Good morning, colleagues. Welcome to our meeting. We are grateful to Francis Maude, Lord Maude of Horsham, for joining us. When in the Cabinet Office, he tried to do a huge amount of reform and change to the landscape of arm’s length bodies, which is the focus of our deliberations this morning. Francis, we are grateful to you for finding the time to appear before us. The first question is from Mr Lamont.

Good morning, Lord Maude. When are public bodies used and when should they be used?

There should be a presumption against their use. Part of the problem with all of this is that the taxonomy, as it tends to be known, is immensely confusing and confused, and defies rational explanation. But there should be a presumption that if something is to be done by the state, by national Government in some form, it should be done within a Government Department for which a Minister is responsible and answerable to Parliament. In the coalition Government, we took the view that that presumption can be overset, and I think we set three tests: if there is a clear requirement for the body’s operation to be seen to be politically impartial and independent of politicians; if it is measuring something where that, again, requires it to be seen to be clearly independent; and—the third one currently eludes me, but it will no doubt come back.

You say that there is a presumption against the use of public bodies, but obviously there are many out there. Does the driver for their creation come from Ministers or from civil servants?

A combination, really. It is often convenient, and we tend to be incontinent in the way that we set these things up. It is often quite casual, with far too little thought given to the establishment of a new public body. There is an in-built tendency in, frankly, all organisations to grow, but particularly in public sector organisations. There is no such thing as a steady state. If you are not actively seeking to reduce the size of the state and the size of the organisation, it will grow—it will never remain the same. Unless you are rigorously controlling, in real time, the landscape of these bodies, it will increase, as history vividly demonstrates.

What is the cause? In opposition, probably all political parties say they want to cut back the number of these bodies, yet when they come into government, they fail to do so. What is the cause of that?

Convenience—you want something done that you do not want to take responsibility for directly. There are a whole range of reasons, but it should be resisted.

Do you think these bodies help Governments achieve their political objectives, or are they obstacles?

It hugely varies. The point is that if you are a Minister in a Government and you are trying to make things happen, you want to have your hands on the levers. If you have created an arm’s length between you and the lever, you are going to—depending on the length of the arm—make life more difficult for yourself.

Why would any Minister sign up to that? If they are losing control and handing over a responsibility for policy delivery, why on earth would they agree to that?

It can be a way of avoiding responsibility. You are asking the wrong person, because I am hostile to setting these things up, by and large. You should be asking someone who has set up a lot of these things.

But in terms of your objective, when you were in government, of trying to reduce the numbers, do you view that as a successful period?

It was reasonably successful, but you make massive compromises and trade-offs along the way. There were lots of mistakes that we made, and one would want to do it very differently another time.

In the different Departments responsible for ALBs, do Ministers fully understand how to control what these bodies are doing?

There is huge variation, but far too few do. My last review of the civil service looked at governance and accountability, and the last chapter was on arm’s length bodies. One recommendation I made was that Ministers, consistently across Government, should be required to be aware of what ALBs are within their purview, because a lot of Ministers are not. There is a very uneven distribution of ALBs across Government; some Departments—DCMS, for example—have huge numbers, and others have relatively few. There is a massive lack of clarity; the whole thing is shrouded in mist and enigma.

Is that done on purpose? During my time as a Minister, I spoke to colleagues who were also Ministers, and some were told by their private office or by civil servants, “You can’t touch that. That is something away from us. It’s an arm’s length body.” Other Ministers were told, “You are the Minister. You can give direction.” There was massive inconsistency in how they were told they could achieve outcomes. Surely, that inconsistency in how Ministers are being advised is a fundamental failure.

Totally. The Ministers that are being told, “You can’t look at this,” should bear in mind the most important words that are ever used by a Minister: “Show me the chapter and verse. Show me where it says that.” Ministers are often told they cannot do things, and that is often a lazy assumption or an unfounded assertion, or sometimes deliberately misleading.

Before we leave that, can we turn the clock back a little, to before 2010? Refresh us, if you will, on what the motivations and aims were in reducing the number of ALBs. Was it to increase ministerial power and parliamentary oversight and bolster democratic accountability, or was it a cost-saving initiative? What were the motivating principles? We had just had the financial crash in 2008, and we were in new territory with a coalition. For some, this was quite an esoteric, almost “second decanter of port at the SCR” sort of conversation. What were the fundamental motivators?

The primary motivation was accountability; the secondary was financial.

Do you think as a society—one thinks of the pressures of social media, media pile-ons and so on—we have become more risk averse and think that it is better not to take a decision in case it is the wrong one? Or has the engine for creating these bodies been revved up because they create that degree of separation, where a Minister on a difficult wicket can say, “Nothing to do with me, guv. It was an ALB over which I had no day-to-day control”?

I think that is part of it. It is the difference between Ministers who like having the job and Ministers who like doing the job. If you like doing the job and making things happen, you want access to the levers, by and large. In a parliamentary democracy, where you expect Executive power to be accountable to Parliament, the greater the extent to which that is a reality, the better.

This might be a slightly odd question, and I do not mean it to be, but is there a danger of these things becoming a test of political virility: “I have more arm’s length bodies than you. Therefore, my Department is more important,” or, “My portfolio is more important”?

I do not think I have noticed that. One problem is that far too few Ministers really know what the landscape of public bodies is within their ambit. And it is not very interesting; there is not a lot of glamour in looking at this. I mean, I am delighted—

But this is the grist of the PACAC mill.

I have not counted how many times I have had the pleasure of giving evidence to this Committee and its predecessors, but it will probably be heading into double figures fairly rapidly. I am absolutely delighted that you are doing this work; it will not be headline grabbing, but it is really important.

We will have to have Clive Betts in as a guest—that gets all the headlines. That is an inside joke, Lord Maude, which no one will get, apart from colleagues around the table.

To pick up that point, through your years of appearances before us—please be reassured that we do feel it is headline news and extremely exciting—what drift have you got from the questioning? Is there anything you feel needs to be dug into that has not been, or where there is a fundamental misunderstanding between how Ministers and the Cabinet Office see things, compared with how mere parliamentarians, who are, to be fair, looking in from the outside, see them? If there was one thing you would nudge us towards scrutinising or investigating further, where would you send us?

That is a good question, and I do not think I know the answer. The thing is such a muddle. The landscape is so confusing that the rational Benthamite would say you should do a proper survey of the whole landscape and create a rational taxonomy, with different types of bodies ranked according to the length of the arm. I remember 100 years ago, as Financial Secretary to the Treasury, being responsible for what was then the Inland Revenue. The Inland Revenue was described, as HMRC is today, as a non-ministerial Department for which a Minister was responsible, and it was peopled by civil servants. Again, there is massive confusion about which NDPBs and other agencies are staffed by civil servants and which are staffed by people categorised not as civil servants. A rational man or woman would say, “Go for a wholesale sorting out of it.” The reality is that that is quite unlikely to happen, but that would be the perfect world—one where you establish some order. You have to start by saying that this has to be done on a whole-of-Government basis. With a lot of the conclusions I reached in the last review I did of the civil service, I started off thinking I knew what all the answers were because I had lived and breathed this stuff for a long time, but I was surprised how much I learned in the course of the review that refined and changed my approach. But the key, overriding thing is that all this needs to be done on a whole-of-Government basis. We have Government Departments here, and the clue is in the name.

You talked earlier about ministerial oversight of arm’s length bodies, and we have certainly heard evidence throughout this inquiry of that varying across Departments. How seriously do Departments and civil servants take oversight of their ALBs?

Again, there is huge variation, but generally not seriously enough. In my experience, the oversight is too often delegated to too junior a level. For senior people, it is not very interesting or exciting; people get drawn to where things are going on that stimulate adrenalin, and this, by and large, does not. But that does not stop it being really important, with real consequences. One recommendation I made was that oversight should be at a more senior level and should be taken more seriously. It should also be done more consistently—there is a woeful lack of consistency.

You mentioned in some of your recommendations that departmental boards are not really abreast of their arm’s length bodies’ performance, and also their risk exposure, which is quite important. Are there any cases where that lack of oversight has led to adverse consequences?

No, not that I can think of. I would have to dredge very deep to try and remember. The performance of departmental boards generally is very varied, and we always knew it would be when we set up the system of enhanced departmental boards in 2010, to be chaired by the Minister in charge of the Department, with much more senior non-exec members with much broader experience. We knew it would be very variable; a big contributor to the variation was how seriously the Ministers took it, and you cannot ordain that—you can encourage it, but not ordain it. The issue should be a consistent item on board agendas, and I made a recommendation that one of the public bodies should periodically come to the departmental board and present itself for interrogation, as it were.

After you made those recommendations, which all seem very sensible and born out of direct experience, do you get the sense that much has changed?

No—absolutely nothing, as far as I am aware.

Do you know why that is?

That is broadly the case with all my recommendations, which did not surprise me particularly.

Thinking back to your time, was there any particular arm’s length body or Department that, despite experience being varied across government, was a really good example of best practice? If you were somebody in the Cabinet Office, is there anything about which you would be thinking, “That worked really well. We need to work out how we can expand that across Whitehall”?

Obviously, I think the Department that I was in charge of was exemplary in that respect: the Cabinet Office. I hope it was. We did take appointments very seriously. We had quite a wide range. It included what was then the Office for Civil Society. A number of the lottery-type bodies were part of it. We took all that pretty seriously, and I think we did it pretty well. I would say that DCMS did it reasonably well. It has a huge range, and quite sensitive ones in the arts and heritage world in particular. It is hard to be specific because I am very out of date on all this.

Do you think the Cabinet Office should be doing more to improve in this space?

I have strong views about the way the centre of government is set up, and the Cabinet Office is now a very confused entity. The way our centre of government is set up is out of kilter with every comparable system of parliamentary democracy with a permanent civil service. We are operating with a kind of relic of a system, which is way past its sell-by date. Somewhere at the centre of government, this needs to be taken really seriously, and a consistent approach driven across government. Part of the problem we have, and part of the way in which our system is quite broken at the moment, is that the Treasury dogma that says that everything is in the silos is an approach—a theology, almost—that is hostile to anything that is done in a cross-government way. It only occurred to me a long time afterwards, but one of the reasons why, in the coalition Government, we were very successful in driving cost savings across government was because it was a coalition Government and the Chief Secretary to the Treasury was a very senior and powerful Lib Dem with his own personal and political authority, who was very on side with what we were seeking to do. He was able to frustrate, or circumnavigate, the Treasury dogma that said that you cannot do things that are cross-cutting. We made those savings happen across government, including the public body reforms. We reduced the number of public bodies by one third by a variety of means. That was done in a very whole-of-government way, and it is quite unusual to be able to do that.

To your knowledge, are any expectations set for new Ministers when they come into role around how they will be engaging with and overseeing arm’s length bodies?

No, and there should be.

Lord Maude, you mentioned the Treasury there briefly. At a time when there is continued pressure on the public purse, which we do not need to go over, does it surprise you that Treasury Ministers are not seeing two wins here: saving public money and de facto reducing the size of the state as it manifests itself? They could take a more rigorous and overarching approach on reform and reduction modernisation than they have done hitherto. You clearly have worries and anxieties about whether the Cabinet Office itself is capable of doing that.

Well, it doesn’t surprise me, because I’ve lived with this reality for 15 years or more, whatever it is now. I encountered it first when I was a Treasury Minister back in whenever it was—the early ’90s. So it does not surprise me. I still don’t really understand it, though. And it serves the country very badly.

Have you made the argument directly to current iterations of Treasury?

Yes. I’ve been consulted by several Ministers in the current Government. One asked for advice on how to make mission government work. I said, “I am afraid you won’t. It’s a very good idea and some other Governments have made it work. Why won’t you? Because the Treasury won’t allow it. They are so hostile to the idea of a cross-cutting budget that you end up mired in the treacle of inter-departmental working groups and mission boards and stuff, and the whole thing means that people lose the will to live.”

Having been promised new fiscal events that reflected the delivery of mission government, it does seem to be business as usual in that respect.

I have a brief follow-up question based on what you were saying about savings. I often find that when there are discussions about public bodies being set up, you see the argument that they can be more financially efficient than doing the same function within a Government Department, be it because you can get around civil service pay scales, or whatever it is. It is also said that shutting them down saves money. How do we marry that up?

It is all about the individual cases. When Executive agencies were being set up—broadly, the idea was developed in the ’80s and implemented in the ’90s—the case being made, which has some merit, was that realistically Ministers are not involved in a lot of the operational delivery of public services, Government services. If you create a separate Executive agency at some degree of arm’s length, then you will reduce the way in which everything ends up landing on a Minister’s desk when something goes wrong. The second advantage claimed for Executive agencies was that they would be allowed to operate outside Treasury pay restraints. Well, dream on, because the second never happened. The first never really happened either, because that just is not the reality of how things work in a parliamentary democracy, where, when things go badly wrong, Ministers will always be held accountable eventually. And if you are going to be held accountable, you want to have some authority. The fundamental principle that I set out in my review was that accountability and authority should, by and large, be aligned. In our system, they are not, fundamentally. A Minister is, in reality, accountable for everything done by any official in their Department, and yet their authority over those individuals seemed to be very limited. In fact, one of the things I discovered doing this review was that everyone assumes that the power vested by statute in the Minister for the Civil Service, who has always been the Prime Minister, to manage the civil service is delegated to civil servants. In fact it is not; it is delegated to Ministers in charge of Departments, but no Minister has ever been told that.

They have now.

You alluded to this briefly, but in your review you describe arm’s length bodies as defying “rational explanation”. Has that got worse since you were a Minister or is it a case of unfinished business? There is a second part to that: from what you just said, would you describe the machine of Government as being too big for anyone to make a significant difference?

Golly—has it got worse? I could not really say. I don’t think that it has got significantly better. There has been an attempt to impose a new taxonomy on new arm’s length bodies, and I don’t think I am able to assess how successful that has been, but it still leaves the landscape unbelievably confused and confusing. Is it too big? The rational Benthamite approach would be to say that we want to have tabula rasa put in place, but you just think about the work involved in doing that and you can feel your lifeblood draining away, so the chances of that happening are very slight. I think we are probably in the world of the Forth bridge, and it does need constant attention. We did a big public bodies review in 2010, and we got a lot of things wrong, but we did make an impact. We concluded that some things should not be done by the state at all, such as inland waterways, and we then created the Canal & River Trust, which I think has been a big success, and some other things like that. Some activities were simply discontinued, and others were brought within direct ministerial accountability, and that saved quite a lot of money. There were lots of things done wrong, or that could have been done better. The thing that disappoints me, though, is that we put in place the system of triennial reviews, and I was always aware of the risk that these would become perfunctory, which they probably did, and now they have been discontinued. They were discontinued under the previous Government, which I think was a mistake. Again, it is one of those things where some stronger central authority would be very important, to say to that part of central Government that has oversight of this whole landscape, “Just insist that these are done rigorously—that there is a proper, rigorous process where the right questions are asked and the right answers are demanded.” That has disappeared, which is a shame.

Governments have focused on ALBs that have been officially classified and where consolidated information is provided, but not public bodies at large. Is it a mistake to ignore other public bodies?

Sorry, can you say that again?

When Governments have focused on arm’s length bodies, they have tended to pick the ones that are officially classified and that the Cabinet Office provides information for, but they do not focus on other public bodies that are more general.

The question illustrates the confusion that there is, and that none of this is at all neat. One does not want to end up being a slave to bureaucratic administrative tidiness, but there is a benefit in having an orderly landscape where people know what is expected. The confusion and the lack of consistency, and the lack of consistent management information and financial and performance data around what a lot of these bodies do, reduces the accountability even further.

I do not think anyone in this room would be surprised by how you describe the Treasury and its vice-like grip on everything. With that in mind, does that make ALBs pointless, or does it make Ministers outside of HMT pointless?

Or both?

I am not against the Treasury having control of things. I consider myself one of nature’s Treasury Ministers. My concern is that they don’t do it very well. They control the wrong things, and they are not interested in some of the things that actually make the difference. The Treasury should have two functions. One is controlling public spending and making sure that it is spent well; the second is promoting economic growth, and they are not brilliant at doing either.

What would you do differently with the Treasury?

I would split it. If you look at all the systems equivalent to ours—Canada, Australia and Ireland, or New Zealand, although that is a little bit different—they are all parliamentary democracies, with Ministers who are in Parliament, and a permanent, non-political civil service. They all have a centre of government that is set up differently from ours. They have a proper department of Prime Minister and Cabinet, with all the secretariat parts of the Cabinet Office brigaded together with the Prime Minister’s office, to create a proper strategic centre of government. Then they have a divided finance ministry. It is confusingly called different things in different places, but you have a senior ministry—in Australia it is the Treasury, and in Canada and Ireland it is the Finance Ministry—and that does taxation. It does macroeconomics—macro fiscal policy—so it would, typically, certainly control the spending envelope. But you then have something that is much more of a budget ministry. In Australia it is called the Finance Ministry, in Canada it is the Treasury Board and in Ireland I think it is called something like the Department of public expenditure and something else. Here, you would take everything to do with the management of public expenditure out of the Treasury and put that together with the central cross-cutting functions that we started to create in the Cabinet Office in the coalition Government—procurement, management of property, and Government digital service. You bring all these things together in what I would call an office or department of budget and management. It does not guarantee success, but at least it makes it possible; it isn’t possible at the moment.

Lord Maude, I have to say that, whether inadvertently or not, you are making Mr Taylor’s day by singing the praises of a former Lib Dem Chief Secretary responsible for marshalling in what became known as austerity and now endorsing the Lib Dem approach to breaking up the Treasury into two. I am sure the Lib Dems will be sending you a membership application form in due course.

To continue that thought for a moment longer, the UK did experiment with that in the 1960s under George Brown.

No it didn’t. It did something completely different.

How would you define that?

They tried to replicate the macroeconomic bit of the Treasury by creating the Department of Economic Affairs, and the Treasury, with little difficulty, saw that off. I am talking about something quite different, for which there are numerous precedents in other countries. You would literally take out of the Treasury this function that is currently in the Treasury and put it somewhere else—possibly physically somewhere else, although you probably don’t need to do that—under a different Minister with different powers. You have to deal with the powers. This is something I did not really understand properly when I was in government, and until I did this last review. The Treasury has these huge, intrinsic, inherent powers to control public expenditure. In the coalition, we reduced the running costs of Government and saved, cumulatively—adding all the years together—£52 billion. That was not from programmes, not from the frontline, but from the running costs of Government—overhead. We drove those cost savings by using Treasury powers, and the political reality is that those powers were delegated to me very early on. The Treasury were convinced that it would only be temporary; they thought it would put a shockwave through the system—that is the way they described it—and then it would revert, because I would get bored with doing it. I did not get bored; I got quite excited by it, and so we carried on doing it, with the support of Danny Alexander, who played a crucial role in this. It was a very different exercise, but you have to have those powers. You have to take those powers to control public spending out of the Treasury. We created some real-time spend controls on digital, IT, property, and marketing and advertising. If I were doing it again, I would do it much more broadly than that. It was not sufficient for a Department to say, “This spending is covered by this budget line, so we are entitled to do it.” We would say, “It may be in your budget line, but it is not a sensible way to do it. Do you need to buy this number of vehicles? Do you need it at all? Do you need this many of it? If you do need this many, is this the sensible way to do it? Is there a whole-of-Government way of doing this that can save money and make it better?” That was crucial in driving these savings, including the digital savings. We went from having, in 2010, the most expensive Government IT in the world, with a litany of car-crash failures in big Government IT projects, to, in 2016, being ranked by the UN as best in the world for e-government. We did that by taking powers to stop bits of Government doing the wrong thing and therefore creating a strong incentive for them to collaborate with us at the centre, where we had the ability to help them do the right thing. It is a very different thing. People often raise that DEA thing from the 1960s, but that is wrong.

You were relocating the powers as opposed to the strategy.

Yes, absolutely. It is about implementation. It is about how you make it happen. In government, the easy bit is working out what to do. That is 10%. The hard bit—90%—is, “How the hell do you make it happen? And if you can make it happen, how do you make it stick and stop it regressing?” There is always a tendency for things to regress.

Much like yourself, the Government have indicated that they would like to see a number of arm’s length bodies closed. They have already announced several, of course, with NHS England being by far the most significant.

Yes, and that was a good decision.

What sort of challenges do you envisage they are going to face trying to head in this direction?

There are typically four reasons why reform programmes fail or get pushed off track: political pushback; vested-interest resistance; inertia; and lack of technical capability. No plan, as we know, survives first contact with reality. You come across the first unforeseen difficulty, and you need to have the technical capability to work out what the answer is. How do you solve that unforeseen problem that has arisen? There will be some combination of all those factors. One of the mistakes we made with our reform programme was with the Bill that we needed to give us powers to do this quickly, because so much of the existence of public bodies is in primary legislation. Your head swam with the idea of trying to get all these things through primary legislation, so we created the Public Bodies Bill, which gave us some Henry VIII-ish powers to change primary legislation by secondary legislation. The mistake we made—or the business managers made—was to think that that would be relatively uncontroversial, and we therefore introduced the Bill in the House of Lords. I think it would have been relatively uncontroversial in the House of Commons, as indeed it was when it eventually got there, but it was not at all uncontroversial in the House of Lords. My recollection of that time is that a number of eminent folk in the House of Lords said, “Of course, Francis, I totally agree with what you are doing in principle, but you cannot possibly mean it to apply to this particular public body, of which I happen to be chairman.” That was an important bit of learning for the future.

That suggests that we need a fairly long period of preparation before kicking off a process of trying to rationalise arm’s length bodies.

I am generally in favour of what we loosely came to call the JFDI—just do it—school of government: find things you can do and get on and do them and create momentum. You should not wait till you have a complete and perfect plan before doing anything. Find some things that can be done relatively uncontroversially and do them. It is the demonstration effect. I now work with a number of other Governments around the world, and there is often a lack of confidence that you can do this, because it is hard. Actually, the demonstration effect—finding some things we could do quickly and showing them—was really important with the whole cost-saving programme we put through in the coalition Government. The particular thing we did early on was renegotiating big contracts with the Government’s major suppliers, once we found out who they were, because there was no central data. We renegotiated contracts and made big savings—£800 million of cash savings in the first short financial year, when the Government was formed—and that gave people inside Government confidence that we could do things. My advice would be: don’t wait till you have the perfect plan, but find some things you can do. You need to be doing the short-term things while at the same time giving thought to what the longer-term plan is.

Given your experience, would you suggest the use of those Henry VIII powers again? Would existing legislation enable the Government to do that?

My answer to the first question is yes, because otherwise you will never get enough time in the legislative timetable to make a big difference. I am not close enough now to know how much scope there is, but the Bill was meant to provide a mechanism for continuing activities, if the triennial reviews came up with a decision to make changes. But I think we ended up having to specify in a schedule to the Bill a list of all the public bodies to which it applied, and that might need to be amended.

During the reform programme, do you think the process of closing and merging public bodies was handled sufficiently well?

I am sure it could have been done better. Is life perfect? No.

Given that your view is that there is an aberration—you said that, within the restraints that you were operating, you were able to resolve as many of these as you felt able to resolve, and a look through the list suggests that around a quarter were permanently shut down and the rest were merged or retained in some other form—how much further would you have gone, ideally?

As I said, we reduced the number by about a third, but I did not see that as being the end of the programme. That was the first cut, as it were, and it should have continued, because the rule does apply: if you are not trying to make the number smaller, it will get bigger. You need to do this constantly, which is what the triennial review requirement was meant to deliver. It has to be done rigorously.

While the triennial reviews are gone, you are still supposed to have a tailored review for each arm’s length body within each parliamentary Session, which I suppose, given how short some of them have been, has not necessarily happened. Another three years has passed since your independent report. Are the new tailored reviews starting to live up to any expectations you had for triennial reviews?

I am not aware of it, but I do not follow it as closely as I probably ought to.

It has been argued that specialist agencies often have better knowledge of their policy area than their sponsor Department. Has that been your observation? If so, how can that knowledge be retained as we do away with some of these structures?

It depends on what you do with it. In some cases that is definitely the case, but one of the problems with today’s civil service is that there is a shortage of that detailed, deep subject matter knowledge within Departments. The sad person that I am, I was recently rereading the early part of the Fulton Committee report from 1968 and the six critiques Fulton made of the ways in which the civil service of the day was not set up to be effective for the needs of the day. Those criticisms pretty much all remain today. One is about the cult of the generalist, or what they called “the gifted amateur”. Another is about the churn, or the random movement from one job to another, which perpetuates the generalist thing, because if you are moving all the time, you are losing that deep knowledge. Some people in the civil service would say that not only are these critiques still live, but in many cases they have got worse. We absolutely do need to find ways of improving the consistent, deep subject matter knowledge that exists within the Government. It matters a bit less where it sits—whether it is in a Department or a specialist agency. There will be, for sure, cases where you need to have that knowledge and expertise located in an agency rather than inside a Department. Where it sits is a bit second order; the first priority is that you have it and you cultivate it and nurture it, and we are not brilliant at doing that.

That point about the Fulton report was made by someone else at a recent Committee meeting. In terms of specialisms, a number of recent former Ministers have observed that, as was alluded to earlier in this sitting, there are circumstances in which agencies appear to believe that they are the master in areas of policy, rather than the servant of the Ministers. Has that been your observation? If so, what can be done about it?

Policy should be being made by Ministers, with very rare exceptions—I cannot actually think of any exceptions at the moment. Policy is for politicians, who are accountable to Parliament and to the public. I think there should be very few exceptions to that. But, again, there is a lack of consistency and a lack of anything approaching being able to benchmark what is being done in one place against another, because there is so much variation.

The reform programme was justified in terms of reducing waste and addressing accountability issues. Do you think there is a trade-off between those two areas?

No, I don’t think so. If we improved accountability by bringing inside a Department something that needed to be done by the state, then there is nothing to say that that necessarily made it less efficient. In fact, it is merging the oversight in the Department—the governance function in the Department—with the actual activity. I cannot think of a way in which there would be a trade-off between the two.

Arm’s length bodies realise that politicians and others—think-tanks and so on—are looking at them and asking questions about them, and they have obviously matured and aged since the time of the coalition. Quite a lot of them now seem to be very adept at promoting themselves and their absolute necessity to the running of the British state. They have communications teams, promotion people and all the rest of it. How concerned should we be that in essence there is a rearguard action being fought among the coterie of arm’s length bodies, whereby they say, “You can’t possibly get rid of us, reform or change us; we are just too vital and embedded”?

To the extent that that is happening, you should be pretty concerned. I have often been astonished to hear stories of public bodies employing Government relations companies and advisers.

Yes, they are—to lobby Government on policy.

That is kind of weird, and a bit inappropriate.

So you think that should stop.

I would say so.

Much of my question has been covered, and we have had a very interesting session. The basis of the question is about how different Governments at different times have either abolished or established ALBs to broadly achieve very similar stated aims. Can you give some examples of where you had success during the coalition period broadly achieving similar aims by doing one and the other? Referring back, there was an interesting discussion around the taxonomy, the structure and the entire piece. There may well be gaps that need to be filled, conflicts between ALBs or duplication. That lack of a real road map or a proper atlas of the space means there is scope creep and potential conflict, which might be the driver behind rationalising some of the scopes between various ALBs.

The trade-off between—what are the two things you are talking about?

The abolition and the creation of ALBs, to achieve largely the same aims, in different cases and examples.

Saving money.

Or providing better services. I don’t know whether you can give any examples.

No, not really. My direct involvement was all quite a long time ago. A lot of this is just about good governance. It is about having some principles and presumptions that you apply: “Does this need to be done at all? If it does need to be done, does it need to be done by the state? If it does need to be done by the state, is there any reason why it shouldn’t be done by a Minister answerable to Parliament? Does it need to be done to this extent?” We should be asking those kinds of questions about everything that the state does, and consistently. I realised at the end of my time in government that I was not really a Conservative in the conventional sense, in that I found that every status quo was a living affront that needed to be—

You are sounding remarkably like Keith Joseph.

Absolutely. But in the public sector, there is still too much a sense that, “We’ll try to get this right and then keep it going.” That world does not exist any more. The world of steady state management—business as usual—does not exist. It is either getting better or it is getting worse, and if you are not trying to make it better—make it more efficient, cost less and deliver a better outcome—then it will be getting worse.

You mentioned other jurisdictions earlier, in relation to cleaving the Treasury. Picking up on your answer to Mr Taylor, when a very mature democracy has built up layers of silt, if you will, sometimes it needs a jolly good dredge to get back to the riverbed and first principles. Do you see that as just the antiquity of the British state? Do you see that as a basic impediment to look at in a radical, modern, contemporary way? Can you point us to any jurisdictions elsewhere that have been in similar circumstances and have dealt with these issues in a more focused, energetic and ultimately successful way?

I do not think the antiquity is a barrier, actually. In some ways, the fact that we do not have a written constitution, and that so much of what you can do in Government is not laid down in statute—or obviously not in a formal constitution—actually gives you more freedom to do things. But you do need to be constantly using those important words: “Show me the chapter and verse. Show me where it says I cannot do this.” The mistake that most Ministers make is in underestimating the powers they have to make a difference. The exception to that is the power of the Treasury, which is huge, and which is often used to limit the scope for reform and radical change. It was interesting that the terms of reference for this review—I have it here somewhere—explicitly excluded my ability to look at the governance and accountability for public expenditure. I obviously ignored that and commented on the absurdity of the terms of reference for a review of governance and accountability saying that the only body deemed suitable to review the governance and accountability of public expenditure is the body that does it at the moment. You need only to express it to see the absurdity. If there is something about us that makes us different, I would say it is that—that is a big blocker.

Let me ask you this question before I bring in Mr Carling. The elected practice of politics seems to be getting younger in profile and less experienced in the real-world management of companies, organisations and so on. You get the call from the chief or the Prime Minister: “We want you to go and be a Minister in this Department”—you get frightfully excited and off you trot. You are inducted by civil servants who will clearly want to house train you in the general view of the Department. In terms of trying to drive major, systemic change agendas forward, we do not do enough—correct me if you think I am wrong—to prepare politicians to be Ministers and to feel empowered to, or to know to, ask those questions: “Show me, chapter and verse. Tell me where my remits are. Tell me where the boundaries are,” and so on. You get bumped in on day one, start doing your stuff, and there is no time to breathe and think.

You are not wrong at all; you are totally right.

How do we address that from a political point of view? There is talk about civil service colleges and so on and so forth to prepare the top flight of civil servants. We do not do that on the political side, and there is a need.

No we don’t and we should. I had a chapter on that, actually. It was outside my terms of reference, but I think it is really important. There are various things, and I think we should do it quite formally. Not everyone who comes into the House of Commons wants to be a Minister, but for those who do—probably at least half of them, I would say—we should have a proper programme to prepare them. I learnt about being a Minister when I was a PPS; I was PPS to a very busy, workaholic Minister who simply said, “You’ve got access to my diary; come to any meeting you want and see any papers you want.” I was like an apprentice and that was fantastic. Very few Ministers do that. That is one way of doing it, but I think we can do it much more formally and I highly recommend that. When I was leading the work on preparing the Conservative party for government in the period before the 2010 election, we kept hearing back from Whitehall that what would be really helpful was if incoming Ministers could tell us what their working style was. I thought that was a really good idea, but I had no idea how you would set about that because we all think that our own working style is completely normal. I could not tell you what my working style is; obviously, it is totally normal, but everyone’s working style is different.

It is certainly not to keep to your terms of reference.

It is perfectly possible to go through a process. Some of the problems that arose in the last Government around ministerial behaviour was simply a lack of self-awareness. Being self-aware is sometimes uncomfortable, but it is really important. You can help people with that. People often do not know what effect their behaviour has on the people around them. Some of the problems you get with civil servants feeling that they are not able to speak truth unto power—to use that rather annoying phrase—is that Ministers have not known how to interact well with officials and not understood what that relationship can and should be. Too often on the other side, officials have not been properly trained in how to present advice that you think may not be welcome to the Minister. How do you do that in a way that is not going to massively damage the relationship? There are ways of doing these things, but they are not easy. A lot of it is about self-awareness on both sides. That preparation is crucial. In the coalition Government, on a very informal basis, I used to do an induction session for new Ministers after a reshuffle—otherwise, as you say, all the induction would have been done by civil servants, which might not have been wholly conducive to effective government.

Lord Maude, one thing you missed out during that last exchange was that surely the onus rests with the Prime Minister to make sure that the people he or she appoints have the skills to be Ministers?

Yes, I totally agree. I make this point in my chapter on Ministers. In any appointment process, a bit of party management will always be involved. That is just part of life, but you are totally, 100% right. I absolutely make that point. I have it here: “Many ministers are appointed with scant regard to their background, knowledge and skill sets. The requirements of party management will always be a factor in appointments, and there is no point in trying to eradicate it completely. However, far more care should be taken, especially in the appointment of junior ministers, to ensure that there is a good fit between the individual and the role.”

My experience, certainly, was that Ministers were appointed based on who had backed whom during various leadership elections, as opposed to whether they had leadership skills or the ability to develop policy. For me, that is always going to end in disaster.

That’s where I went wrong as well.

You are never going to totally get rid of that, because promotion and status is a currency in the political world, but far more attention should be paid to the fit and to the preparation—people being prepared and willing to submit themselves to what can sometimes be uncomfortable. Partly to set an example, which was not particularly effective, I used to submit myself once a year to a 360° review run by the Institute for Government—it offered this to others. That is very effective: there are things that all of us do, particularly when you are busy and you have a lot going on, that have an effect that no one has told you about. But finding a way to bring that just makes it work better.

To follow up on that, before I ask about a different subject. You are talking about how a Prime Minister can make sure that the people they are appointing as junior Ministers have the right skill set. Obviously, Prime Ministers are very busy people and do not necessarily have the time to conduct really thorough assessments.

That is what the Whips should be doing.

That was going to be my question: where do you think that best fits and how can that be ensured?

It has to be done somewhere and the Whips Office is probably the place to do it, but you need some professional help. We should not be doing this in a kind of amateur way—if we do it at all, we do it in a pretty amateur way. There are plenty of people around who do this for a living. It is not rocket science.

To move back to public bodies reform more broadly, the public bodies reform programme that your Government led would have required sustained engagement and buy-in from across Government for a long time. How did you create that sustained engagement and buy-in, and how was that structured and resourced at the centre of Government?

First, on how you get the buy-in, it was mixed. It was not universal. There was plenty of resistance and wrangling with colleagues about particular things. You end up saying, “Yeah, I’m not going to fight about that,” so you do end up with a process that is not perfect. On buy-in to the concept, this is the kind of thing where, “Of course, I totally agree with the principle and the approach, but you can’t possibly mean this because that is going to be quite uncomfortable for me in the conversations I have to have.” Both parties in the coalition were committed to buy-in. I cannot actually remember whether the Lib Dems did have a commitment to it, but most parties go into an election saying they are going to do this; it was just that the Lib Dems did not expect to have to make good on it. How did we set it up? We had a very good, quite small team in the Cabinet Office who ran the programme. They were very good—full credit to them because it was not seen as a route to the top. It was not good for making friends among senior officials elsewhere in the system, so full credit to them for being committed. They did brilliant work on this. We had a Prime Minister and a Deputy Prime Minister who showed a commitment to this so people did not really feel that there was nowhere for them to go at the end of it.

How big was the Treasury's role in driving the agenda forward?

I can’t really remember, to be honest. It was very much driven by us. I do not remember the Treasury being difficult about it, which is something you will not often hear me say. I do not remember how they were involved, to be honest.

Fair enough. Finally, we have the sense that the ongoing review programme under the current Government is primarily asking Departments to look at how their public bodies are working and doing it on that basis, rather than having a particularly strong central drive, although I am sure that is happening as well. Do you think that approach works—asking Departments to take the lead on reviewing their own public bodies?

The centre needs to be able to challenge and interrogate, and to do that effectively. I do not know whether they are set up to do that. Ministers need to be very involved in that. I had the advantage of being quite senior, and I had been around a long time. I was also at the end of my career, so I did not mind who I irritated; that is an advantage, too.

I know you said that almost tongue in cheek, but you have just mentioned the very small team leading this in the Cabinet Office. You then pointed out that they did not make friends within the system because they were chopping things away and so on. Is there merit in creating a small team of senior, experienced people who are moving towards the end of a political or a civil service career, to whom making friends really does not matter because they do not need the approbation of others for future promotion? It is not size, but more to do with age, experience and attitude.

I think that is a good point—there is a lot of merit in that. I wish I had thought of it.

A cabal of the wise people.

Yes, absolutely.

I have to say that young people can also be very keen on condensing public bodies.

They can—of course they can. One mustn't be ageist, but there we are. Thank you, Sam, the youngest member of the Committee; we are grateful to you for speaking up for the youth.

Thank you, Chair. I must admit that at times this inquiry has sometimes felt a bit hypothetical. We start with the landscape, but we have often not drilled down. I feel that right now we have a witness who has looked into some of that detail. The ambition in looking at this of the Government you were a Minister for was much bigger than what was achieved. I am going to guess—correct me if I am wrong—that there was some low hanging fruit: arm’s length bodies or organisations whose structures meant it was going to be quicker. Are there any that you did not get to that you could tell us about? Are there any features of those organisations that you could tell us about that may be useful to people approaching the task now?

I should have anticipated that question; on the spur of the moment, I can’t think of any. Partly you kind of blank them out, and I’m not very good at looking back over these things. People used to say, “You wanted to have a bonfire of the quangos,” but that is not a phrase that I can remember ever having used, because it raises expectations and makes it all more tabloid. This was meant to be a serious exercise, largely focused on, as I said at the outset, increasing accountability, which had the collateral benefit of saving money.

Earlier, the issue of pay did come up. I understand that one allure of creating an arm’s length body that carries out functions that may be carried out elsewhere is the ability to go outside the civil service pay structure. To what extent was that an impediment to taking functions back in-house? Have you any recollection of that?

I don’t. At the end, if you could show that overall it was saving money, it was possible to be reasonably pragmatic.

It is one of the issues, isn’t it, that arm’s length bodies are perhaps paying what are closer to market wages, especially when the arm’s length bodies are carrying out technical functions?

Yes.

I just wondered whether there was any sense that perhaps that was making it difficult to bring people back in-house.

To be honest, I don’t remember that. I can see how it could be an issue, but I don’t remember the extent to which it was an issue or, indeed, how it was resolved, other than by people being sensible and pragmatic.

I have one more question, Chair, and I think this is a different approach. I think that throughout this there has been consensus that people want to see a reduction in wasteful arm’s length bodies and more accountability, but there are some arm’s length bodies that perhaps have been set up for a more wholesome purpose, which is that they carry out some function where independence from political decision makers is considered a virtue and protects the integrity of the work that they do. To that end, how resilient do you think our arm’s length bodies are to political interference? You have said a lot about what was a “get it done” approach to government. As we enter the world of political populism, left and right, how resilient do you think our arm’s length bodies would be to a populist Government?

Well, it depends. It is all in the circumstances. The Office for National Statistics is a clear example of something that needs Ministers not to be able to interfere. There are no absolute guarantees and Ministers may try to interfere beyond what is appropriate, but again it’s about clarity. What are your powers? What is it legitimate for you to be involved with? It’s about getting that clarity. How robust the bodies are will depend on the people.

Could something be done to strengthen their independence and to move them further away from political control?

Again, it depends. Some of them should be less immune from political control. When I talk about the confusion of the landscape, with labels attached to different long-standing bodies but not reflecting the reality, I think you need to have a way of describing these things whereby the principal differentiating factor is the length of the arm. How remote from political, from ministerial, control should this be? For what purposes should the activity be accountable, through a Minister, to Parliament? It is the lack of clarity that I think creates the problem. Sometimes things should be absolutely removed from any semblance of ministerial interference, but clarity and transparency are the key.

Thank you.

Lord Maude, thank you very much indeed for taking our questions this morning.