Bonfire of the quangos is mostly hot air

There are over 1,000 quangos in the UK. Today’s news that 192 of them are to be abolished appears to be concrete evidence that the coalition is taking radical action to reduce the role of government and cut the deficit. But then one reads the small print.

In reality most of these quangos will be abolished in name only. Their functions, and in all likelihood their staff, will simply be transferred to other government bureaucracies. The Regional Development Agencies, for example, will be transformed into Local Enterprise Partnerships with some of their responsibilities offloaded to BIS. Rather than abolishing a pointless layer of government, the coalition is rebranding it. With this process repeated across the quangocracy, it is far from clear that there will be big savings in expenditure.

The underlying problem is arguably the government’s attitude to regulation. Unless it takes serious steps to rescind the huge volume of legislation introduced in recent years, the coalition will find it difficult to scale back the associated bureaucracies. This relationship between regulation and quangos is clearly seen in the field of financial regulation where the government’s attempts to increase the volume of regulation will lead to one quango evolving into three or more. The important role of the European Union in the regulatory sphere is another obstacle to cutting many of these agencies.

The “fairness” agenda also appears to have hampered the process of scaling back the quangos. It is notable, for example, that the Low Pay Commission, which advises on the level of the minimum wage, has survived. A genuinely liberal government would of course abolish the minimum wage, together with the bureaucracy that goes with it – just as, in another Conservative age, the wages councils were abolished. Even a prudent socialist administration could save money by replacing this quango with a simple inflation-linked formula.

Cutting the quangocracy is in many ways an open goal. Many of the agencies have low profiles and are not highly valued by the public. The coalition’s failure to use this opportunity to achieve a significant reduction in the role of the state therefore augurs badly for next week’s Comprehensive Spending Review.

14 October 2010, IEA Blog

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