The UK government’s plan to close at least 262 quangos as part of the public bodies reform programme to save £2.6bn in administrative spending by 2015 is based on "incomplete and imprecise" estimates from departments, according to a new report from the Public Accounts Committee.
The government is reducing the number of quangos from 904 to between 632 and 642 by the end of the spending-review period. The programme is intended to improve accountability for functions currently carried out at arm's length from ministers.
However, the Public Accounts Committee argues that there is a risk that departments are claiming savings that amount to little more than cuts to services, when they should be including only genuine savings arising from administrative reorganisations. The committee has also raised concerns that estimates of transition costs such as redundancy and pension costs are incomplete; and the savings estimate does not fully take into account the ongoing costs to other parts of government of taking on functions being transferred from the abolished bodies.
Meanwhile, some departments have wrongly included wider savings from bodies being retained, rather than just administrative savings from bodies being abolished or substantially reformed.
The committee says that departments may not be getting the best value for money from the sale or transfer of the assets of bodies being abolished.
Margaret Hodge MP, chair of the Public Accounts Committee, said:
The estimated costs of closing bodies, including payments for redundancies and pensions, are incomplete. And not enough account has been taken of the continuing additional costs to other parts of government of taking on functions previously carried out by the abolished bodies.
The Cabinet Office has accepted that its savings estimate needs to be reassessed. It will provide a revised administrative savings figure this month. Hodge, who commends this move, added:
Decisions on individual reorganisations have so far been made solely at departmental level. Clear central direction has been absent. The Cabinet Office must get to grips with the programme's overall costs, benefits and key risks.
It’s early days for the programme but the question must be asked how we or the Cabinet Office will be able to judge its overall effectiveness. The Cabinet Office needs to develop a clear set of measurable objectives supported by reliable information.