by Callum McGoldrick, researcher
It has been a feature of recent governments to state one objective and then legislate to achieve the exact opposite. Labour wants to unleash growth in the economy yet raise the tax burden to ever new highs and the Conservatives saw a huge increase in the size of the quangocracy despite promising to have a ‘bonfire’ of them.
A new National Audit Office (NAO) report seems to be suggesting that the government should continue in the same vein. In order to increase the accountability of smaller public bodies we should reduce the financial reporting regulations on those bodies. Specifically, the NAO report says, “government should work with departments to develop a consistent approach to deciding which bodies may be eligible for ‘light-touch’ reporting requirements where the risk to public money is low.” Taken at face value, it seems more than a little ridiculous, how can a lower threshold for reporting possibly mean more transparency?
Added to this, many larger public bodies, let alone the smaller ones, have a poor track record of producing annual accounts on time. Many are running with years worth of delays on account publications. Here at the TaxPayers’ Alliance we find constant annoyance with such delays and as a result, a lack of transparency about the funding, staffing and efficiency of these organisations. It is of paramount importance that all public spending is scrutinised not just by the government but by the public too, and that requires the extensive publication of annual accounts.
The NAO report offers some very useful insights, however. Our legislation around transparency accounting is geared towards large organisations - the sort of public sector behemoths that have teams of hundreds of people employed purely to meet existing legislation. Many smaller central government organisations have the same statutory requirements as these larger organisations and can spend a significant amount of time and money on compliance, something that makes them less efficient at performing their core duties.
In the report, the NAO outlines that in the private and third sectors, smaller organisations have a lower reporting burden to reflect their size. They also say that in other countries, such as New Zealand, smaller central government bodies have a far lower set of reporting requirements than the largest departments. Our current one size fits all approach is undoubtedly disproportionately costly and inefficient for smaller central government bodies.
So what does the NAO recommend? They say that there are five key points for the government to consider when it sets new requirements for central government bodies. These are:
- understand the costs of implementing requirements for small bodies;
- consider whether the benefits of new requirements outweigh the costs, especially for small and low-risk organisations;
- tailor requirements to organisations of different sizes where this results in a better cost-benefit trade-off;
- clearly communicate the rationale for new requirements; and
- consider whether new requirements can replace or streamline existing requirements.
All of these recommendations seem to be very reasonable, in fact needed to actually see some improved efficiency across government. For bodies that only have a handful of staff and a fraction of the budget of our largest government departments, maximising the time and resources spent on performing their core function would be a very welcome move.
It raises a further question though; why is our current legislation so bad at delivering results now? The answer lies in the real objectives of both politicians and the management class of the public sector.
Labour, both since July’s election and under Blair / Brown, sought to advance their own progressive ideology through the entire public sector. This means that rather than efficiently delivering results that taxpayers want to see, improving adherence to the ideals of ‘diversity, equality and inclusion’ is paramount. The Conservatives failed to undo this during their time in office, likely because outsourced responsibilities to quangos could mean reduced responsibility for ministers.
It has also meant that all public sector bodies are judged on their compliance to a new system of measuring success, one not based on outcomes for taxpayers but adherence to the progressive cause. It’s about time that we focus not just on the inefficiencies in departments but also understand the bad laws that contribute to this inefficiency. While the NAO offer useful suggestions to finding some efficiency savings, the main cause is undoubtedly the terrible legislation currently on the books.