Some eminently sensible people are a bit sceptical about the value of cutting quangos. They look at the billions at stake in the debate over the welfare budget and the millions spent at the quangos seem a little immaterial.
There are a few reasons that this isn't the case.
The quango sector offers spending cuts that the public won't notice. If the Sustainable Development Commission vanished tomorrow, then the next day Britain would continue to tick along quite nicely and no one would be too put out but the approximately fifty staff and their families. By contrast, when cutting - say - benefit spending, the people receiving it will be upset if they face a tighter family budget than they did before. Any government looking to cut spending needs to take easy wins as well as addressing the big public sector budget. Those millions add up.
Furthermore, the quangos centralise decision making and thereby get in the way of the fiscal decentralisation that could improve public sector efficiency and economic performance. In the report Wasting Lives I set out how most of an NHS Trust's spending is determined by central government quangos:
- Their decisions over which drugs to buy are expected to conform to guidance from the National Institute for Health and Clinical Excellence.
- IT expenditure is mostly handled by Connecting for Health which runs the National Programme for IT, the largest single information technology project in the world.
- Staff pay, the largest item of expenditure,62 is determined nationally by the NHS Pay Review Body.
- Amounts of funding are also set nationally according to a weighted capitation formula.
Finally, the quangos create work for themselves to justify their existence and lobby for changes in policy (often expanding their budget as a result). The Equalities and Human Rights Commission wrote in a three-year strategy document that:
“By 2012 the Commission wishes to have achieved the following key outcomes:
no regression in law from the levels of human rights protection and
mechanisms for enforcement under the Human Rights Act and other ratified
human rights treaties”
Why exactly should taxpayers who don't want the Human Rights Act and the ECHR that it enshrines have to pay for a campaign to keep both in place?
Slimming such bodies is never as effective as ending them. When pruned, no matter how severely, they'll always build their budgets again over time. Unless you cauterise the neck, the head always grows back.
The Sustainable Development Commission writes reports about why we don't need economic growth and otherwise does the same work as the New Economics Foundation but with £4 million in public money (incredibly, the NEF also gets taxpayers' money in grants).
It is great news that the Government are building a bonfire of the quangos. But they need to add a few more particularly egregious bodies currently under review to that fire. The TaxPayers' Alliance will be campaigning on a few particularly egregious examples - the Carbon Trust, Consumer Focus, the Equality and Human Rights Commission and the Office of the Children's Commissioner - over the next few weeks in the run up to the Spending Review.