Public Bodies Bill [Lords]

Dominic Raab Excerpts

Tuesday 12th July 2011 Commons Chamber

[Mr Dominic Raab (Esher and Walton) (Con)]

I welcome the opportunity to speak in this important debate.

Two key objectives for the coalition are to tackle irresponsible Government spending and to deliver reform of the public sector. The Bill will help to achieve both those aims.

It is worth saying at the outset that some public bodies do important work and are a necessary response to the complexity of modern government. However, they have become massively overused. When the Government came to office, there were 901 quangos. In 2009, executive quangos alone—those that take decisions and do not just advise—employed 111,000 people at a cost to the taxpayer of £38 billion. Governments of all political persuasions share the blame for adding to this problem, but the previous Government certainly added to it in abundance. Funding for executive quangos leapt by 59% between 1997 and 2008.

It is right that the Government are cracking down on the inflation of the quango state. They are doing so first and foremost through greater transparency in the exercise of public functions and powers. In the current economic climate, in which value for money is even more imperative than usual, transparency and ministerial accountability are especially vital. Government policy is also welcome because abolishing and merging quangos and cutting their programmes will save £30 billion over the spending review period, as Ministers have reiterated yet again today. Given the difficult spending decisions that have inevitably been made elsewhere, it is essential to streamline Government as much as possible. Nowhere is that more important than in the sphere of quangos.

It makes sense to merge bodies with comparable functions, as set out in clause 2. For example, the proposed merger of the Office of Fair Trading and the Competition Commission is designed to deliver more effective regulation. It will also realise annual cost savings of between £3.5 million and £6.8 million. It is right, as Members across the House have done, to look at and question the practical impact of these changes. On that particular merger, will the Minister say any more in his winding-up speech about the institutional separation of powers between the initial investigation and the final enforcement decision? I have spoken to a number of competition lawyers and experts about that, and it is a key feature of the current competition regime. How will it be retained in the combined competition and markets authority?

Most of the savings will come not from mergers, but from cutting waste. Some quangos have been guilty of the most appalling waste of taxpayers’ resources. The right hon. Member for Dulwich and West Norwood (Tessa Jowell) made a spirited defence of the Equality and Human Rights Commission. However, auditors have refused to sign off its accounts for three years running. Last year, it breached Government pay guidelines and spent more than £1 million without due authorisation. It presided over a botched website launch, which eventually saw almost £1 million written off. Members do not need to take my word for that. The National Audit Office damningly concluded that

“there is little general financial understanding or competence in the organisation, and that many managers have limited experience of the effective management of public money.”

I discovered that for myself last week when I was informed through a parliamentary answer that a single agency worker at the commission was paid an astonishing salary of £200,000 last year. How can that possibly be justified? In the light of that, it is right that the commission is listed in schedule 5 to the Bill, allowing its functions to be modified or transferred by the Government, subject of course to the consultation on its future.

Other quangos that are to be scrapped in the Bill should probably never have been created in the first place, and I make no apology for listing as chief among them the eight regional development agencies, a pet project of the last Government that proved an expensive failure. The RDAs were established in 1999 but did little to stimulate growth. Job creation in the five years before their creation was higher than in the five years that followed despite the continued boom economic conditions. They also failed to reduce regional imbalances, which was one of their main aims, as figures from the Office for National Statistics amply demonstrate.

The RDAs made a range of poor spending decisions. Between 2007 and 2009, for example, 62% of all grants went to predominantly public sector organisations, while the trade unions were awarded more than £3 million. That is not a spending pattern that inspires confidence, nor is it one to drive a private sector-driven economic recovery. The RDAs will not be missed by those trying to drive jobs and growth in the private sector, especially as scrapping them will save three quarters of a billion pounds in administration costs alone between now and 2015. It is high time to shed light on quangos’ activities and cut down on waste.

Looking ahead, I also welcome the commitment made by the Minister for the Cabinet Office in his statement in October to triennial reviews of the purpose of the remaining quangos. They will be an important part of ensuring that the number of quangos does not balloon again in future, but that provision for them does not appear in the Bill. I ask the Minister to explain why it will not be made a statutory requirement. Equally, Ministers have previously talked about a role for the Public Administration Committee in vetting any new quangos. It would be interesting to know what the status of that proposal is.

Ultimately and overall, the Bill is a big step in the right direction towards strengthening transparency and accountability while delivering savings for the taxpayer, and it has my full support.