Quasi-autonomous non-Governmental Organisations (QUANGOS) have been part of the UK public sector for many decades and there are often robust political and managerial debates about the usefulness (or otherwise) of these public bodies. This has been brought into focus recently by the atrocious state of Government finances in the UK and the need for the next Government (whoever it may be) to make real terms reductions of public expenditure in excess of £100 billion.

Not surprisingly when there are threats to front line pubic services such as schools and hospitals many will question whether we really need the large range of QUANGOS which currently exist and also whether we can afford them in the current economic and fiscal climate.

A well-researched document recently produced by the Taxpayers Alliance claimed that in the UK there were a total of 1162 QUANGOS and other agencies which cost the taxpayer a total of £63.5 billion. These figures seem to chime with similar figures used by David Cameron in a recent speech but differ markedly from other claims which put total QUANGO expenditure at £14 billion.

This brings us to the first issue of what do we really mean by a QUANGO. For example, the figure of £124 billion includes in its list of QUANGOS all of the NHS Trusts in the UK which deliver hospital and community services. Few would regard NHS Trusts as being QUANGOS in the usual meaning of the world. Even the TPA report includes in its list of QUANGOS the following organisations:-

• The British Museum
• The BBC
• Kew Gardens
• The National Library for Wales

I am not sure many people would regard since high profile and well known organisations as QUANGOS.

Perhaps QUANGOS can be considered in four main groups:-

• Service providers – some QUANGOS such as the British Museum provide services directly to the general public.
• Funders – some QUANGOS distribute public funds to relevant external organisations. Thus the Arts Councils distribute funds to arts projects and the Higher education Funding Council for England (HEFCE) distributes funds to universities for teaching and research. So it is misleading (as the TPA report does) to claim that HEFCE spends £7billion per annum. The vast bulk of that money, with the exception of £20million for internal administrative costs, is distributed to universities for teaching and research. Also in this category might be included Regional Development Agencies.
• Regulators and Inspectors – some QUANGOS are charged with inspecting and regulating public sector service providers. Thus OFSTED inspects schools and the Healthcare commission inspects hospitals. The Audit Commission audits and inspects a range of public bodies. Also in this category might be included QUANGOS such as the Equalities commission.
• Advisors – there are a myriad of bodies of varying size which provide advisory services to various parts of Government.

There are many questions which will continue to be asked about QUANGOS. These include:-

• What benefit do they actually produce? For example, have schools really improved as a result of OFSTED? Have inequalities really reduced as a consequence of the Equalities Commission? The evidence is often thin. Also the activities of such inspection QUANGOS often place great burdens on the public bodies being inspected.
• Could their work be done by other existing organisations? For example, many of the roles of the Learning and Skills Council (LSC) in funding post-16 education used to be done by local authorities. Also, much economic work is done by local authorities as well as RDAs. Do we therefore need these QUANGOS when local authorities might do the same work for less?
• What public accountability is there for the work of QUANGOS? The Boards of QUANGOS are not elected but appointed by Ministers who seem to closely control what they do in some detail.
• Why are so many QUANGOS based in London when their wok could be just as easily done in other parts of the UK?
• Are there too many QUANGOS? For example do we need a QUANGO to fund higher education (HEFCE) and a QUANGO to fund post 16 education (LSC)?
• Are QUANGOS just devices for Ministers to reduce civil service head count and to avoid direct responsibility?

Overall, the future of QUANGOS probably depends on how much time and energy Ministers can devote to the issue given the vast problems which will face the next Government. Some savings can probably be squeezed out of the QUANGO system but it is probably much less than currently imagined.

Find out more

Malcolm appeared on BBC One's The Politics Show talking about QUANGOs on November 8th

Get under the skin of questions of private and public finance with The Open University Business School

The financial crisis and global recession have made many commentators ask, "Are the prevailing business models bust?" Twenty years after the fall of Communism in Europe, has the last nail been put in the coffin of the market as the organising principle of civil society?

In a recent edition of The Bottom Line, executives of three companies reflected on how to plan for the long term in the face of the recession and the possible upturn. Simultaneously, a number of influential bodies, including the Engineering Employers Federation (EEF), are calling for the establishment of a national investment bank. Is planning back in fashion and will we see Indicative Planning regain favour? Furthermore, are there lessons to be learned from GOSPLAN, the Soviet Union’s economic planning committee?

Is planning back in fashion?

The recent dominance of financialisation, with its accompanying short-termism and reification of shareholder value, is deemed to be fundamental to our present difficulties. Not all sectors of the economy can plan for the longer term. Mining; oil and gas exploration and refining; engineering and industrial and commercial construction; project management and so on are subject to indivisibilities and long lead times, so planning in a technical sense is a must. The challenge is whether planning can be scaled up to the aggregate level of the economy in order to provide the critical mass on which business models can be built and sustained.

Herbert Hoover during his time at the US Department Of Commerce.
[image in the public domain, owned by US Department of  Commerce, accessed from  Wikimedia Commons]

Indicative planning involves co-ordinating the private and public sector’s investment and output plans, on the basis of forecasts and targets. It is most strongly associated with the development of the French economy in the post-War era, but its lineage can be traced back to the influence of Herbert Hoover in 1920, when he was US Secretary of Commerce. Today, one can see versions of indicative planning (in the form of sectoral targets) in the emerging economies, influenced perhaps by the organisational underpinnings of a number of advanced Asian economies.

In some senses, these later versions of indicative planning are voluntary versions of GOSPLAN, whose targets and plans were implemented using input-output analysis. Input-output models were invented by the Nobel Prize winning economist Wassily Leontief. They link the outputs of different industries in the economic system to show how change in one part affects all other parts. Perhaps, if the leading economies of the world had embraced indicative planning using similar analysis and decision-matrix techniques, some of the worst aspects of the economic and financial crisis may have been avoided.

This matrix approach is at the heart of Scenario Planning, which was developed by Herman Kahn to model the likelihood of thermonuclear war. It can also be seen as part of Indicative Planning and related to input-output analysis. It was versioned for large industries and organisations to undertake long-term flexible planning, based on a range of plausible scenarios.

...hoping for a return to normal based on "business as usual" appears to be very short-sighted, even for sectors whose market horizons are quarterly or seasonal.

It could be argued that the credit crunch and global recession are akin to a thermonuclear shock to the world economy. In this scenario, hoping for a return to normal based on "business as usual" appears to be very short-sighted, even for sectors whose market horizons are quarterly or seasonal. This response is about survival rather than sustainability. The cost of this survival is borne by the whole economy. There may be a revival of faith in induction (generalising from an individual perspective to make sense of the whole) but, in a complex system, one organism doesn’t account for everything.

John Maynard Keynes.
[image in the public domain, owned by the IMF, accessed from  Wikimedia Commons]

For the guests appearing on The Bottom Line, with their businesses in large-scale project management (trucks; and plumbing and piping), discussing the long-term did not engage with the epigram of the economist John Maynard Keynes from his masterly Tract on Monetary Reform of 1923: “In the long run we are all dead”. The full quote gives Keynes’s intention to show that the current state of affairs is no guide to the future

“The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again”.

The insights of great economists notwithstanding, if businesses don’t attempt to plan and we have an economic system that appears indifferent to the future, then we all will have shorter life spans.

Find out more

These Open University Business School courses will help make your planning sharper:

Engineering the future
Making sense of strategy
Capacities for managing development

Image of John Maynard Keynes [© Wikimedia Commons]

About the author

Leslie Budd is Reader in social enterprise at The Open University Business School. He is an economist and has written extensively on the relationship between regional and urban economics, and international financial markets.

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Ever since the autumn of 2003, and up until the first quarter of 2008, government regulations and redtape has been the most important problem faced by small firms until it was toppled from its perch by the business climate and recession, according to the OUBS-based Quarterly Survey of Small Business in Britain. At that time, even though their priority was to deal with the effects of the recession, hardly any small firms believed that the time they spend on regulations and paperwork has decreased over the past year and 61% believe that it has increased.

Although the very smallest firms are exempt from some government regulations and paperwork, it is clear that the burden in terms of the proportion of working time spent on compliance falls most heavily on them. A large majority feel that regulation is unclear, complicated and disproportionate. Only one in ten believes that the government consults well with business before introducing or changing regulations.

However, this is not just a whinge against big government. A vast majority of small businesses say that their view of regulation would be improved by better communication, earlier warning, more effective consultation and feedback on that process. Even more say their view would be improved by fewer and simpler regulations with less frequent changes. However, there is little sign that anyone is listening. Small buisness compliance is big business for government and professional advisors.

The Department of Business, Enterprise and Regulatory Reform (BERR) estimates that businesses in Britain ‘spend at least £1.4 billion each year on advice to help them comply with regulation’. The UK Trade and Investment estimate of the overall regulation advice market is £4.3 while ARK Business Analysis (a consultancy firm in this field) reports that ‘the government’s Regulatory Impact Assessments show an annual regulatory impact on UK business in employment and safety per year of £11 billion and climbing’.

However, another survey conducted by the small enterprise team at OUBS among more than 1,000 professional advisors revealed that the time taken to deal with their own government regulations and paperwork has increased and 71% believe that the time it takes their clients has increased over the past year. They confirm that the government does not consult well enough about regulations and that they are generally unclear and complicated (and that in many cases industry certification should be considered).

Most agree with small firm owners and do not think that the government understands business well enough to regulate. Better communication about what government is doing and guidance on regulations would be welcome, as would better consultation and feedback on that process. Echoing small business owners, the most welcome changes, would be fewer and simpler regulations, with less frequent changes. In fact, the government does have a taskforce that aims to reduce regulation but Britain’s small firms and their advisors are still waiting to see if the government, distracted by the recession, listens to their views.

Find out more

• Calibrating regulation: Light touch or firm grip?
• Evan on... compliance

About the author

Colin Gray is Professor of Enterprise Development at the OU Business School, where he is responsible for research and teaching in small business and entrepreneurship.

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