Spending watchdog criticises “incoherent” oversight of arm’s length bodies

There is no collective understanding of what type of oversight is appropriate and cost effective for different types of arm’s-length bodies, the National Audit Office has claimed.

The spending watchdog noted how the term ‘Arm’s-length bodies’ (ALBs) covered a wide range of public bodies, including non-ministerial departments, non-departmental public bodies, executive agencies and other bodies, such as public corporations.

In a report it examined four Whitehall departments that oversee a large number of ALBs: the Department for Business, Innovation & Skills, the Ministry of Justice, the Department for Environment, Department for Food & Rural Affairs, and the Department for Culture, Media & Sport.

The NAO concluded that the arm’s-length bodies sector remained “confused and incoherent”.

It said: “There is no single list of all ALBs across government nor a common understanding of when ALBs should be used, or what type of ALB is most appropriate for particular circumstances. Different departments define ALBs in different ways and some ALBs are uncertain about how they relate to their department’s objectives.

“The prevailing inconsistency hampers a coherent approach to overseeing ALBs that is consistent with their purpose, although the Cabinet Office is building on its Public Bodies Reform Programme and taking further steps to address this.”

The report found that all four departments used different approaches, but without a consistent overarching framework that drew on learning from departments’ experience.

The NAO also said that:

  • Departments could “undermine good relationships with ALBs by frequent, often duplicated, requests for information”.
  • Although 87% of the ALBs the NAO surveyed felt the frequency of contact with departments was ‘the right amount’, 52% felt oversight had increased in the last 18 months. 
  • There were concerns that departments often contacted ALBs to request information that was already held by the department, or available in published documents such as annual reports.
  • The one consistent feature was the extent to which oversight was focussing on compliance and control, as opposed to achieving greater value from the relationship. “There are, however, examples of departments adopting a more strategic approach through greater involvement of more senior staff and selective, targeted collaboration with and between ALBs.”

The watchdog acknowledged that differing circumstances within individual departments and across ALBs precluded a one-size-fits-all approach. However, it said the Cabinet Office had “more to do to develop greater coherence and consistency in the oversight of arm’s length bodies”.

The report recommended that the Cabinet Office review the effectiveness of existing mechanisms for sharing good practice and developing capability in departmental oversight of their ALBs.

Amyas Morse, head of the National Audit Office, said: “If one of the main reasons for having arm’s length bodies is to provide a zone of relative independence, the fact that oversight mechanisms focus predominantly on compliance and control means there is almost certainly room for improvement.”

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