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Public Bodies Bill

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Public Bodies Bill passes second reading

The government’s controversial public bodies bill passed its second reading in the House of Commons in July by 304 votes to 229 – a government majority of 76.

A Labour amendment declining to give the bill a second reading was defeated by 307 votes to 231.

The bill gives ministers powers to abolish or reform public bodies with little Parliamentary or public scrutiny.

Francis Maude, Minister for the Cabinet Office, acknowledged that “this is going to end up being a rather short debate on second reading of a large bill”.

Retain or reform tests

Conservative MP Bernard Jenkin chairs the Select Committee on Public Administration which published a critical report on the bill in January 2011.

He said the bill was “much improved and much more acceptable”. But MPs could make improvements “to ensure that these controversial changes to bodies that were, after all, brought into being through primary legislation are not simply ticked off by Ministers with a stroke of the pen.”

Jenkin focussed on his committee’s findings that “the tests determining whether a public body should be retained or reformed were poorly designed and not applied consistently and that Ministers had failed to consult adequately about them.”

The select committee report said there should be a single set of tests that covers:

  • whether a function needs to be performed – the existential test
  • whether it is appropriate for it to be performed independently by a public body – the impartiality test
  • and how it can be delivered most cost-effectively (value for money).

The government’s review of public bodies which was published in October 2010 used four tests: existential; whether the body concerned carries out a highly technical activity; whether it is required to be impartial; and whether it needs to act independently to establish facts.

Jenkin pointed out that the tests in the bill are different from the tests applied in the review.

Clause 8 gives four tests: efficiency; effectiveness; economy and “securing appropriate accountability to Ministers”.

Jenkin said effectiveness was not defined; he presumed that economy meant value for money and said he did not know what “appropriate accountability” was. He added that these were “very subjective tests” to have in legislation.

Protection for staff who are transferred

Labour MP John McDonnell pointed out that consultation with staff unions is not listed in the bill. He said that the bill should contain an explicit reference to the Transfer of Undertakings (Protection of Employment) regulations.

The bill as it currently stands contains a reference to transferring people on conditions similar to TUPE. He said conditions that are similar to TUPE are not TUPE. “Therefore, a whole range of conditions of service and protections that staff now enjoy will be put at risk.”

Nick Hurd, Parliamentary secretary, Cabinet Office, said McDonnell “was quite right to remind the House of the impact of the changes on human beings”. Hurd said he would be happy to meet McDonnell “to clarify any confusion that might exist in relation to TUPE”.

Office of the Chief Coroner, Agricultural Wages Board, S4C

Much of the debate focussed on three public bodies: Office of the Chief Coroner; the Agricultural Wages Board and S4C (the Welsh Channel 4).

Andrew George, who leads on Defra matters for the Liberal Democrats, opposed the abolition of the Agricultural Wages Board. “Rural workers are exceptionally isolated and in an exceptional position that I think justifies exceptional protections.”

Many MPs spoke out against government proposals to abolish the Office of the Chief Coroner. At the end of 2010, the government suffered its biggest defeat in the House of Lords when the original proposal to abolish the Chief Coroner’s Office was removed from the bill.

Although the CCO is not in the bill presented to the Commons in July, the Secretary of State for Justice and Lord Chancellor, Kenneth Clarke MP is proposing to transfer a limited number of the Chief Coroner’s statutory powers to the Lord Chief Justice and others to himself as Lord Chancellor.

Click here for a House of Commons briefing on the Office of the Chief Coroner.

Merging the Office of Fair Trading and the Competition Commission

On the merger of the Office of Fair Trading and the Competition Commission, Conservative MP Dominic Raab asked about the institutional separation of powers between the initial investigation and the final enforcement decision. He asked how that separation will be retained in the combined competition and markets authority.

The bill will now go to a public bill committee which will examine it line by line. The committee has 10 Conservative members, eight Labour members, two Liberal Democrats and one Plaid Cymru. It is expected to report by October 13.

Click here for the latest House of Commons library briefing on the bill.

Government waters down its powers in controversial bill

Prospect has welcomed concessions by the government on some of the most controversial aspects of its Public Bodies Bill.

The bill caused consternation because of the wide-ranging powers it grants to ministers to abolish, merge or reform public bodies with little or no parliamentary scrutiny.

It still retains provision to abolish or reform nearly 200 non-departmental public bodies.

But it also included a list of 150 more bodies that could be brought into the remit of the bill at a later date, without recourse to parliamentary scrutiny.

Following wide protest across all parties, some key concessions were announced in the House of Lords by government whip Lord Taylor in February. They are to:

  • hold further talks on safeguards that should apply to orders made under the bill
  • remove ministers’ right to decide the fate of the further 150 bodies by removing clause 11 and schedule 7
  • remove all clauses relating to selling the Forestry Commission.

Lord Taylor said the government had accepted that “bodies and offices should be listed… only where parliament has given its consent in primary legislation.”

It would also move some of the 150 organisations to other schedules, “to ensure that all reforms announced as part of last year’s review of public bodies can be implemented.”

Schedule 7 was heavily criticised as a form of ‘death row’ for public bodies. It listed 150 organisations carrying out a host of functions – judicial, regulatory, advisory, cultural and environmental.

Ministers could have brought them within the scope of the bill any time they wanted.
Prospect members among the 200 bodies that are still covered include the regional development agencies; Natural England and the Marine Management Organisation; the Environment Agency; and the Commission for Equality and Human Rights.

A Lords committee scrutinising the bill welcomed the concessions but said they did not go far enough, as exceptionally wide delegated powers remain in several clauses.

The third reading of the bill in the Lords – and final chance for amendments – was on May 9.

Why Prospect opposes the Public Bodies Bill

Please feel free to use any of this information for letters to MPs, newspapers or blogs.

Prospect represents 34,000 members in civil service departments, agencies and non-departmental public bodies, many of them covered by the government's Public Bodies Bill. We have deep concerns about the bill, which are outlined below.

The bill gives ministers, not Parliament, the power to decide the future of a huge range of bodies covering every area of public life – from justice to the environment, from consumer protection to regional development – with little or no parliamentary or public scrutiny.

The bill grants extensive powers to ministers to:

  • abolish
  • merge
  • modify the constitutional arrangements
  • modify the funding arrangements
  • modify or transfer the functions of, or
  • authorise delegation

of a significant number and range of public bodies.

As the bill stands, when ministers draft their orders they will not be required to take into account any representations, parliamentary resolutions or recommendations from parliamentary committees.

There is also no requirement on ministers to consult with interested or affected parties before an order is made.

Among the bodies covered by the bill are: the Environment Agency, Natural England, the Forestry Commission, the Sustainable Development Commission, the Health and Safety Executive, the Countryside Council for Wales, the Youth Justice Board, the Equality and Human Rights Commission, the Regional Development Agencies, the Arts Council, Big Lottery Fund, the General Teaching Council and many more.

The government’s rationale for the bill was outlined by Cabinet Office minister Francis Maude in August 2010. “These reforms are intended primarily to increase accountability, but will also support the aims of the spending review by reducing costs and support our ambitions for a Big Society by encouraging alternative, devolved or non-state delivery models.”

Neutering parliament

Parliament plays a vital role in safeguarding rights and freedoms. It is parliamentary scrutiny that allows bills to be amended and gives interested parties, the public and the press time to consider the implications of proposed laws.

We agree with the House of Lords constitution committee which said that the bill “...strikes at the very heart of our constitutional system, being a type of ... legislation that drains the lifeblood of legislative amendment and debate across a very broad range of public arrangements.”

The committee said the government had not made the case as to why the vast range of statutory bodies affected by the bill should be abolished, merged or modified by force of ministerial order, rather than by ordinary legislative amendment and debate in Parliament.

Lord Knight of Weymouth said: “This skeleton bill is an insult to parliamentary scrutiny – and I am afraid that the insult is doubled by ministers claiming to act in the name of increasing accountability.”

Potential move of functions from independent to political control

The wide-ranging powers in the bill may lead to the abolition of organisations and offices which play the key role in holding public bodies or central government to account. The bill makes no provision for safeguarding the continued independence of these bodies.

Unsound economics

Cutting the number of quangos will not necessarily lead to a reduction in their costs because:

  • 65% of NDPB costs are grants that are passed on to others. They fund universities, legal aid and other core government functions
  • nearly 80% of NDPB expenditure is located in just 15 NDPBs (out of nearly 800 executive and advisory NDPBs).

Many of these bodies save the government much more than they cost. The Sustainable Development Commission has 60 staff and receives £1m in government funding. It says: "Moves towards greater sustainability made to date are saving government £60-70m every year, and further progress has the potential to save hundreds of millions more."

Advisory bodies account for nearly half of all arm's length bodies but most do not even have their own budgets and simply offer a way of bringing expert advice to policy-makers at lower cost than they would through consultancy contracts.

The public administration committee's report, Smaller Government: Shrinking the Quango State, said: "At the outset, both accountability and value for money were considerations, but the extent to which quango reform would yield significant savings was probably exaggerated.

"This created a false expectation that the review would deliver greater savings than it has been able to realise. Consequently, the government appears unsure about the extent to which the reform will result in significant savings for the taxpayer."

Mergers and reorganisations bring significant costs and disruption. A March 2010 report from the National Audit Office, Reorganising Central Government, said: “With 90 reorganisations in four years, UK central government machinery is in a constant state of change. At approximately £200 million per annum, the costs are far from negligible and the reorganisations inevitably involve disruption and loss of service.”

Threat to independent scientific advice

The government’s actions will do real damage to a host of scientific and environmental bodies that were specifically set up to protect the public interest in everything from nature conservation to health.

The outgoing head of the Royal Society, Lord Rees of Ludlow, said the abolition of hundreds of public bodies could prevent ministers from receiving independent scientific advice that is critical to good policymaking.

“We have to watch carefully to ensure bodies that perform valuable services are not abolished without assurances that these services will be continued elsewhere.”

Schedule 7

Schedule 7 of the bill, which lists 150 organisations which can at any time be brought within the scope of the bill, has become known as ‘death row’.

All these bodies, by definition, must be independent of government. How will they be able to retain their independence when a minister can abolish them by order?

Accountability

It is ironic that a bill professing to increase accountability gives such draconian powers to ministers. It gives ministers unacceptable discretion to rewrite the statute book, with inadequate parliamentary scrutiny of, and control over, the process.

These bodies are already accountable to ministers, Parliament and the public. Will private sector providers have to follow Nolan's seven principles of public life: selflessness, integrity, objectivity, accountability, openness, honesty and leadership?

Lack of consultation

In a House of Lords debate on the bill, Lord Faulkner of Worcester said: "The minister heard, over and again, complaints about the almost complete lack of consultation. Bodies which have served the community well, without a breath of scandal attached to them, which were seen by those who deal with them daily as helpful and supportive, which were in many cases established by an Act of Parliament after extensive debate in this House and in another place, and which were fulfilling a role which cannot be performed as cost-effectively or efficiently by others are all being tossed on to a bonfire with little more than a sentence in a departmental press release.”

Prospect agrees with Baroness Royall of Blaisdon, who said: “We need constructive discussions because this is a bad Bill. It is badly thought out, badly structured, badly executed, bad for the constitution, bad for public bodies and bad for government.”

Consumer protection

The voice of the consumer may be weakened if the bill is implemented. The government wants to:

  • abolish the watchdog Consumer Focus – which currently has strong legislative powers to protect consumer rights – and transfer its powers to Citizens Advice, which is a charity and does not have these legislative powers
  • transfer the consumer enforcement functions of the Office of Fair Trading to Trading Standards Services funded by local councils
  • pass the Consumer Direct helpline, currently overseen by the OFT, to Citizens Advice.

Consumer Focus was created as the voice of the consumer to protect the consumer in energy and other areas, including postal services. It is a statutory body with a board and a chair appointed by the Secretary of State. It is answerable to Parliament and is audited by the National Audit Office.

In October 2010, Consumer Focus helped win back £70m for consumers who had been overcharged by npower.

Useful links

House of Commons library briefing paper

Constitution Committee – Sixth Report. Public Bodies Bill

Public Administration Committee – Fifth Report. Smaller Government: Shrinking the Quango State

Prospect’s evidence to the Public Administration Select Committee