The rise of the quangocracy

The Tories are targeting the soaring cost of public bodies

(PA)

The amount of taxpayers' money spent on quangos – short for quasi-autonomous non-governmental organisations – soared last year by an inflation-busting 12 per cent. Almost 800 such groups, mostly funded by handouts from the state or from levies, have a central role in the administration of the country.

These unelected public bodies range from massive employers including the Environment Agency, the Defence Procurement Agency and the Housing Corporation to little-known committees such as the Home Grown Cereals Authority and the British Hallmark Council. Spending on the major quangos – the executive agencies – leapt from £30.8bn in 2006-07 to £34.5bn last year.

But they would face severe cutbacks under a Conservative administration determined to reduce levels of public spending, The Independent can disclose. In a speech today, David Cameron, the Conservative leader, will promise to tackle levels of public debt if the party wins the election expected next year. He has already called for the £139.50 BBC licence fee, to rise by £3 on 1 April, to be frozen for the next year in an effort to force public bodies to "deliver more for less".

The party is working on plans for a massive audit of Britain's "quangocracy" amid suspicions that controls on some of their budgets are lax and that some quangos duplicate the work of others. One shadow cabinet minister said: "The quango state has grown, like Topsy, under Labour. We believe there is substantial scope for real savings in this area, this will be an early priority for an incoming government."

Despite promises by ministers to get to grips with Britain's burgeoning collection of unaccountable organisations, their number has fallen only slightly over the past decade.

When Labour came to power in 1997 there were 857 "non-departmental public bodies". According to the Cabinet Office, that number fell to 827 in 2007 and 790 last year. But their expenditure is soaring, from £37bn in 2006-07 to £43bn last year, with the taxpayers' contribution rising from £30.8bn to £34.5bn.

The largest and most powerful agencies – the so-called executive non-departmental public bodies – employ 92,500 staff. The biggest spender is the Department for Innovation, Universities and Skills, which is responsible for such organisations as the Construction Industry Training Board, the Design Council and the Learning and Skills Council.

A Cabinet Office spokeswoman said the rising budgets reflected "the Government's increasing investment in education, skills and research during difficult economic times" as well as increasing spending on preparations for the 2012 Olympics in London. Critics accuse the Government of keeping details of spending by quangos under wraps in an attempt to limit political embarrassment.

There is widespread disagreement over how much money they get through because of the problem in defining exactly what constitutes a quango. According to one calculation, they administered budgets of £167bn in 2006, including the £112bn budget allocated to the National Health Service.

Tory sources accept that the amount of "low-hanging fruit" in Whitehall budgets is limited, but believe quangos could be the most productive area of spending to scrutinise. They also insist that there would be public support for economies, particularly if inefficiencies in quangos' expenditure can be uncovered. One potential area for savings could be the high salaries paid to chief executives of some of the bigger quangos.

Dan Lewis, the research director of the Economic Research Council think-tank, said: "The quango was a late 1990s Blairite policy solution. You give it a good name, you set up a fancy website, people are given good titles, it starts off well. And then it starts to lose its way."

He said quangos offered a "tremendous reform opportunity" for a Tory government. "We need to look closely – if we are going into a nasty recession – [to check whether] they are engaging in activities which private companies are doing already or whether they are even crowding private sector activity."

He added: "I hope very much that David Cameron, soon after taking office, orders that the Cabinet Office quickly restore a full annual quangos report in a clear and accountable break from the past." Mr Lewis said the 400 pages of details published by the Government about quangos' spending had been slashed to 30 pages in recent years.

Fat cats: What the bosses earn

Alf Hitchcock

The outgoing Deputy Assistant Commis-sioner of the Met will join the National Policing Improvement Agency next month. The agency is funded by the Home Office. As its head of leadership programmes, he will be paid an estimated £120,000.

Sir Michael Pitt

The chairman of the new Infrastructure Planning Commission will receive an annual salary of £184,000 this year. A former council chief executive, Sir Michael will work four days a week to speed up decisions on major planning applications.

David Gavaghan

The chief executive of the Strategic Invest-ment Board, which oversees public works in Northern Ireland, took home a salary and bonus of £213,000 in 2007.

The wonderful world of quangos

British Hallmarking Council

Oversees the hallmarking of gold, silver and platinum. Funded by a levy from the Assay Offices.

Coal Authority

The successor to British Coal, it regulates the licensing of mines and deals with subsidence damage claims. Had £27.1m government funding in 2006.

DairyCo

The former Milk Development Council, a fast-growing body promoting the drink and advising dairy farmers. Raises about £7m a year from levies, equivalent to 0.06 pence per litre of milk produced.

Darwin Initiative

Offers money and advice on wildlife conservation projects in developing countries. Latest initiatives include work protecting chameleons in Madagascar.

The Potato Council

Funded by levies on potato-growers and seed merchants. Promotes the health benefits of eating potatoes. Raised almost £6m in 2006.

Government Hospitality Advisory Committee for the Purchase of Wine

Made up of senior wine experts who advise officials on buying wine for the huge Whitehall cellar holding thousands of bottles. The members are unpaid.

Herbal Medicines Advisory Committee

Advises the Department of Health on the regulation of herbal products. Meets about six times a year.