622 THE MODERN LAW REVIEW [Vol. 51

Unionists and Northern Ireland Office lack confidence in a significant proportion of the people concerned demonstrates the abnormality of Northern Ireland as a society. It also points to the pressing need for political reform and dialogue rather than political repression in that society.

CLIVE WALKER*

“THE NEXT STEPS”: MINISTERIAL RESPONSIBILITY AND GOVERNMENT

BY AGENCY

ON February 18, 1988 Mrs. Thatcher announced plans to reform the civil service by hiving-off 70,000 jobs to new executive agencies. The Prime Minister told the Commons that a progressive programme to establish the agencies would be launched and a first list of candidates for hiving-off has been drawn up. The list includes the Meteorological Office and Her Majesty’s Stationery Office.’

The plans constitute both the revival of an old idea and a radical reform. Twenty years ago the Fulton Committee argued that accountable management would be enhanced by hiving-off a number of the executive activities undertaken by departments.* Now the idea has been revived and adapted to Mrs. Thatcher’s philosophy. An administration that was once famous for quango hunting3 is, through the privatisation process and now with the current reforms, fostering the multiplication of these fringe bodies.

THE IBBS REPORT

The proposals spring from the Prime Minister’s Efficiency Unit, headed by Sir Robin Ibbs, which produced in early 1988 its report “Improving Management in Government: The Next step^."^ The report was highly critical of the low priority given to managerial performance within the civil service. Senior civil servants were said to respond to the concerns of their Ministers which were dominated by the demands of Parliament and the problems of communicating policies. Reacting to Parliament and the media produced ministerial “overload” so that managerial issues and attention to results became neglected. Civil servants were therefore left to work out managerial issues on their own. But with 600,000 employees, the

* Lecturer in Law and Director of the Centre for Criminal Justice Studies, University of Leeds.

H.C.Deb., Vol. 127, col. 1149. * Report of the Committee on the Civil Service, Cmnd. 3638 (1967), Vol. 1, paras. 188-

lOn A,”.

See, e.g. P. Holland and M. Fallon, The Quango Explosion (Conservative Political Centre, 1978); P. Holland, Quango, Quango, Quango (Adam Smith Institute, 1979); Costing the Quangos (Adam Smith Institute, 1980); A. Barker, Quangos in Britain (1982); C. Hood, “Keeping the Centre Small: Explanations of Agency Type” (1978) 26 Political Studies 30.

K. Jenkins, K. Caines and A. Jackson, “Improving Management in Government: The Next Steps” (London, HMSO, 1988).

SEPT. 19881 THE IBBS REPORT 623

civil service was unwieldy and was not structured for managerial effectiveness.

Ibbs concluded that, since much of the work of the Civil Service concerned the delivery of services rather than policy formulation, a number of such service functions could with benefit be hived-off. As much as 95 per cent. of Civil Service work involved service delivery or executive functions and so was eligible for hiving-off. This would leave a small core staff of civil servants engaged in policy advice to Ministers.

Four key recommendations were accepted by the Government. First, that “to the greatest practicable extent” the executive functions of government, as distinct from policy advice should be carried out by agencies. Responsibility for day to day operations would be delegated to Chief Executives who would be responsible for management within policy objectives and a resource framework set by the responsible Minister. Secondly, a progressive programme for attaining these objectives should be adopted. Thirdly, staff should be properly trained for managing of the delivery of services, whether these services were to be delivered from inside or outside central government and fourthly, a project manager should be appointed to supervise the programme. In February, Mrs. Thatcher announced that a Second Permanent Secretary had been appointed in the Office of the Minister for the Civil Service in order to see the reforms through. She also made it clear that some of the new agencies would operate from within departments but some functions would be hived-off to independent, perhaps private, bodies.

CONSTITUTIONAL ISSUES

A number of press commentators saw these changes as moves to weaken the Civil Service unions and to pave the way for further privatisations. The constitutional significance of the proposals should not, however, be under-estimated. As Ibbs made clear, the convention of ministerial accountability is to be subjected to root and branch reform. In place of the notion that Ministers control and are responsible to Parliament for all their civil servants’ actions is the idea that executive agency managers should take over responsibility for day to day matters. There should be a new constitutional convention, said Ibbs, “that heads of executive agencies would have delegated authority from their Minister for operations of the agencies within the framework of policy directives and resource allocations prescribed by Minister~.”~ Under the new system, therefore, it was supposed that Ministers should stand back from detailed involvement, managers should be left free to manage and efficiency in the delivery of services would improve.

The arrangements to be made for policy control and accountability will be crucial but on this front there is some confusion. Ibbs is

Ibbs, p.17.

624 THE MODERN LAW REVIEW [Vol. 51

more clear about departmental than non-departmental bodies. In the case of the former, Ministers will draw up policy frameworks and update these as part of an annual review. Long-term plans will also be developed. Heads of agencies will be responsible for operational matters and for implementing the frameworks. They will be accountable to Ministers but, it is promised by Mrs. Thatcher, they will also be subject to scrutiny by Select Committees, the Public Accounts Committee and the Ombudsman. Where agencies are set up outside departments, Ibbs offers little help, saying “appropriate forms of accountability to Ministers and to Parliament will need to be established according to the particular circumstances. ”6

PROBLEMS WITH THE REFORMS

Will these arrangements prove workable? Are they satisfactory in constitutional terms? A number of considerations suggest that they should be treated with extreme caution.

First, a world in which it is so easy to tease operational and policy matters apart seems too good to be true. It may seem to many administrators to be a world quite unlike the one in which they work. Furthermore, the notion that policies should be made by people who have been abstracted from the (real) world of service delivery seems highly questionable even (nay, especially) within the Government’s own terms.

Secondly, the Ibbs case for hiving-off is based heavily on anticipated efficiency gains but government by agency is, as American experience has indicated: a highly problematic process. The shorter history of British agencies and public corporations has not been free from difficulty. The public corporations that have been used to run the nationalised industries have been beset with problems of political interference, lack of continuity and ill-defined performance standards. Tony Prosser has argued that “arrangements for securing the legitimacy of the nationalised industries have been woefully deficient-largely due to a neglect of institutional design.”8 This is no mere academic matter. According to Prosser, democratic legitimacy is essential to the success and efficiency of the enterprises involved. As for the independent regulatory agencies, bodies such as the Independent Broadcasting Authority, Commission for Racial Equality, and Civil Aviation Authority have not been free from accusations of inefficiency, vacillation and lack of accountability .9

Ibbs, p.17. ’ S e e e.g. P. W. MacAvoy (ed.), The Crisis of the Regulatory Commissions (1970);

J. 0. Freedman, Crisis and Legitimacy (1978); B. M. Mitnick, The Political Economy of Regulation (1980); L. J. Hector, “Problems of the CAB and the Independent Regulatory Commissions” (1960) 69 Yale L.J. 931.

T. Prosser, Nationalised Industries and Public Control (1986) p.235. For an examination of regulatory agencies in Britain see R. Baldwin and C.

McCrudden, Regulation and Public Law (1987).

S E ~ . 19881 THE IBBS REPORT 625

Why should the new agencies prove more satisfactory than their predecessors?

Thirdly, it is clear that Ministers will be disinclined to answer to Parliament for agency operations. Such matters will be treated as issues for agency heads alone. Ministers will answer only for their statements of broad policy, for any frameworks and plans developed. The problem is that highly contentious political issues often arise out of individual operational decisions. There is no neat line to be drawn between policy and operation. Ministers will be able to avoid Parliamentary scrutiny with new facility by employing the screen of respect for managerial autonomy.

Fourthly, it will be no easy task to draw up policy objectives capable of precise statement. This will require the application of considerable departmental resources, it will be technically difficult and will create new avenues of political contention. In a changing world the updating and revision of such statements will be a constant problem for the department. At the same time the agency itself will be developing new approaches to new problems and so may find itself in conflict with departmentally-established objectives. It will often be the case that agencies have to muddle through and in these circumstances it is unrealistic to suppose that blueprints can be developed for all agencies in advance of operational experience. Furthermore, if the ministerial teams devising such guidance are going to be “core” civil servants specialising in policy advice, they may well have little experience of implementation to draw upon in drafting frameworks for agencies.

Fifthly, even in cases where blueprints are possible, the agency and ministerial teams involved may not necessarily agree on their content. The ministerial view will prevail but continuity of agency policy is likely to suffer and this will affect the efficient operation of the agencies that is their raison d’etre. Experience with the nationalised industries suggests that discontinuity may be a difficult problem for all “controlled” executive agencies.l0 In the regulatory sphere a system of written ministerial policy guidance was tried as a means of controlling the Civil Aviation Authority in the seventies, but this was abolished by the Civil Aviation Act 1980. By that time officials in the agency were in agreement with their shadowing civil servants that the policy guidance structure was proving too rigid, too difficult to adjust to changing economic circumstances and too vulnerable to challenges in the courts.”

The danger inherent in supervisory systems is of producing two tiers of government: the “shadowers” within the department, and the agency itself. These tiers, moreover, may well lack proper coordination. Departmental monitoring is clearly anticipated by Ibbs, who speaks of agencies being held “rigorously to account” by Ministers but, if carried out properly, this process may lead to a

lo See Prosser, supra n.8, Chap. 6. I’ See R. Baldwin, Regulating rhe Airlines (1985), Chap. 13.

626 THE MODERN LAW REVIEW [Vol. 51

duplication of functions that is hardly the badge of a government bent on streamlining.

Sixthly, executive agencies will, it is said, be overseen by parliamentary committees, but the influence that such committees will be able to exert is unclear. Agency heads may well be inclined to invoke the new convention of autonomy and argue that if policy matters are at issue these should be taken up with the Minister and, if operational matters, these should be left to the unrestricted judgment of managers. One way to counter such a response might be to develop guidelines of sufficient precision to offer practical benchmarks for monitoring committees but, as has been argued, such precision may be chimerical. Will, indeed, the new breed of agency managers be as susceptible to the application of informal pressure as departmental civil servants have traditionally been?

Seventhly , complaints against executive agency actions will arise as readily as they have against departments. But Ibbs is silent on the provision of a complaints machinery apart from stating that the powers of the Parliamentary Commissioner for Administration will apply to these bodies. It may be that bodies representing the consumers of agency services will have to be publicly funded if grievances are to be recognised and acted upon.

Finally, to move from a system of continuous or linear decisionmaking within a department to a linked, two-tier structure with a formal framework, is to invite interventions by lawyers and judges. When “well-defined frameworks” are established for agencies these will offer ready targets for those wishing to contest agency decisions. This proved to be so in 1977 when Freddie Laker successfully impugned the vires of Peter Shore’s civil aviation policy guidance to the CAA in the Court of Appeal.12 It could, of course, be argued that this is no bad thing, that the publication and open discussion of aims and objectives enhances efficiency. The prospect of judicial review may, however, have a less desirable effect. It may lead to defensive decisionmaking, to a concern not so much with efficiency but with making bureaucratic activities “judgeproof.” The end result of precisely-stated objectives may be stultifying legalism.

Those who publish rules, objectives and guidelines are now far more liable to judicial review than in Freddie Laker’s day. The doctrine of legitimate expectations has blossomed in the last decade and both the departments that draft and the agencies that apply guidelines will be held to account as never before if they depart from or misapply these g~ide1ines.l~ It is, moreover, clear from last

See R. Baldwin, “A British Independent Regulatory Agency and the ‘Skytrain’

SEPT. 19881 THE IBBS REPORT 627

year’s Datufin case14 that, whether the new agencies are to be departmental or privatised, they will, if carrying out public functions, be liable to judicial review.

To summarise, then, the new proposals present a series of constitutional, legal and practical difficulties. To condemn them out of hand would be unwarranted since much depends on the mechanisms devised to yoke the agencies to the machinery of government. It would be a mistake, however, to ignore the problems liable to be encountered. Policy and operational matters will not emerge readily in the form of precise and lasting blueprints; there will be discontinuities and efficiency losses where agency policies are overriden by Ministers; Ministers will not give agency heads as much freedom as may be anticipated; a new tier of “agency watchers” may be required in the department; Parliament may find it difficult to hold agencies to account; lawyers may see this as a growth area for litigation and legalism may overtake agency decisionmaking.

DAMAGE LIMITATION If the proposals are to be put into effect then it is essential that institutional arrangements and procedures are adopted that will lend some legitimacy to agency actions. In devising these it is necessary to accept that hiving-off will not remove matters from the political arena and that the processes of participation and accountability are those that will yield legitimation. To this end, the following steps should be taken. First, in relation to scrutiny by Select Committees, the Public Accounts Committee and the Ombudsman, it should be made clear in the terms of appointment of agency heads, and in relevant legislation, that they are accountable to Parliament directly for all policy as well as operational matters except only in relation to the drafting of guiding frameworks. Secondly, the powers of the Comptroller and Auditor General (CAG) should be strengthened so as to allow his or her office to conduct in-depth efficiency reviews of agency activities. Full access to agency books and records should be given to the CAG and “managerial” decisions should not be exempt from such scrutiny. Efficiency reviews should be undertaken on an annual basis.

Thirdly, the Monopolies Commission, or some specially- established body, should scrutinise governmental agencies on a regular basis on questions of efficiency, costs of service or for possible abuses of an agency’s dominant or monopolistic position in the market for a particular service. CAG scrutiny should not be treated as a substitute for this competition-oriented review.

Fourthly, guidelines must be established in a way that avoids the pitfalls of legalism. Excessive detail should be avoided (it will not

’

l4 R . v . Panel on Takeovers and Mergers, ex. p . Datafin [1987] 2 W.L.R. 699.

628 THE MODERN LAW REVIEW [Vol. 51

serve to exclude the judges) and flexibility is to be aimed for. The procedures for establishing guidelines must be open and allow participation. Departmental guidelines for agencies should be published and notice given to relevant parties; there should be an opportunity for affected persons to submit data, views and arguments; and the department should provide a statement of the basis and purpose of the guidelines. Relevant background materials should be openly available. Statutory deadlines should be established to ensure the prompt production and revision of guidelines.

Fifthly, an annual public review of agency performance should be instituted. Affected parties and interested groups or individuals should have rights of public participation and reports of review proceedings should be made by an independent person or body and submitted to the relevant Minister and to Parliament.

Finally, public funds should be provided to establish and support representational groups for the consumers of agency services. It should not be assumed that such bodies will emerge of their own accord. Bodies such as the Transport Users Committee provide models.

These institutional and procedural steps can be seen as minimal responses. They would lend the new agencies some legitimacy but would not solve all the problems noted above (e.g. of drafting workable guidelines; of requiring shadowing staff in departments; of coordinating departmental and agency policies; of liability to, and defensiveness concerning, legal attack). Without these kind of steps the proposed agencies are liable to cause concern not merely to public lawyers but also to members of the public and consumers of agency services. Ibbs had a point in outlining the deficiencies of ministerial responsibility. But to weaken this further without being sure of the gains would be to indulge in speculation rather than considered reform.

ROBERT BALDWIN*

* Law Department, London School of Economics and Political Science.