Labour is creating or overhauling at least 17 public bodies, a move which is likely to come with high costs, an Institute for Government report has found.
Launching a new “tracker” of public bodies, the thinktank warned of some of the pitfalls when setting up government agencies from scratch, saying: “Successfully creating a new public body is difficult and entails high fixed costs in terms of time, budget and leadership focus.”
The Institute for Government found the price tag of creating a new government department can be £15m in set-up costs, plus £34m in lost productivity.
It said while public bodies were rarely on the same scale as departments, creating them can be more costly, such as when they need to be “set up from scratch rather than refitting existing space and integrating existing systems”.
Matthew Gill, the author of the IfG report, said: “Public bodies – from the National Wealth Fund to the National Care Service – will be central to the Labour government’s success. But they are hard to build well and many questions about the funding, governance and remit of the 17 bodies so far announced remain unanswered. Our report provides a guide, based on lessons learned that have not been clearly set out before.”
The new government has wasted no time in bringing forward legislation to set up bodies such as the Fair Work Agency and the Armed Forces Commissioner.
However, there is little detail on the costs, with the impact assessment for the new Fair Work body stating: “It has not been possible to estimate … the set-up costs of the FWA associated with bringing together existing enforcement bodies [or] the costs associated with new state enforcement responsibilities including the enforcement of holiday pay regulations.”
Other bodies, such as the football regulator, will ultimately be paid for by an industry levy. The impact assessment for the legislation said: “The set up costs will initially fall to the exchequer. Once the regulator is operational, levy payments are expected to fund the regulator. The levy will claw back the majority of costs incurred during the set-up of the regulator, and will also cover the ongoing running costs of the regulator.”
Some public bodies promised by the Labour in its manifesto, including the Ethics and Integrity Commission, have not yet been established or detailed in legislation yet.
The IFG said most new governments set up new public bodies and that between 2000 and 2023, between two and 12 public bodies were established each year – although a much greater number have been abolished.
Setting out 10 lessons for setting up public bodies successfully, it said it was necessary to define its mission clearly, pointing to the Independent Commission on Civil Aviation Noise (ICCAN), which was abolished within three years because politicians, civil servants and leaders never agreed what it was for.
It also highlighted the need to build support, giving the example of the Trade Remedies Authority (TRA) that was cut back two years after launch because new ministers were less committed to the value of a technocratic body shielding ministers from producer lobbying.
The IFG also said it was key for a public body to be resourced at the right level, pointing to the UK Health Security Agency, which faced financial uncertainty and big cuts in its first year, frustrating recruitment, even at board level.
Separately, an inquiry by the Civil Service Commission found on Wednesday that it was “largely satisfied” with the way the government was appointing civil servants, after complaints of cronyism by the Tories.
Its rapid review found that appointments without competition during July and August were “considerably lower” than the average in previous years.
A government spokesperson said: “Exceptions are an important part of bringing talent and expertise into the civil service. We welcome this report from the independent Civil Service Commission, which sets out that the commission is largely satisfied with the processes around exceptions and identifies a range of good practice across government. We will continue to work with the CSC to strengthen internal processes and ensure consistency across departments.”
