Oversight of Arm's Length Bodies inquiry

Government departments now have more than 460 ‘arm’s-length bodies’, through which they spend around £250 billion a year. Departments rely on their arm’s-length bodies to deliver important functions and services to the public. Yet over the years there has been no consistent rationale for deciding what is best done through an arm’s-length body and what is best done directly by departments themselves. The Cabinet Office recognises that the resultant population of arm’s-length bodies is “an accident of history”.

The quality of oversight by departments of their arm’s-length bodies is inconsistent.

They do not always have the information to understand how their bodies are performing and it is not clear that oversight arrangements are always proportionate to the relative risks and opportunities of particular bodies. While we heard some examples of effective oversight, there needs to be much more shared understanding of what works, with learning both within departmental groups and across departmental boundaries.

Departments are also missing opportunities to improve services by capitalising on the operational experience and know-how of their arm’s-length bodies when developing policy. There is no one size fits all approach to departmental oversight, but the Cabinet Office needs to use its position at the centre of Government to ensure that departments improve the way they manage their business through arm’s-length bodies.