a particular type of public body and the extent to which Ministers are held directly accountable for the activity of certain bodies, it becomes more explicable. However, that is not a desirable way in which to allocate a public body to a specific classification.
§ Dr. Wright
I agree with the hon. Gentleman. That is why a map is necessary. There must then be justification for why particular bodies are placed in particular categories and the accountability requirements can be matched with particular bodies. That would enable us to get to grips with such an issue that is growing like Topsy. I am not sure whether the hon. Gentleman was suggesting Machiavellian reasons for such action. I am attributing it to ordinary decent British chaos. The time has now come for a system. We must have a map. It would not just be a paper exercise; it would genuinely help with accountability and legitimacy.
I pay tribute to the way in which the Government have grappled with the issue. They require the executive quangos to fulfil a range of requirements in relation to openness, publication of reports, access to meetings and registers of interest. That is essential. It should have been in place already. Public confidence is crucial in such matters and that will not exist in such bodies unless such basic reporting requirements are in place.
It is not yet clear how far we have got with some of the requirements. The fact that we do not know the answer is revealing. A quick analysis of the replies from Departments that were received by the Select Committee on Liaison showed enormous variability. As for the executive quangos—the NDPBs—95 per cent. of them said that they were under a requirement to publish an annual report. When asked whether they were obliged to release reports of meetings, the answer was that 9.5 per cent. were, although a further 19 per cent. said that they did so voluntarily. In answer to whether there was a public right to inspect the agenda of meetings, 4.5 per cent. of them said that there was, while another 8 per cent. said that they undertook that voluntarily. On whether there was a public right to see the minutes of meetings, 12 per cent. said that there was and another 16 per cent. said that they undertook that voluntarily.
The figures for advisory quangos are even more alarming. Asked whether they were obliged to release reports of meetings, just 1.8 per cent. said yes, with up to another 10 per cent. doing so voluntarily. On whether there was a public right to inspect meetings and agendas, only 5 per cent. said that there was, with another 8 per cent. undertaking that voluntarily, and on whether there 119WH was a public right to the minutes of meetings, only 4 per cent. said yes, with another 13 per cent. undertaking that voluntarily.
These figures are necessarily imprecise, but they make the point that there is still no comprehensive system. Although there is guidance on and injunctions to do those things, there is enormous variability between bodies on whether they are done. The figures on openness were particularly dismal for advisory quangos and it is worth saying that such quangos have a central role in a range of issues, not least science, biotechnology and food safety.
I believe that, as a result of the BSE crisis and other problems, there has been a collapse of public confidence in the expert advice that Governments take and on which they rely in crucial matters. Therefore, quangos that give advice to the Government are very important. They may not seem important in executive terms—I understand why the Government view them as they do—but they are hugely important in terms of people's trust in the advice that the Government receive.
Ensuring that those bodies operate as openly as possible is therefore not a marginal or tangential matter. Indeed, it is now crucial that they do so. I urge the Government and the Cabinet Office to make sure that we make serious progress on openness. That necessity is buttressed by the House of Lords report on science and society which was issued a few days ago. It talks about the need to engage the public far more in scientific decision making and to open up some of those scientific and expert bodies to far more public scrutiny.
Another area to which the Select Committee drew attention and on which it made suggestions is that of quangos' accountability to Parliament. Several improvements can be made in that regard. We made specific suggestions, for example, that minutes of meetings between Ministers and the chairs or chief executives of major quangos should be reported routinely to Select Committees, so that Select Committees can keep an eye on what is going on. I acknowledge, and am grateful for, the cautious welcome that the Government gave to some of our proposals, but that proposal was not one that they felt able to accept. I apologise if I seem to be riding a hobby-horse, but I was struck by the terms in which they rejected it. The Government prayed in aid the Freedom of Information Bill in their argument that such reporting was unnecessary. They stated:
The Government recognises the importance of openness and transparency, and has introduced a Freedom of Information Bill with the aim of opening up Government generally. That Bill not only provides a general right of access to information held by public authorities, but also requires public authorities to adopt a scheme for the publication of information as a matter of course. It is expected that under the Bill a great deal more information will be readily available, including for example minutes of meetings generally.The problem is that the Bill does not say that. It provides exactly the grounds upon which that kind of information can be withheld. That is the formulation and development of Government policy and it is prejudicial to the effective conduct of public affairs. It is precisely those blanket exemptions in the current Freedom of Information Bill that make it impossible to take seriously the protestations of openness. I hope that those points can be remedied at some stage.
120WH The sky has not fallen in because we have the minutes of the Monetary Policy Committee of the Bank of England and it is possible to have routine reporting of major meetings between Ministers and quango chiefs to Select Committees. It is possible also to develop something akin to confirmation hearings, so that Select Committees can look at those whom Ministers are intending to appoint to some of these major positions. These bodies are exercising extraordinarily important public functions on our behalf and on behalf of Parliament, and Parliament should at least be entitled to have a look at these people, nothing more. It should not be involved in the appointment process, but should simply have a chance to look at the people, invite them to a meeting, give them a bit of a going over and make sure that they are acceptable. That would be a huge infusion of parliamentary accountability into the land of quangocrats. It is something that we should develop and I am disappointed that the Government were not more responsive to the suggestion. It has been suggested also in the recent report from the Liaison Committee, representing all the Chairs of Select Committees, as something that the Select Committees should now be developing. The Government will need to think again.
The Select Committees should also he informed that the so-called prior options reviews that explore whether quangos should be established and the quinquennial reviews that explore whether quangos should continue to exist, or in what form they should exist, are taking place so that they have a chance to have an input.
§ Mr. Lansley
I should like to ask a question about the Committee's proposals on confirmation hearings. There is an argument that there would be some prejudice to the proposal that those whom Ministers are minded to appoint to the head of an executive NDPB should appear before Select Committees because, at that stage, they could not speak for the policy of the organisation or what they would do for it. The Committees would focus on that person's past and suitability. It is, therefore, not a policy issue so much as a personality issue. Is it really the job of a Select Committee to be second-guessing the Minister on the personality? It might be better to bring the head of an NDPB before the Committee at a fairly early moment to examine the intentions in terms of policy.
§ Dr. Wright
I was not sure whether I agreed with the hon. Gentleman's earlier point, but I know that I do not agree with him on this. The Committee would be seeking to explore whether a prospective appointee seems well equipped for the task. It is as simple as that. It is not a judgment about personal characteristics, but a judgment about whether someone has got the background, the expertise and the approach to undertake the public task that he is being asked to perform. It does not conflict at all with the idea that inpost this person will come back and be regularly interrogated by a Select Committee, but it is a chance to ensure that at the time of the appointment, the individual has to run the gauntlet of Parliament. If we are serious about parliamentary accountability, we must be serious about exploring the mechanisms to strengthen it. It is easy to talk about it in a rhetorical way; we do so all the time. The problem arises when we try to make something of it. We now have a series of 121WH proposals designed to strengthen Parliament in relation to the Executive, and we are talking about one of them. If we believe that Parliament is an important enterprise, we should explore the various suggestions with interest.
Another aspect is accountability of quangos to the general stakeholders, including local communities. Some quangos are trying harder to be more accountable and responsive to their general stakeholders than others and I pay tribute to them. I was struck some years ago by a study that sought to establish whether members of elected or non-elected bodies were more responsive to their users or consumers. It assessed accountability in both types of bodies. What alarmed me about this reputable academic study of around 20 years ago was that in many respects the non-elected people took accountability far more seriously than the elected ones, who simply assumed that there were no issues of legitimacy or accountability about their role—after all, they had been elected. That was the end of the argument. People who had not been elected took greater steps to prove their legitimacy by activity.
An interesting issue emerges from that study. The task is to make both elected and non-elected bodies have a sense of continuing accountability. As I said, some quangos are doing well and others less well. We have to encourage those who are doing less well to do better for their community of stakeholders. For local public spending bodies, an annual scrutiny meeting with the local authorities in their areas should be regarded as a fundamental part of their activity. We need to build in those connections.
Appointment is my final subject. It is important, even though I shall not say much about it. Whatever else is true of quangos, the fact that they are appointed bodies is their raison d'etre: they are not elected, but appointed. People ask who these people are, who appoints them, what sort of people are appointed and whether the system is fair. As the hon. Member for South Cambridgeshire (Mr. Lansley) will know, that was explored by the Nolan committee in its first inquiry because of allegations made in the previous Parliament about the impropriety of many quango appointments. We now have the Nolan rules. For executive quangos, the Nolan rules are supplied to appointments, particularly in the health service, which was the scene of much of the earlier controversy.
How we appoint people to appointed bodies poses huge issues. I argued in the Nolan committee that we should take as many appointments as possible away from Ministers and establish an appointments commission. I could not see the reason why, if civil servants were appointed through a civil service commission route, we could not appoint people who preside over quangos through a similarly independent appointments commission route. I did not persuade the Nolan committee of that. It did not recommend a public appointments commission, but it did recommend a public appointments commissioner. The point was to enable Ministers to retain the power of appointment, but to have a monitor—the public appointments commissioner—who would stalk the system to ensure that it worked properly. There were to be independent members of appointments panels, and the public appointments commissioner would make sure that the system was working properly.
122WH Ministers in the previous Government were accused of putting their cronies on public bodies and Nolan had to explore that accusation, but if Ministers now are charged with doing that, they can claim to be doing it under the Nolan rules. That will be a good defence; it will provide Ministers with an answer to those rather difficult questions about who they are appointing and why. It is important, however, that the Nolan rules are known to be working properly.
A report is about to be published by Dame Rennie Fritchie. She is the most admirable public appointments commissioner, and she has been making inquiries on the subject. We should be genuinely troubled if she finds that the Nolan rules are not working sufficiently well. If Ministers can still appoint people for reasons other than merit, it would be an extremely serious development that should cause us to revise our view of how effective the rules are. We look forward with some concern and a great deal of interest to Dame Rennie's report, which will be published next week.
I would simply say—it is what the Select Committee says in its report—that it is time to revisit the argument on whether an independent appointments commission should do many of those jobs. I do not understand why Ministers have to make a raft of public appointments, although I realise that they can nominate people. However, if the Prime Minister can set up an independent appointments commission to appoint Cross-Bench members of the House of Lords, and if the Wakeham commission says that a wholly independent appointments commission should appoint all members of the House of Lords, apart from the small number of elected members, I see no reason why we cannot have an appointments commission to appoint those who sit on quangos. That question will surface again next week, and I urge the Government to consider it.
I commend the Select Committee's report. It contains some meaty provisions that will ensure that the system works better than it does now. I believe that quangos are here to stay. We should build on their virtues and try to overcome their vices. That will need better co-ordination, less fragmentation, and more accountability and transparency. That is where the Committee's report will lead.
§ 3.8 pm
§ Mr. Norman Baker (Lewes)
I congratulate the hon. Member for Cannock Chase (Dr. Wright), Chairman of the Public Administration Committee, on the Committee's report, which is good, and on the clear way in which he presented its conclusions to the Chamber this afternoon.
I agree with much of what the hon. Gentleman said. He began by talking about the word "quango" which, he rightly says, is a household word. It became a dirty word in the 1980s and early 1990s, which led to the sudden, overnight introduction of the non-departmental public body—the NDPB, which is an unattractive acronym. At least the word "quango" rolled off the tongue; NDPB does not. It may have been no coincidence that that collection of letters was chosen to replace quango. We have a long tradition of changing names. For instance, Windscale became Sellafield.
§ The Parliamentary Secretary, Cabinet Office (Mr. Graham Stringer)
Liberals became Liberal Democrats.
§ Mr. Baker
That was an improvement.
123WH As I said, quangos became NDPBs. I hope that I can delve into the history of quangos as it is relevant to the present. Their title became a dirty word because they were overtly used as a way of bypassing local government. When I was a local council leader, as other hon. Members who are present may have been, councils were predominantly controlled by Labour and the Liberal Democrats, but the Conservative Government had a big majority. Local councillors wanted to do things that did not find favour with that centralising Government, for whom the answer was not to respect the tradition of local government and to leave such matters to be dealt with locally, but to try to bypass councils through the removal of powers and their transfer to non-elected bodies.
It was not only the transfer of power that was offensive, although power was removed from some councils, which carried on with fewer functions. For example, the function of checking abattoirs was transferred from environmental health officers to the Meat Hygiene Service. We all know that that led to a diminished, more expensive and less credible service, at least in the short term. Some councils, including the Greater London council and the metropolitan councils, were abolished altogether. The most insidious element of the quangos, which explains why they have acquired their bad name and retain it with the public, was their use for the overt bypassing of councils and the appointment to them of people who were to a large degree sympathetic to the Government of the day. In other words, quango members were place people appointed on behalf of the then Conservative Government. Interestingly, quangos were usually strongest where the then Government were weakest, and the place men and women—they were mostly men—were present in force.
In 1994, before I entered the House, I conducted a study on the matter as leader of a district council. I discovered that in Wales, which is not the Conservatives' strongest area, 34 per cent. of Welsh Office expenditure was made through quangos. A huge percentage of public money was spent in that way on functions that, in many cases, could and should have been of local councils. I mentioned place men: 37 per cent. of people appointed to quangos dealing with Welsh issues were clearly identified as Tory supporters—there may have been more—and 16 of them did not live in Wales but felt able to deal with Welsh issues. In 1994, 14 of the 38 largest quangos had chairmen or chief executives with senior roles in businesses that donated funds to the Conservative party. At that time, 44 Members of the House of Lords popped up on quangos. Of those appointees, 31 were Conservatives, 10 were Labour supporters, three were cross-Benchers and none was a Liberal Democrat. That hardly reflected the popular vote or even the composition of the flawed House of Lords. It is clear why quangos acquired a bad name: they were used to bypass local councils, reflect Tory policy and deliver that policy where the Tories could not win local elections.
At a time when local councillors were not given the financial support that is now rightly awarded to them, it became increasingly disturbing that people employed on quangos were not subject to similar restrictions. Indeed, such restrictions still do not apply. In 1994, the part-time 124WH chairman of the Horserace Totalisator Board received £92,000 a year and the part-time chairman of the parole board received £45,000. However, councillors received £600 to £700 a year in allowances, in many cases for doing a job that involved managing a multi-million pound budget, albeit a budget that was diminishing.
That leads me to accountability, which was mentioned by the Chairman of the Select Committee. The rules did not apply equally. One would have thought that successive Governments would have ensured that unelected bodies established to deliver public functions and spending public money were subject to closer scrutiny than local councils, which—whatever their faults—can at least be turfed out every four years if they fail to deliver the electorate's wishes. The rules that apply to councils do not apply to quangos. For example, there is no surcharge on quango members as there is on local councillors if they misuse public money. That seems wrong to me.
I have not carried out an analysis, but I have anecdotal evidence that the Conservative place men and women on quangos are to some extent being replaced by Labour place men and women. That is happening in Sussex. That serious point brings the system into disrepute. I entirely agree with the Committee's sensible recommendation calling for an independent appointments commission. That must be followed through if we are to have confidence in the quango system.
The Government say that this is a subject ultimately of ministerial accountability. There are some wonderful Ministers in the Government, who work hard, are dedicated, do their best for the public and are in general superhuman beings, but how can any Minister of whatever party possibly know at any one time what is going on in all those thousands of quangos that exist across the country? How can she or he possibly be in control? How can she or he have any real accountability for those issues except in name only? The only way they can have accountability frankly is by issuing general guidance or by firefighting when a problem arises and they have to deal with it. That is the only accountability there is; there can be no other. Is a body—spending in some cases millions of pounds—to be accountable only through a single elected person? London mayors will have budgets which may or may not be substantial, but at least they will be subject to quite a lot of external scrutiny.
Individual Ministers have numerous other functions and constituency duties, and they cannot possibly have anything other than the most cursory oversight of all those quangos. Local councils are subject to a set of tight rules in terms of surcharging, the use of public money and statutory duties. The same rules of accountability are not applied to quangos and consequently there are differences in terms of legitimacy.
How does this impact on the ground? What is at issue is how this affects individuals in our constituencies. I thought of three examples on my way to this Chamber. Local councils have always taken an interest in economic development and have powers to undertake certain functions to help the economic prosperity of their areas. We have created training and enterprise councils, such as Sussex Enterprise in my region, which 125WH are not accountable and are based solely on business representation. When Sussex Enterprise was set up, only two representatives were allowed from the local councils, one from West Sussex and one from East Sussex, but under a rule made by the previous Government those two representatives could not be councillors. That is the irony of it. The only people specifically excluded by law from being on that board were elected councillors. If that is not bizarre, I do not know what is. Of course, that body met and conducted its business in private. More to the point, the decisions that it reached were often at variance with the democratic decisions reached by the local councils. I do not want to criticise Sussex Enterprise, which in many ways does a good job, but it has a particular perception about what the economy of Sussex needs. Its perception is based on the A23 corridor, which it feels is the appropriate mechanism for economic development. As it is a Sussex-wide body it looks at East and West Sussex together whereas East and West Sussex county councils believe that the economies of the two halves are very different, as indeed they are. All the Government's figures demonstrate that West Sussex is much richer than East Sussex, therefore the approach needed is different. However, that is not the approach of Sussex Enterprise, so it is in some ways subverting the democratic wish of the elected county councils and district councils in that area.
That was brought home to many of my constituents a few years ago when the Victoria hospital in Lewes, which was run by an NHS trust, and a local library, which was the responsibility of the county council, were threatened with closure. When people heard that the library in Ringmer was to close, petitions were organised and letters were written to councillors. The county council meeting was packed with constituents who said, "If you shut this library, we're going to vote you out at the next election." The county councillors said, "Okay. We can't take this. Look at the number of people here." The council backed off in the face of opposition and the library remains open.
When the closure of Victoria hospital was suggested, people ran around asking, "Who is responsible? Where are they?" We had to crowbar trust representatives into talking to the press. They did not want to know. The decision was taken behind closed doors. The trust has much improved, but those two incidents displayed the stark difference between the council and the NHS trust. In the council, there was clear, public accountability and the decision was easy to reverse, but in the NHS trust, the decision, which would affect a key public service, was taken by a shadowy group of people, without public knowledge, behind closed doors.
Will that continue? The proposed national park for the south downs has a great deal of public support. We all want the south downs to receive the best possible protection, but local people both those in favour of and those against the national park—are worried that decisions about planning matters, which are taken by democratically elected councillors in open session, will be taken by the new body. The people who are not councillors will be more remote from the sites to which their decisions relate. That is a genuine concern. The clear principle is that any person or persons who spend 126WH public money should be clearly and openly accountable for their actions. The Select Committee appears to share that view, but the principle does not apply now.
Instead of being elected, let us suppose that we were appointed by the great and the good—perhaps by the Queen's representatives who would choose us according to our good deeds on the basis of grace and favour. Suppose we were reappointed if we behaved ourselves for five years and said the right things to those who made the appointments; suppose we met in secret without members of the public or press; suppose there was no Hansard to record what was said; suppose there were no agendas or published minutes; suppose the press and the media could not find out what Parliament was doing with public money, but had to write to the Secretary of State who might, or might not, answer questions. That would be intolerable and we would not put up with it. Yet, that is the situation with many quangos that spend our money in the public interest.
Why can we not have openness and accountability? The Select Committee's Chairman rightly said that freedom of information legislation will not deliver on that. I am afraid that it will provide little freedom and even less information. The Government do many good things, but Home Office Bills are not very liberal, as we saw last night. We are worried that information will not be available. The Freedom of Information Bill has been roundly criticised on all sides. Since the former Chancellor of the Duchy of Lancaster, the right hon. Member for South Shields (Dr. Clark), did a fantastic job in producing the White Paper, the Bill has been filleted out. As soon as he produced the White Paper, he was sacked for being too radical. He is the first Minister that I know of to have been sacked for delivering a Government manifesto pledge. We have a pale shadow of that White Paper. It will not open up quangos. The Bill is flawed.
If we want to act quickly, why not see whether the legislation that applies to councils can be applied to quangos? Let us have the same rules and a level playing field. In 1960, Baroness Thatcher introduced her first Bill, which opened up councils effectively. Why do we not apply that principle straight away to quangos? I see no reason for bodies that spend public money not to be accountable in an open and democratic way. At present they are not.
I hope that the Government will take the issues that I have discussed seriously. I do not want to be entirely negative, although I feel strongly about the matter. The Government have listened and some of their responses are sensible and seem to go in the right direction. Nevertheless, they must deal with some key issues if they are serious about the matter, and one is the independent appointments commission. We cannot have patronage in the hands of Ministers, whether for appointments to the House of Lords or for appointments to quangos. We must remove patronage and the Prime Minister is right to want to do so with respect to the House of Lords.
§ Mr. Lansley
The Select Committee is not specific about the desirable extent of the remit of the independent appointments commission that it proposes. It has left that for further consideration. The hon. Gentleman seems to suggest that all public bodies—all 127WH quangos, so called—should be subject to an independent appointments commission. Is that his party's view?
§ Mr. Baker
It is certainly our view that the independent appointments commission should go a long way towards being responsible for appointments. Whether it should make every relevant appointment may be a matter for debate, but it should certainly appoint those who would appoint individual members. Ministers should not have the right to pick and choose people who have given their party good service, as often happens now.
The issue is a serious one relating to freedom of information, public accountability and the proper use of public money. I congratulate the Select Committee on a useful report and hope that the Government, who have shown signs of progress in the right direction, will treat the recommendations seriously—particularly those on accountability.
§ Mr. Jon Trickett (Hemsworth)
I join the hon. Member for Lewes (Mr. Baker) in congratulating the Select Committee on Public Administration on a fascinating and comprehensive report. I am slightly disappointed that, although the House of Commons authorities have found time for this important debate, hon. Members are, in the event, preoccupied with other matters. Notwithstanding that, I hope that we shall still be able to air many of the issues that would have been debated had more hon. Members attended.
I want to draw on my experience of local quangos to find some general lessons. The Chairman of the Select Committee may well be right in describing quangos as to some degree an inevitable product of the modern political process, but I am reluctant to accept that. As has been noted, many were the result of deliberate political action, particularly by the previous Administration, especially for local provision.
The debate is timely, because we are more than half way through a Parliament past the fulcrum point—and no doubt beginning to think about the next election and beyond. The Government are committed to modernising the country. It does not surprise me that tasks other than tackling the proliferation of quangos have been given priority. I hope that more time will be found, perhaps after the next general election, to tackle them more seriously and comprehensively.
I have, for my sins, been a member of two quangos. When I was a councillor and leader of Leeds city council, I served on the health authority. That was a very large body and was in the process of reviewing all the health services that were provided to 800,000 or so people. I sat on the review body, which became known as the Leeds review. When I moved to an adjacent authority, I discovered that many of our actions in Leeds were affecting health provision in my area in a way that I would not now welcome. We planned the future of health services for many people in West Yorkshire.
I also sat for two or three years on the Leeds development corporation, which was allegedly designed to bring regeneration to part of the city. It had the most swingeing powers, including the power legally to 128WH expropriate land. When the development corporations were set up, land, buildings and other assets were transferred without compensation from public bodies that operated within the boundaries of the development corporations. Leeds development corporation also had swingeing powers to conduct compulsory purchases of private sector land. It did not hesitate to use either its powers to transfer land that it felt it might want to use from public bodies, especially the council, or its powers for compulsory purchase—it took away properties from on-going, profitable businesses.
I have described the background of the two bodies on which I served in order to suggest the scope of their acitivities. I sat on both bodies for about two and a half years, but it has always been a mystery to me why I was appointed. There had been a tussle between the then Government and the council about my original nomination—the Government refused to agree to my appointment to the development corporation.Although I was subsequently appointed, no one has explained to me why I was refused in the first place or subsequently appointed. A similarly mysterious process was involved with the health authority.
During those two and a half years, we spent millions of pounds, changed the lives of many people in the city and expropriated land. As hon. Members might imagine, I dissented from many of those decisions. Only two or three recipients of the services that the organisations provided contacted me. As an elected councillor, I was responsible for 15,000 people, and two or three people at least contacted me daily. As an elected representative, I was under continual and consistent pressure in relation to the services that the council provided, and every four years we had to submit ourselves for re-election. Those who served on the quangos did not have to do so. I was well known in the area and people knew that I was on the bodies, but no one contacted me in that regard. Pressures were put on me and other members of the board—I assume that that applies to members of quangos throughout the country—by practitioners, the providers of services, bureaucrats, clinicians, planners and experts in economic regeneration, but not by citizens, recipients of services, patients, ill people or their relatives.
Inevitably, that coloured the nature of the decision-making process. Decisions were taken on the advice of professional officers, who were employed by agencies. I did not feel that I had an active relationship with the communities to which we were meant to provide services, which was profoundly unsatisfactory. I do not doubt that that is the nature of quangos and remains so today, notwithstanding the sea change in attitudes towards quangos that has taken place since the election.
I was elected in a by-election and subsequently moved to Wakefield, when I discovered another face of quangos. Two local health trusts took a decision to unify and eventually close one of the two local hospitals, which would lead to services deteriorating. Many people contacted me and, as their Member of Parliament, I had the privilege of presenting a 60,000-name petition to the House. The quangos, the health authority and the health trusts resisted dialogue and interaction with citizens and Members of Parliament. The merger went ahead even though 60,000-odd people had signed a petition and many had written individually, so we are now facing the consequences of the possible closure of one of our hospitals.
129WH The merger of the two health trusts and the subsequent decison to close a hospital was not an act of citizenry, as I have never heard an ordinary citizen or patient say that we need fewer doctors, nurses, hospitals, beds and so on. However, many clinicians and others argue that case, especially those who are health service officials. Professional pressure and expertise largely determine the pattern of service offered by quangos to communities. I do not wish to dismiss that, as it is an important aspect of the decision-making process. Pressure from the citizenry is far less significant in determining such patterns. That position prevents a proper strategic approach to service provision and is to be lamented.
§ Mr. Lansley
The hon. Gentleman and the hon. Member for Lewes (Mr. Baker) gave examples relating to health service decisions—particularly trust decisions—in their own areas. They stressed the benefits of accountability through local government as distinct from accountability exercised through Ministers, who would ultimately take such decisions. Is the hon. Gentleman criticising ministerial accountability within the health service and does he want local government accountability for local health services?
§ Mr. Trickett
I shall attempt to address that as I develop my argument.
There is a case for a structural review of many of the services that I am discussing. It may be necessary to introduce local accountability through councils, and regional and national government structures to bring quangos under control.
§ Mr. Trickett
I accept that entirely. There is ethical and philosophical pressure, as well as pressure from citizens, for the seamless provision of care services, especially for the elderly. Social services departments under close democratic control are increasingly being encouraged to integrate with health service provision. Different patterns of managerial structure and accountability are creating an imbalance in service provision that must be corrected. It would be sensible to bring those parts of the health service dealing with that matter closer to local authorities and under democractic control.
I shall discuss the position in Wakefield and the quangos providing services there as the spending of such relatively unaccountable bodies is startling. I have not looked at all the quangos, but have selected two or three for reasons that will become clear. Wakefield health authority spends £218 million a year, which is then disbursed in various ways. Health care used to be provided by local communities and I see no reason why that cannot be the case in future. Indeed, parts of health provision are already under democractic local control through local councils.
The Police Authority, which nowadays is a quango, spends £301 million in West Yorkshire. Wakefield TEC spends £8 million. Sadly, it is to go, but it will not be 130WH brought under council control. The council has an economic regeneration function. It will be subsumed into a larger body, a skills and learning council, and will be based in Bradford. With no disrespect to my hon. Friend the Member for Shipley (Mr. Leslie)—his constituency is part of the Bradford metropolitan area—I find that a ludicrous decision. What a former coal-mining area such as Hemsworth has in common with a wool textile area such as Bradford I do not know. I regret the decision to set up a larger quango that is even more remote from the people.
It is not always apparent how the £8 million a year that Wakefield TEC spends is directed towards improving regeneration. Wakefield college spends £17.5 million a year. They are large providers of services. It is true that some of the board members are appointed in a transparent, although not very accountable, way, but in some cases it is difficult to find out how they are appointed. The bodies appear to be self-renewing public bodies, with no accountability. The college appears able to appoint members of the board of governors in an ongoing way. To some extent, the TEC is a mystery. I do not wish to single out Wakefield TEC or other Wakefield institutions as being better or worse than others anywhere else; I am simply trying to exemplify my point.
I have approached each of those bodies in the past few days and asked them to give the names and locations—not specific addresses—of their board members, who provide services to all the citizens in my constituency. As hon. Members may expect—they may be surprised or may even deplore it—I have met with reluctance to provide my office with background information about each of the members. That is in stark contrast to democratically elected members, whether members of the House of Commons or members of the local council, who are accessible to local communities through the democratic process, because, by virtue of being an elected member, one is accountable and accessible.
The regional development agency, Yorkshire Forward, is spending £100 million a year in Yorkshire and the Humber region, as we are obliged to call the area where we live. I have never met anybody who said that they were a Yorkshire and Humber man or woman, whether they be Yorkshiremen or people from Lincolnshire. That is a side issue, although it is not to be totally dismissed and smiled at, because we live in real rather than imaginary communities that have been created to suit boundaries that somebody somewhere has decided to impose on us.
No doubt Yorkshire Forward is excellently led. I know many of the people on the board, whom I know to be of high repute, as are all those that I have encountered on the boards of the organisations that I mentioned earlier. However, they are accountable and inaccessible. It is very difficult to get hold of the chair of Yorkshire Forward.
Yorkshire Forward is a regional development agency and has decided that Yorkshire and the Humber region should be rebranded. A marketing exercise is being carried out, which may be useful because we are all competing in a global market for inward investment. Evidence suggests that some capital is footloose and may be attracted to one region rather than another, but that is debateable. The marketing exercise will cost just over £300,000 and a questionnaire has been sent out. As 131WH a true-born Yorkshireman, I have never noticed a crisis of identity in Yorkshire. Characters such as Denis Healey, Dickie Bird, Fred Truman—
§ Mr. Trickett
One could go on. They are not people who suffer from identity crises. Yorkshire people have a strong sense of identity.
§ Dr. Tony Wright
Has my hon. Friend heard it said that one can always tell a Yorkshireman, but one cannot tell him very much?
§ Mr. Trickett
That is a valid comment and it might apply to some of those just mentioned. Bernard Ingham is another. He is a sterling Yorkshireman, but did not always listen when points were being made to him.
Rebranding Yorkshire is an extraordinary idea. If the regional development agency was under democratic control and had to submit itself to election, I wonder whether it would set about the bizarre process of rebranding. I understand the argument for marketing and branding Yorkshire, but giving it a new brand is a surprising exercise.
As an interested Yorkshireman, I read the questionnaire carefully and thought about filling it in. Question nine, which may be the most extraordinary part of the exercise, asks the people of Yorkshire to identify any personality who might become a good ambassador for Yorkshire and the Humber region today. We are supposed to think of a name, fill it in and send it off. It is important to have regional structures, but I doubt whether an elected assembly for the region would ask the public, through a questionnaire that is sent out randomly and which can be accessed on the internet, to identify someone who could be Mr. Ms or Mrs. Yorkshire. If the board of the regional assembly were democratically elected, whoever was elected as the first minister would be the ambassador and advocate for the region and we would not be spending a substantial sum of money—£300,000—to rebrand Yorkshire, which is strange, or to find an ambassador for Yorkshire, which is bizarre.
Yorkshire Forward is falling into the trap that I described earlier. Board members are not in an active relationship with the communities for which they are providing services. They are in an active relationship only with the other members of the board and, more importantly, the professional officers serving the board, and someone has said that we need to market Yorkshire.
Many of the services that I have described, such as organisations for economic regeneration, the police force and health services, could be restructured and brought under democratic control, especially if we could establish a new democratic tier of regional government. I imagine that, in a second term, we would begin to tackle the quango state rigorously and comprehensively, to disassemble or deconstruct—whatever the jargon is—those elements that could be deconstructed. They could then be put back together under democratic control.
132WH I hope that the Minister will say that the Government are prepared to examine the quangos, case by case, to decide whether they could be placed back in local government. That would reinvigorate local democracy more than anything else. Instead of tinkering with the structure of councils and setting up cabinets and elected mayors, we should give local government back some of its functions, because that would encourage more people to vote for local government.
§ Mr. Andrew Lansley (South Cambridgeshire)
I am grateful for the opportunity to contribute to the debate, which I have enjoyed. As other hon. Members have said, it was particularly enjoyable to hear the Chairman of the Public Administration Committee introduce the subject, as that helped to set the scene and to explain the Committee's recommendations. Happily, they were not too many or too detailed, unlike those in many Select Committee reports. A Select Committee should hit some key notes, and the Public Administration Committee did that well.
The hon. Members for Cannock Chase (Dr. Wright) and for Lewes (Mr. Baker) partly set the scene, but there is a context to the debate that has not been dealt with. I suspect that I may fall foul of the hon. Member for Cannock Chase, but there is a numbers game behind this issue. It is not irrelevant, because it provides context, and people focus on it because it has been a way to get a handle on what goes on inside the quangocracy, which is otherwise impenetrable.
The numbers game is important because we need to understand what has happened. From 1979 to 1997, the Conservatives reduced the number of non-departmental public bodies from 2,167 to 1,128. The hon. Member for Cannock Chase made an oblique reference to the fact that many bodies that had been under local elected control were given appointed status during that time. Schools that are grant-maintained rather than maintained by local education authorities are a principal example of that. I will not engage in the pros and cons of that argument, but it is reasonable.
Examining the quangocracy is rather like trying to get hold of mercury. We all know the phenomenon whereby one examines something to quantify it and targets a number, only to find that the target has moved. The thing that one was looking for will take on a different shape, and I am afraid that that has occurred since the May 1997 election. The difficulty in the past was associated with the larger number of local public spending bodies, but now the Government have reduced the number of advisory non-departmental public bodies. Admittedly the reduction has not been large—the figure is 70 or thereabouts. At the same time, however, many task forces have been created.
The hon. Member for Cannock Chase prefaced the debate by saying that it might touch on task forces, and I will follow up that point. Two aspects worry me. The Government moved away from the process that had emerged for scrutinising NDPBs. That may or may not have been adequate, but at least it was established that a significant number of NDPBs were subject to the Nolan rules for appointment and fell under a scrutiny system that worked through the public bodies report and other means—but the task forces do not fall under the framework to the same extent.
133WH The second difficulty was that, because the Government sought to target NDPBs as a definition—if only one definition—of quangos, it was in their interest for people not to know too much about the number of review bodies and task forces that had been created. The Neill committee was explicit in the review of its first report that on the basis of written answers in the House of Lords between February 1998 to November 1999, it was impossible to determine how many review groups and task forces existed. At that point, the Minister of State, Cabinet Office came clean about how many there were—although only in response to, rather than in anticipation of, a democratic audit. That created a real source of concern, which is relevant to our debate.
As we are trying to improve the scrutiny, accountability and openness in the formal structure of NDPBs, it would be damaging if a separate set of bodies could come into the orbit of government without being subject even to the scrutiny that has been applied to the quango state up to now. The Government are, of course, keen to diminish the difficulties associated with the task forces by referring to them simply as a means of expanding sources of advice to Ministers. Expressed in those terms, why should Ministers not have the sources of advice that they want? But there are many underlying problems.
The first is that they are narrowly not just politically—chosen. Of course Ministers must have a degree of freedom to choose advisers who have an understanding of the political perspective from which Ministers operate: but appointments are often more narrowly chosen than that. There is often partisan partiality. Secondly, the process is exclusive. Bringing people into task forces may expand the sources of advice, but the people on those bodies attain an exclusive position in providing advice to Ministers. By definition, influence accumulated by one group of people over policy decisions is to the detriment of another group.
What other groups are losing influence over the process? I fear that the representational bodies—those with a genuine and legitimate representational role as interest groups, pressure groups or elected people—are losing out in providing advice to Ministers. With representational bodies, the process is more open. More material is published as responses to White Papers, Green Papers and so forth than when the issues are taken up through advisory memorandums from task forces to Ministers.
§ Dr. Tony Wright
I was right to say that the hon. Gentleman would talk about task forces, but there is a problem with his argument. If he read the democratic audit report, which is the only comprehensive account of the full range of task forces, he would see that the initial criticism ended up as praise. It was seen as a far more open way for Governments to take advice than a closed policy process—precisely the opposite of what the hon. Gentleman said. Perhaps the hon. Gentleman should be arguing strongly to ensure the publication of 134WH the reports of task forces. The better regulation task force insisted on that from the beginning, which takes us back to transparency and accountability.
§ Mr. Lansley
I am grateful to the hon. Gentleman, but he will not be surprised that my purpose in paying tribute to the democratic audit report was not to endorse its arguments and conclusions. That work, most importantly, exposed the extent of the issue. I do not endorse the conclusions that were reached and I am surprised that the hon. Gentleman takes the line that he does. The merit of a task force does not lie in the fact that it is a better system than the private closed policy-making system, without reference to openness and scrutiny.
§ 4 pm
§ Sitting suspended for a Division in the House.4.15 pm
§ On resuming—
§ Mr. Lansley
Before the Division, I was responding to the hon. Member for Cannock Chase about task forces and disputing whether they were desirable because they were more inclusive of external advice than a process that was entirely internal to Government Departments. However, we should test them not by that measure, but against their lack of openness and scrutiny because of the Government making so little information available, the potential for conflict of interest, the potential for partiality in appointments and the lack of scrutiny of those appointments under the Nolan rules. There are better ways in which to undertake such matters. Indeed, in some respects the conventional process by which Ministers seek advice from representational bodies in open consultation through Green Papers and White Papers is preferable to a system in which some decisions are not exposed to the same extent or are prejudiced in the policy—making process by the exclusive opportunities for people to act as advisers.
There is a potential accountability issue concerning Ministers relying on the advice of advisory bodies and distancing themselves from the consequences of the decisions. Accountability issues should track back simply and directly to elected persons. As for reaching different conclusions about what remedies should be used, illustrative of that argument is that the public regard the accountability with which they hold councillors as more simple and direct than that in respect of decisions made by NHS trusts, especially on closures. We all know that closure decisions are surrounded with mechanisms to try to make them accountable to the community, such as health councils, Ministers and so on, but that does not mean that they are undertstandable. The confusion and lack of transparency admittedly, a jargon word—that suffuses the task forces and review bodies set up by the Government since 1997 is highly regrettable and I hope that the Government will move away from taking such action.
I refer now to the growth of the quango state since 1997. The numbers game is significant because, as the hon. Member for Cannock Chase said, we should not target it. There has been limited success in the past, in 135WH that such targeting allowed some of the characteristics of the quango state to re-emerge in other ways and to reconstitute itself like a chameleon to avoid that. The underlying issues concern the extent to which executive or policy-making activities are required. One mechanism by which a quango state could be reduced would be to limit the extent to which it could execute, tax and spend. If we cut that back over time as a proportion of the total activity of our nation, we shall reduce the opportunities for the quango state to assert itself.
The second issue is whether the functions are conducted nationally or locally. There is a tension between the operation of quangos at local level, and local democracy. However, it is a somewhat creative tension. It is one of the things that best constrains quangos and drives us, if we are responsive, towards having fewer appointed bodies and being more responsive to elected bodies. If activity is undertaken at local rather than national level and if Ministers exercise powers and control more and local government control less, the temptation to use appointed bodies will grow. The temptation to use their regional and local offshoots will follow. Therefore, there is an underlying political debate, which was clearly in the minds of hon. Members who spoke earlier. If one goes down the path of devolving responsibilities to local government, rather than retaining them for central Government, one will, by extension, limit the opportunity for quangos to emerge.
Now we come to the third issue. If things are managed substantially by central Government or its agencies, or by quangos, how is the process to work better? My purpose is not so much to offer a series of solutions as to comment on those in the Committee's report, which helps us think about the problems.
At the risk of offending the Chairman of the Select Committee, I will start with some points with which I do not agree. First, I do not agree that regionalism and regional structures present a good mechanism for scrutinising quangos. I understand that the argument was that 410 local authorities would find it extraordinarily difficult to make each quango accountable to them. The response to that should not be, "Let's draw the responsibility for holding all those functions to account away from local authorities. Let's take away the responsiveness to local conditions. We shall not let people who understand what is going on apply that understanding to quangos. Let's do it all regionally." If one follows that path, one ends up with a regional tier of government with a more distant set of institutions, and local authorities that feel that they have not only a limited function, but virtually no control over many of the decisions being made.
A good example is planning legislation. It is important that the regional structures are created by local authorities and that those structures have a derivative function, rather than superseding the responsibilities of local authorities. Within planning policy making, we should devolve those responsibilities as far as possible to local authorities, so that they can make genuine decisions. In the final analysis, regional bodies, Government offices, planning inspectors and the Secretary of State are more likely than local authorities to make decisions. Without dwelling on individual planning decisions, it is only too obvious to most of us that that fact has made it increasingly easy for local 136WH authorities to play a political game in relation to planning decisions, rather than exercise the responsibility of deciding what developments should take place and where. It is damaging to local democracy that councillors feel that they are not taking the ultimate decisions, and that they are simply making a populist response locally, rather than balancing the long-term needs of their area. I am afraid that taking decisions away from local authorities and setting up regional structures will only exacerbate that undesirable trend.
The second respect in which I disagree with the Select Committee's report relates to joined-up government. That is not a term with which I am ever comfortable. In any case, I thought that it had been superseded. The hon. Member for Cannock Chase seemed to have a term, although I could not bring myself to use it. Was it "joined-up-ness"? I thought that, because the phrase "joined-up" did not work exactly, "wiring it up" had superseded it, and that the performance and innovation unit at the Cabinet Office had decided the time had come to tell people how to do it. As ever with the current Administration, if at first something does not succeed, give it a different name and try again. "Wiring it up" seems to be the thing.
In his evidence, Professor Marquand quite rightly pointed to the difficulties of trying to connect decisions inside Government if one disaggregates responsibilities out to quangos. The proper response to that is not necessarily to say that all these decisions should be held at the centre, but is to recognise how policy is interconnected. This brings one back to the issue of localisation, because at a local level the interaction of these decisions can be seen more readily.Therefore that points once again to trying to avoid wherever possible quangos having local arms that are not responsive to local needs.
Even at national level, the responsibility for connecting these policies together lies with Ministers. It does not lie with superseding the role of quangos. If a quango is established for a valid purpose—the hon. Gentleman set out what some of those purposes might be—the point of it is set against a specific framework of policy and, indeed, of supply for public expenditure purposes, for specific purposes. If those purposes do not connect or properly co-ordinate with other bodies, the fault lies not in the quangos or the structures themselves, but in the adequacy and understanding of Ministers of the policy and instructions—the executive responsibilities—that they give to those bodies. Too often one of the problems of quangos is that we tend to focus on their effectiveness or otherwise, in managerial terms. We focus too little on the underlying responsibility, which delegation to quangos does not absolve, of identifying what the purpose of a quango is, giving it policy, giving it supply and being accountable for the outcome of that activity.
Another point on which I do not agree, particularly with the hon. Member for Lewes, is the extent to which independent appointments should be made to quangos. Just as Ministers are fundamentally responsible for the policy and the public spending which flows into non-departmental public bodies, so Ministers are responsible for the quality of the appointments they make to deliver that in those bodies.
§ Mr. Lansley
The hon. Gentleman tempts me.
For these purposes, I will simply make a distinction. It is not the responsibility of Ministers to determine the output of the House; it is the responsibility of Ministers to secure policy and effectiveness in public spending through non-departmental public bodies. Any view I might take about appointments in quangos is not transferable to a view about appointments in the House of Lords.
To revert to non-departmental public bodies and appointments, for that reason I would be very careful about the independent element in appointments. The independent element is about propriety and securing impartiality, not about securing the characteristics of a person who is appointed chairman, chief executive or board member of a quango. It is more important for Select Committees, if they are considering going down the path of confirmation hearings, as it were, for them genuinely to be confirmation hearings, involving confirmation of a decision made by a Minister, not necessarily when the Minister is minded to make it, but perhaps at the point at which the Minister has made a decision, and then perhaps scrutinising the Minister and the appointee to learn what are the instructions, the policy and the purposes for which the Minister has made this appointment. At a subsequent point, in terms of policy and outcome, intention can be compared against result, rather than going into the question of whether the Select Committee should have a role in second guessing the decision of a Minister on the personal characteristics of the person to be appointed.
Happily, that takes me through those things where I specifically want to disagree with the Select Committee. There are other points on which I agree. First, the hon. Gentleman made it clear that a map of Government as recommended is important to secure definitions and to understand and create, perhaps over time, consistency and coherence in the structure of quangos. That is highly desirable. Secondly, I endorse the Select Committee's view that the results of prior options reviews should be more accessible and that the review team should contain an independent element. I do not wish to speak at length on the third point, the parliamentary accountability of quangos, because a commission under the chairmanship of Lord Norton of Louth is considering that. However, I shall draw to the attention of my noble Friend the Select Committee report—which he will no doubt have seen—and our discussion today. I hope that that is another area in which he and his colleagues can make recommendations to Government for policy purposes—which I hope will, in turn, inform a wider debate on the strengthening of Parliament's role in scrutinising and holding the Executive to account.
Fourthly, the auditing of local spending bodies, on which the hon. Gentleman did not dwell—its 138WH technicality is beyond me—is important. It has arisen in regard to training and enterprise councils, for example, in a way that has left concern. It is important to understand why the audit trail is going into local spending bodies and how many bodies are asking local spending bodies to account for themselves and expose all their financial activity. If the reason for an audit is one of simple propriety, it is perfectly acceptable for the National Audit Office to undertake it. However, such audits need not occur routinely. They should occur for a specific reason, because of an allegation, for example, or on a more random basis to ensure that a body is not acting in a way that involves impropriety or financial loss. However, if the reason were one concerned with management, it is probably better for the Audit Commission to secure effectiveness. The relationship that the Audit Commission has with different local spending bodies, including local government and the national health service—which it has worked hard to achieve—might create mutual understanding.
One must bear in mind some of the problems that have occurred with quangos—I would include TECs in that—because of the degree to which interference, not so much in terms of audit as in terms of but of Treasury controls and, under the present Government, public service agreements and so on, second-guesses the objectives for which arm's-length distance from Ministers was created in the first place.
I made some general remarks about appointments to which I should like to add some specific points. There is a concern about appointments. In a sense, there is a discontinuity between our debate and the work of the Commissioner for Public Appointments because, as the hon. Gentleman made clear, the commissioner has another report to make. We must recognise that lack of confidence in Government and concerns about the lack of accountability of quangos are greatly increased if appointments to such bodies are seen as impartial, biased or ineffective.
Members of the Committee will be aware of the fourth report of the Commissioner for Public Appointments and the number of politically active appointments in the NHS to which it refers. The commissioner states in that report that the number of local councillors appointed has more than doubled and that Labour councillors represented 80 per cent. of the then most recent figure. He commented:This trend raises a concern that the emphasis on representation may lead to the bodies in question losing the wider management and professional skills and competencies which those holding office need to fulfil the responsibilities that they are required to discharge.That highlights the issue. One may want the body to achieve local representation, in which case, as the hon. Member for Lewes would argue, responsibility should be with local rather than national Government. Alternatively, as was the case under the previous Administration, one can recognise that the purpose of appointments is to give NHS trusts and bodies—in this case—the skills that they need. If one no longer makes appointments on the basis of the skills that are required for the management of trusts and one includes skewed 139WH local representation that does not evenly reflect the political balance of the area, one brings the entire process into disrepute.
§ Mr. Lansley
I am about to conclude, but I will happily give way to the hon. Gentleman, so as not to frustrate his desire to intervene.
§ Mr. Baker
I am hoping to move the debate along. Does the hon. Gentleman not agree that there are local council specialists, for example, planning and environmental health officers, who have particular skills, but who are subject to decisions by elected councillors? Those councillors give them directions, but do not intrude on the exercise of their skills. In the same way, civil servants in each Department undertake valuable work that does not interfere with the political process. So it is possible to combine democratic accountability with individuals' skills.
§ Mr. Lansley
Transparently, it is possible to combine those things, but it is a question of what one sets out to do. In the context of the NHS, if one seeks to achieve a national service without postcode rationing, in which there is no local discretion about choices between priorities—
§ Madam Deputy Speaker
Order. I know that the hon. Gentleman was tempted in that direction, but we should perhaps come back to the report. Postcode rationing is a tiny bit off the subject of quangos.
§ Mr. Lansley
I am grateful to you, Madam Deputy Speaker. You may know that I can resist almost anything except temptation.
If the structure is brought into disrepute, we end up with the situation that Martin McElwee graphically described in a report entitled "The Great and Good?". He said—unfortunately, it is true that all Governments tend to give increasing numbers of appointments to their natural supporters and allow appointments to reflect their political priorities. He said that this Government were "quantitively different" from other recent Governments in the extent to which they had brought in their supporters to make a new political class. They have created that class not so much through election as through the exercise of appointments.
Although there may be advantages to managing government through appointed bodies, there is an inherent danger that that structure may not be based on openness and accountability. The structure must inspire confidence through its impartiality and by making appointments based on merit. That is the basis on which the Commissioner for Public Appointments will, rightly, examine the whole structure.
In conclusion, I commend the Committee for its report and for giving us the opportunity to have this debate. With the exceptions to which I have referred, the report helps us a great deal in trying to increase the transparency, openness and accountability of quangos. I hope that the Government will take it further by considering sympathetically some of the recommendations that have been made.
§ The Parliamentary Secretary, Cabinet Office (Mr. Graham Stringer)
First, like my hon. Friend the Member for Hemsworth (Mr. Trickett), I declare not a current interest, but a former activity—as a member of two quangos. I was a member of Central Manchester development corporation for seven years and a member of North Manchester health authority for one year, in the early 1980s. So I have experience of quangos and of local authorities, which I must say added to my interest in the Committee's report. I read not all, but most of the evidence in the two volumes. I, like everyone else in the debate, want to congratulate my hon. Friend the Member for Cannock Chase (Dr. Wright) on producing a comprehensive overview of quangos, non-departmental public bodies, local public bodies, advisory bodies, task forces and all the groups going under different names. My one disappointment today is that only five of us have participated in the debate, which relates to principles of accountability, public expenditure and democracy and many activities that affect our constituents. I am surprised that so few hon. Members have turned up.
The Government examined the report's recommendations carefully and broadly agreed with 12 of the 25. They disagreed with eight and are considering five more, which I shall come to shortly. I do not intend to dwell on those with which we agree. It is possible in debates such as this for the Minister to make a speech of the Government's position and read that out. I prefer to listen to the debate and respond to it on behalf of the Government. If I miss out answers to anything that hon. Members have asked, I shall answer in writing.
The eight recommendations with which the Government could not wholly agree were characterised by a search for consistency on the part of the Committee. It wanted consistency about how different public bodies should be accountable. The Government's response was that perfectly good structures exist and it is not necessary to alter them for the sake of consistency. Those are not the words that were used, but that is the essential response. I shall come back to two recommendations from the end of the report, about how appointments are made and the Select Committee's role.
The Committee took evidence from right and left-wing academics, local government, two Commissioners for Public Appointments, a Minister and several other experts, and it was striking that the debate that has been going on for a quarter of a century about whether quangos should exist has disappeared. There is complete consensus—but not on the exact size of, or methods of appointment to, quangos—that in a modern society there will always be groups of bodies that do not fit straight into national or local government. I do not know whether that development of consensus is the reason there are not more people here today. Of course, the witnesses differed in the emphasis that they placed on the need for change.
I shall begin by dealing with the last part of the debate—the end of the contribution of the hon. Member for South Cambridgeshire (Mr. Lansley). Quangos have had a bad name and change is happening now, not because people do not recognise that an expert panel or arm's-length organisation is sometimes needed, but largely because of what happened during 18 years of a Conservative Government, in which quangos were used 141WH ruthlessly to give positions to active Conservatives as well as to ex-Members of Parliament and ex-Ministers. However, this debate has not been adversarial and I shall not list the 20 names to which my right hon. Friend the Minister of State, Cabinet Office, referred during a debate in the House on 18 January. He listed a considerable number of people who had been thrown out of government, had chaired Conservative associations or were married to active Conservatives or Conservative Ministers who had been given appointments. Such appointments undermined the confidence of the public and members of other parties in NDPBs. As elected local councillors in Manchester in the 1980s and 1990s, my colleagues and I got fed up with seeing the electorate throwing Conservative councillors out of office but then finding them being given increased responsibility running health authorities and trusts, as well as being appointed to residuary bodies, development corporations and other quangos. As I said, we were fed up with such appointments, which gave quangos a bad name.
The hon. Gentleman referred to the fourth report of the Nolan committee on the change in appointments to NHS bodies.
§ Mr. Lansley
Just for accuracy, I remind the Minister that I referred to the fourth report of the Commissioner for Public Appointments.
§ Mr. Stringer
I shall quote from a statement made in July 1999 by the chief executive of the NHS, when the debate was happening. He said:The new criteria that the Government have introduced to reflect more the interests of patients, people who use the service, carers and people from voluntary organisations are important. The make-up of boards has changed a little. Pre-1997, about 70 per cent. of people on boards had management experience in other organisations. That figure is now 50 per cent.There has not been a huge change. In 1993, The Observer claimed that 40 per cent. of executive non-departmental bodies were in the control of known and explicit Conservative appointments and produced facts to show that that was the case.
My right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) also changed the criteria so that local people were appointed to NHS bodies. That was an important change. Many people in different areas were extremely annoyed when they listened to consultations given by development corporations or health bodies in the late 1980s and early 1990s, as they often found people who had had to look at an A-to-Z guide to reach the location that they were going to administer. That was completely unsatisfactory and the Government have put it right. As I have said on a number of occasions, we have achieved that by changing the right of Ministers to appoint people but by accepting the recommendations of the first Nolan committee that people should be appointed on merit and through a clear and transparent process. We have supported that throughout.
As other hon. Members have mentioned, appointments continue to be a matter for debate and discussion. We look forward to the publication next Wednesday of the inquiry conducted by the 142WH Commissioner for Public Appointments into the NHS appointments process. We have debated who should be appointed to those positions and how, so I suggest that we spend a couple of minutes thinking about the Select Committee's recommendations on how people are appointed and the role of councillors. I shall do no more than go through the arguments and tell the Committee a little about the history of elected representatives on health authorities.
Prior to 1982, all health authorities assumed it to be a good thing that a third of an authority's membership should consist of local councillors appointed by the local authority. Between 1982 and 1992, that proportion changed to 25 per cent., and the right of local authorities was largely lost in 1992. After that, it became difficult for Liberal, Social Democrat or Labour councillors to be made members of an NHS body. The figures bear that out. Although there are three times as many Liberal, Social Democrat and Labour councillors combined as there are Conservative councillors, there were twice as many Conservatives on these bodies then.
As the rules of appointment have changed, that balance has changed. The Government are still committed to appointing on merit from the local community and, just as important, trying to improve the diversity of the people who serve on those bodies. At present, 50 per cent. of new appointments on NHS bodies are women. It will be some time before that is the complexion of all NHS bodies, because the membership changes only once every four years—or longer if people are reappointed. The same is true of the number of people from ethnic minorities—the number has doubled on those bodies. That is part of the Government's objective of improving the composition of those bodies.
All that is background to a debate that will take place next week. About 17 per cent. of elected councillors are members of NHS bodies.
§ Madam Deputy Speaker
Order. The Minister is being very kind in giving us the background for next week's debate. Perhaps we can return to today's debate.
§ Mr. Stringer
I thank you for that advice, Madam Deputy Speaker. I shall bear it in mind. Appointments were mentioned in the report, but I appreciate that I went too far in the subject.
I move on to the points raised by my hon. Friend the Member for Cannock Chase. I agree with my hon. Friend that this is not a numbers game. Numbers have been mentioned, but the Government would not have failed even if the numbers had changed in the other direction. About 140 NDBPs have been abolished and about 70 new ones have been created. However, that is not the main question. Many of those NDBPs are there to deliver a service. It is important that they carry out their functions properly and that they do it in a transparent and accountable manner.
I know that the Select Committee and the Government more or less agree on the next point. The Committee wants more information, and we shall give it more information; we intend to be as transparent and open as possible. Public bodies will be the executive non-departmental bodies mentioned in the executive agency report. We are attempting to make things as clear as possible, leading to the production of a map of the public sector.
143WH My hon. Friend then considered what should be an executive NDPB and what should be in the democratic sector. He mentioned a good academic study. It showed that appointed bodies, which do not have the confidence or arrogance of being elected, sometimes make the effort find out what people want. They can respond—I am mindful of the contribution made by my hon. Friend the Member for Hemsworth—better to public demand than locally elected bodies.
From the point of view of a modernising Government, the public want services to be available. The public can get more out of a harmonious partnership between an NDPB that produces a service and the local authority. Not many of us who were involved in local authorities 20 years ago would have thought that possible. It has happened, and we must respect it. Although we are rightly concerned about democracy—it is central to what we do—what many people want from a hospital or a housing service is good quality. Joined-up government is not about putting everything into one place or keeping everything separate, but about ensuring that people get the service that they want and recognising the best bodies to provide it.
My hon. Friend mentioned openness. It is difficult to make the case that the Freedom of Information Bill does not go far enough. His report acknowledges that the Government are more open with information on NDPB membership and their annual reports, objectives and business plans, and that the Bill will help. We are committed, as the White Paper "Quangos: Opening the doors" explained, to an open, accountable and effective public sector.
§ Dr. Tony Wright
I hope that I am not straying, but my hon. Friend has provoked me—and I was doing so well in agreeing with him. Had he read an earlier Select Committee report on the draft Freedom of Information Bill, he would have seen that it made a careful distinction between open government and freedom of information. Open government is a gift from Government. It reflects the Government's desire to be more open, and the Government have been admirably more open. Freedom of information is about the rights of citizens. They are two different concepts.
§ Mr. Stringer
I understand my hon. Friend's point. I was simply saying that we are improving the ability of members of the public to receive information, either by exercising their rights in the Freedom of Information Bill or as a result of the Government's decision to be more open. Given that, it is hard to criticise the Government further as we appear to share the same objectives on this issue.
The other principal difference the Government have with the report—in this respect, I agree with the hon. Member for South Cambridgeshire—relates to the scrutiny of people who are about to become chairmen of executive non-departmental bodies. I understand the desire for more parliamentary scrutiny, but the course that is recommeded would lead to confusion and possibly ineffectiveness. Taking an example at random, imagine somebody whom the Government were minded to appoint to the Environment Agency for England and Wales appearing before the appropriate Select Committee, which decided that the person was not right 144WH for the job. The Committee might think that there was a mismatch between the person's skills and those required in the job description. I am a great respecter of Select Committees, but they can make mistakes as much as they can be right. The result would be a complete lack of public confidence in that person. The Select Committee would effectively have a veto, there would be a slowing down in the process and it may—I am speculating, but I think reasonably—lead to fewer people applying to become chairmen of the different executive non-departmental bodies.
§ Mr. Baker
I understand the Minister's point. However, if he takes the example of the Environment Agency, the previous Government appointed as the chairman a person who was a leading Conservative supporter and who lived in the constituency of Huntingdon. Surely there is a problem with the existing arrangements.
§ Mr. Stringer
I knew that if I mentioned a real example I would become involved in a debate on an appointment about which I know nothing in any detail. The Government's position on appointments is that the best person for the job should be appointed on merit. Clearly that was not always the position under the previous Government.
If a process is implemented whereby Select Committees can express a view on somebody the Minister is minded to approve, those Committees have a veto, undermining the appointment process. If that happens, applicants might dry up. There would be a blurring of the lines of responsibility because, although that person was appointed by the Minister, he would feel that he had needed the support of the Select Committee which considered the case. That is why the Government have rejected that proposal. I know that the Committee visited the United States and examined the process there. I am not going to go any further down this path, but the balance within the American constitution is very different from the balance within our constitution.
§ Dr. Tony Wright
I do not want to respond to points as the Minister makes them, but he is right in saying that this is important territory and that there is an issue of principle involved. I ask him to look carefully at the words that we use. We talk not about second guessing, but about a candidate elect being invited to appear before the Committee—if it chooses to do so before an appointment is finally confirmed. Leaving aside individuals, the prospective chairman of the Strategic Rail Authority, for example, might be invited to come before the Transport Committee to discuss issues concerning the rail system. When a person is taken on, that is a normal requirement—I was about to say that it does not appear to be a huge disincentive to candidates, but I need to be careful in this context. The Select Committee would gainsay the decision only in the most exceptional circumstances. It is entirely normal for a prospective appointee to discuss his role within the Select Committee.
§ Mr. Stringer
I cannot believe that many prospective appointees in the transport industry genuinely look forward to being interrogated by the Transport Committee. I have participated in its interrogations, and I know that they are carried out thoroughly.
Although we are discussing one example, our conclusions could apply to any Select Committee. Select Committees are a question-and-answer forum and do not involve dialogue—that is not their nature. Committee members can be aggressive in their questioning and someone who appears before a Select Committee but who does not have answers to all the questions does not look too good on television. If he or she took up the appointment after such a performance, his or her position would be undermined. The Government rejected the proposal for that reason, among others. Of course, the day after his or her appointment, the new chair or chief executive of an important executive agency or non-departmental body could go along to a Select Committee and discuss what will be done. There is a fundamental disagreement about the responsibilities of Government and of Select Committees.
On ministerial responsibility for appointments, the hon. Members for Lewes (Mr. Baker) said that a Minister cannot know every person who is appointed, and that he or she should therefore appoint no one or very few people. That cuts the line of ministerial responsibility, but the hon. Gentleman's argument is worth examining. In business, local and central Government and other walks of life, chief executives, chairs of companies and Ministers cannot know every detail of the business or Department that they control. They rely on advice on numerous occasions, but that does not mean that when they take such advice, they are not responsible for it. The hon. Gentleman's logic was incomplete. The appointments process is no different from that which applies to many other executive decision-making processes. The process involves knowledge, advice and decision.
We should consider the alternative. I advise hon. Members to read a history of the appointments of the Doges in Venice. For some reason, politicians are not the flavour of the month—we are the second least popular group of people in the country after journalists. If we found someone else to take our responsibilities away from us, that would be an abdication of responsibility, and it would blur the lines. If we gave away responsibilities by creating committees, what basis would their decisions have? The Government have clearly accepted the first Nolan report, there is an independent external assessor and appointments are made on merit and can be challenged. However, the final decision rests with the Minister. What is the point of giving away responsibilities and setting up another committee to undertake such matters? We come back to the question of who appoints the committee. Indeed, to do that, another committee that is even more independent may be appointed, which results in the loss of a direct line of accountability.
§ Mr. Baker
I agree and am in favour of political accountability.However, the huge number of quangos and Ministers' many responsibilities mean that, with the best will in the world, Ministers cannot do the job to the degree that they would like. The alternative is a dramatic reduction in the number of quangos and, whenever possible, the return of duties to local government or even regional government, so that they become democratically accountable through elected local politicians.
§ Mr. Stringer
The hon. Gentleman made two separate points, one about local democracy—which I covered earlier—the other about ministerial responsibility for appointments. It would be wrong for a Minister to delegate or give responsibility for appointments to local bodies in cases in which national bodies exercise such a function.
I accept concerns about what should be considered in the local democratic process and what should be outside it. Indeed, I listened with interest and sympathy to the local experiences of the hon. Gentleman and my hon. Friend the Member for Hemsworth.
We are coming to the end of a full, if poorly attended, debate. We have touched on most of the issues at the heart of the excellent report. I have not really dealt with task forces, which were mentioned by the hon. Member for South Cambridgeshire. The report entitled "Ruling by Task Force: Politico's Guide to Labour's New Elite", as well as "The Great and Good?", which deals with some of the people invited into government, put an emphasis on the matter that is different from that of the hon. Gentleman.
A new Government clearly need advice from new sources. However good the civil service, it is not the repository of all the wisdom in the world. Indeed, that is impossible. Pertinent to the appointment of task forces are remarks made by my noble Friend Lord Falconer of Thoroton in a debate in the House of Lords on 23 February. He said:What are the problems which need to be addressed? First, transparency. We should name the people on the task forces. We do. We should state their focus and remit. We do. We should keep that information up to date. We update it every six months. We should publish the reports of task forces. Twenty-one have already reported, and many others will be published or are in the process of being published. I cannot say that there will not be good reasons why advice should not be published.—[Official Report, House of Lords, 23 February 2000; Vol. 609, c. 268.]Some of those reasons are self-evident. The hon. Gentleman therefore overstated his case.
In conclusion, I thank the Select Committee members for producing such a good report. I should also thank my hon. Friend the Member for Cardiff, West (Mr. Morgan), the previous Chairman of the Committee, as I understand that the report is not all the work of the current Chairman, my hon. Friend the Member for Cannock Chase.
§ Question put and agreed to.
§ Adjourned accordingly at fourteen minutes past Five o'clock.