Public Bodies Bill [HL]

Debate between Lord Hunt of Kings Heath and Baroness Thornton

Tuesday 11th January 2011 Lords Chamber

[Baroness Thornton]

I realise that putting down an amendment to add something to this hotchpotch Bill may seem perverse in the extreme but assure the Committee that there is method in my madness. This is a probing amendment, designed to achieve what we seem to have signally failed to achieve so far with this Bill: that is, to gain some understanding of the rationale, the explanation or the philosophy that lies behind (the arm’s-length institutions that are included in the Bill and those that are not). I use the Food Standards Agency as an example of a body that is not in the Bill but about which reform is being proposed.

The Food Standards Agency, is, as it says on its website,

“an independent Government department set up by an Act of Parliament in 2000 to protect the public's health and consumer interests in relation to food”.

What has already been announced is that some of its functions will be taken away and given to Defra, and nutrition and dietary health will be moved back to the Department of Health. That is a very retrograde step in the view of many people concerned with diet and health. I think we can safely say that the Food Standards Agency was specifically formed after the BSE food scandals to try to re-establish public confidence in food advice by creating an arm’s-length body and an independent organisation. If the Government wish to change that fundamentally, they have to have some justification for addressing those issues specifically. Even if they wish to make the FSA a leaner and more cost-effective body, as they have done and to which the FSA has responded very well, cost-cutting is not the point here. It would seem that the FSA can be changed and its powers taken away without recourse to Parliament, without consultation and without this Bill.

Why is the FSA not included in this Bill? I was tempted to table an amendment for all the non-departmental government bodies that are not included in this Bill just to try to make sense of the Bill, and I have not ruled out that idea. For example, we will address later the other health bodies that are included in this Bill: the HFEA and the HTA. They were created with a similar motivation to that behind the Food Standards Agency—the need to have an arm’s-length body independent of government that could be trusted by the public to give good advice.

So far, the passage of this Bill has resembled a familiar song that we may all know, “The Hokey Cokey”. You put Channel 4 or Ofcom in the Bill, then you take them out of the Bill—or you think about it—and maybe shake them all about a bit. In the case of the recent government amendments on the Criminal Procedure Rule Committee, and a host of the other judicial-sounding bodies, they are out, but why? Perhaps we should rename this Bill the Hokey Cokey Bill.

Since tabling this amendment, the Public Administration Select Committee in another place has very obligingly published, Smaller Government: Shrinking the Quango State. I had intended to use the Treasury’s admirable publication, Reforming Arm's Length Bodies, and the Institute for Government’s document, Read Before Burning, as a theme for this discussion, because both contain a sensible description of the different kinds of arm’s-length bodies, what they do and how they might be reviewed and reformed. However, I think that they have been overtaken by the admirable report from the committee under Mr Bernard Jenkin MP about the dog’s breakfast that is not just this Bill but the whole process of reforming arm’s-length bodies.

To go back to basics, the coalition agreement merely said:

“We will reduce the number and cost of quangos”.

I have to say that my own Government’s policy was along the same lines. The Reforming Arm's Length Bodies document outlined how to do this in an orderly fashion over a period of time and save money in the course of doing that. So the Government started a cost-reduction exercise. Shortly after the election, they undertook to review public bodies sponsored by departments, including executive agencies. The stated aim of the review was primarily to increase the accountability of government. To achieve this, the review attempted to indentify functions that could be transferred from public bodies to central departments. The Government argued that Ministers could then be directly responsible for those activities and could be held to account by Parliament for the discharge of those activities. Indeed, Francis Maude, the Minister in the Cabinet Office—I particularly like this bit—said:

“I have led an intensive review into public bodies, subjecting each to four tests. The first test was existential and asked, does the body need to exist and do its functions need to be carried out at all?”.—[Official Report, Commons, 14/10/10; col. 505.]

I think that existential is a really good word to use in the process of these discussions. Those tests were whether,

“a precise technical operation needs to be performed to fulfil a ministerial mandate”.

The second area was,

“where it may be right to delegate power to an independent body … when there is a need for politically impartial decisions”.

The third area was,

“where there is likely to be a need for independent action … when facts need to be transparently determined”.

The fourth area, of course, was the existential test.

Added to that, we have another test, which appeared slightly late in the day: transparency. According to the report:

“The Ministry of Justice has retained bodies on the grounds of ‘transparency’”,

so we know now that we have at least four or five tests that the Government have said need to be applied to arm’s-length bodies.

The report goes on to say:

“It is also unclear whether all three of the tests the Government set were necessary in determining whether a function should remain at arm's length from Government”.

The report adds that the Institute for Government,

“during its research for its report, Read Before Burning, conducted its own evaluation of public bodies and the level of independence they need to discharge their functions properly. Their evidence states that: The key issue for deciding to put a function at arm's length is the degree of independence from day-to-day ministerial intervention needed to enable the body to command public confidence that it can perform its function in the public interest”.

That test applies completely to the FSA, and indeed to several bodies that are included in this Bill. We therefore have the importance of the independence test.

The additional test that is brought to bear is that of value for money. As well as the four or five tests that I have already outlined, the Select Committee says that the Government,

“are silent on a range of other issues, such as the implication of changes on the wider public policy framework, value for money, or current performance of organisations”.

The report concludes:

“The Government did not consult properly on these proposals. When undertaking such a fundamental review of the machinery of government it is desirable and sensible to do so”.

Our own Merits Committee did, as I recall, agree with that.

The report goes on to say that the Government do not apply the tests consistently and have declined, in some cases,

“to provide an explanation for why it intends to retain a body”.

It seems to me that asking for an explanation of why the Food Standards Agency is not included in this Bill is exactly the point of this Select Committee report. The Government have been inconsistent about what is in the Bill, what is out of the Bill, and what tests should be applied to the bodies that they intend to keep and to reform. The conclusion of this very critical report says:

“We are not convinced that the Government has applied its tests consistently. Neither can we find any evidence to suggest that it took any steps to ensure a uniform approach was taken. We recommend that the Cabinet Office publish details on how the tests have been applied to all public bodies that are still under review, so we can ensure that in future these tests are applied consistently.

The lack of consultation and inconsistent application of the tests, which are themselves confusing”—

I would agree with that—

“have led us to conclude that there was no coherent and consistent process for reviewing public bodies”.

I return to the Food Standards Agency, which I would not wish to include in this Bill. Whether or not I proceed to add a whole host of other bodies into the Bill in a desperate attempt to understand the rationale is dependent on the Minister’s explanation. I would really appreciate him addressing the very important issues that are raised in this report—and this is the first opportunity we have had to say this. I would like an explanation of the broader implications that this report has for the Bill. Obviously, it involves not just the Food Standards Agency but many, many bodies.

Finally, we on these Benches are not opposed to modernising arm’s-length bodies. Indeed, in March last year we published a document about the reform of arm’s-length bodies that said that we intended to reduce their number by 123 and to save money by doing so. However, we intended to do it in an orderly fashion with consistent and consistently applied criteria. This Government have not done that, and we need an explanation of what they intend to do next. I beg to move.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to my noble friend Lady Thornton for raising three very substantive matters with this amendment: first, what is to happen to the FSA; secondly, the process by which the Government have undertaken this review; and, thirdly—coming back to the debate on the first group of amendments—the architecture of the Bill.

I was the Department of Health Minister who, with the noble Baroness, Lady Hayman, as the Defra Minister, took through the legislation that created the Food Standards Agency. The noble Lord, Lord Newton, and I are singing off the same hymn sheet here. I remind the noble Lord that the reason for this was that there was a great deal of public distrust, it would be fair to say, arising out of the BSE issue along with some concern about the advice that the relevant government departments had been giving to the public. Therefore, the decision was taken to create an independent agency sponsored not by Defra but by the Department of Health.

Overall, that agency has worked very well indeed. I pay particular tribute to the noble Lord, Lord Krebs, and to Mr Geoffrey Podger, the first chair and chief executive of the FSA—and, indeed, to their successors—for doing what I think has been an outstanding job. It has certainly advanced the credibility of the advice that that body gives to the public and, importantly, has also enhanced the credibility of the British food industry. I therefore have some reservations about the changes that are now being proposed to the FSA. I understand that there will be a transfer of some of its responsibilities to the Department of Health. I must declare my interests in relation to the health service and to public health as they are recorded in the Register. The FSA has a tremendous reputation and, in the Government’s place, I would hesitate before making substantive changes.

However, the second point raised by my noble friend relates to the rationale for the Government’s approach both to those bodies that are contained in the Bill and those that are not. It is still not clear to many noble Lords what the rationale is. This is a good opportunity for the Minister, who, as noble Lords have already remarked, has been very helpful to the House, to explain some more about the rationale for the bodies contained in the Bill and those that are not, even where those that are not are actually to have substantive changes made to them.

The noble Lord, Lord Taylor, will be a little tired of having Select Committee reports quoted back to him because it would be fair to say that all of the Select Committees that have so far looked at the Bill and at the review undertaken by the Government have been not exactly complimentary. The noble Lord, Lord Taylor, has to answer the central charge of the Public Administration Select Committee, chaired by Mr Bernard Jenkin, which said:

“This review was poorly managed … no meaningful consultation, the tests the review used were not clearly defined and the Cabinet Office failed to establish a proper procedure for departments to follow”.

Apart from rejecting the Select Committee’s report out of hand, the Government have been rather silent in responding so far. We are entitled to some comment on the review process itself.

My noble friend Lady Thornton referred to the Bill as being the “Hokey Cokey Bill”. I think it is more Gilbertian myself. The noble Lord, Lord Taylor has a little list. In fact it is a very big list that is gradually becoming smaller. I note that the Jonathan Miller production of “The Mikado” is back at the Coliseum yet again. The noble Lord might take care and reflect by going to see it.

It brings us back to the architecture of the Bill. In an earlier debate the noble Lord, Lord Lester, raised the question of Amendment 175, which is consequential on the paving Amendment 1 that the House passed. That is a very important amendment because it sets very clearly the restrictions on ministerial powers to be used in the Act. If, as a result of the discussions that I know that his officials are having with noble Lord, Lord Lester, tomorrow and other discussions, the Government were able to accept the principle of Amendment 175, while making it clear that they do not intend to reverse this in the other place, then we would make more progress.

There are other substantive issues in relation to the architecture. I have already mentioned the use of the supra-affirmative procedure and the deletion of Schedule 7. Some reassurance that public consultation will take place when it is proposed to deal with any of the bodies in this order would go some considerable way to reassuring noble Lords. In the absence of the House understanding what changes the Government are prepared to make to the architecture, we go inevitably through these bodies one by one and, in a sense, in a vacuum—a point made earlier by the noble and learned Lord, Lord Mackay of Clashfern. We are due a Committee day next week when, no doubt, we will hear when further Committee days are to take place. I hope that in a fairly short time the Government will be able to make a little clearer their sense of where they are on the Bill and whether they are prepared to make the kind of changes to its construct that would reassure noble Lords considerably.