'A bonfire of the quangos?': Was Wes Streeting right to abolish NHS England?

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The Secretary of State for Health, Wes Streeting’s decision to abolish the health agency, NHS England, has prompted almost universal acclaim across the political spectrum. Former Conservative secretaries of state for health, notably Jeremy Hunt, and even the Reform MP, Richard Tice, queued up to commend Streeting’s decision to dismantle ostensibly wasteful health service bureaucracy.

The health secretary’s resolve to dismantle the agency clearly has merits. Abolishing NHS England reduces wasteful administrative duplication in the health system, in principle releasing resources (an estimated £500 million per annum) to more effectively support the frontline in a period of acute pressure on health service provision.

Moreover, it does away with the façade that unelected managers in an arms-length body rather than elected Ministers should determine the future of the NHS. Like it or not, English public services operate according to the principle of ministerial accountability, where politicians are ultimately responsible to Parliament for NHS performance. Under the previous Conservative government, managers in the health service sought to shield the organisation from political instability and confusion  at the apex of government, discretely excluding Ministers from operational decisions. That was an understandable approach, particularly in the aftermath of the Covid-19 pandemic, but it is not (and never has been) a sustainable way to run the NHS. It would never be acceptable to a politically confident Minister such as Streeting. Nor would it be tolerable for the Labour government as a whole, for whom demonstrable progress in the NHS will have a crucial bearing on the next election.   

The disassembling of NHS England also provides an important opportunity to consider what delivery model the service should adopt in the future. Although the scrapping of the agency was initially interpreted as a centralising shift, there is widespread agreement that to remain sustainable, the service requires a decentralised delivery model, tailoring healthcare provision more intelligently to local community needs. Yet far more detailed thinking will be required about the new delivery agenda.

The Starmer government should nonetheless be aware of the dangers of ‘bureaucrat-bashing’ in the public sector. While there was self-evidently a duplication of roles between the two bodies, it isn’t clear that the NHS as a whole requires less management and leadership capability. Since it was conceived in the late 1940s, there was a persistent danger that decisions about the NHS would be excessively influenced by clinicians. Clearly, medical professionals must have input into critical policy and management decisions, but they should not dominate operational judgements about the future of the NHS.

The big prize, though, is to resolve how dismantling NHS England will enable Ministers to focus on the future challenge that is reshaping healthcare systems around the world: how to create a truly preventative, patient-focused health service. Now widely disparaged, the 2012 Lansley reforms were attempting to resolve how to give coherent, long-term direction to the NHS freed from day to day ministerial interference. Self-evidently, Conservative ministers had other motives, notably shielding politicians at the centre from blame for NHS failings, partly resulting from long-term under-funding. Yet there was a more substantive issue at hand: how to protect the NHS from constant changes in the political environment that make it all the harder to focus on long-term goals and priorities.

It is also worth recalling recent history. Central government began to create arms-length delivery bodies in earnest in the late 1980s (known as ‘Next Steps’ agencies), in part because Whitehall departments were regarded as particularly weak at delivery. Those government departments were often dominated by university-educated civil servants who valued analytical skills, tending to treat delivery and operational capabilities as second-order issues.

The Next Steps report published in 1987 noted that 95 per cent of civil service activity related to service delivery and operations. Yet the senior ranks of civil service management were composed of policymakers with little experience of frontline implementation. As the report (1987: para 10) itself noted, ‘Senior management is dominated by people who have relatively little experience of managing or working where services are actually being delivered’.

The Thatcher administration believed that agencies were best equipped to drive delivery and policy implementation, partly by drawing on tried and tested approaches to financial efficiency developed in the private sector, while focusing on delivery as the core task (a similar agenda to what became known as New Public Management). The Whitehall ‘core’ would become appreciably smaller as a result. Lord (Peter) Hennessy described the creation of agencies as ‘the most dramatic change in the Civil Service since the late 19th century’.

According to the National Audit Office (NAO), there are around 300 arms-length bodies, among the largest being Network Rail, NHS England and Homes England, employing nearly 400,000 civil servants. Almost 60 per cent of total day to day UK government expenditure (£455 billion) is channelled through these so-called quangos.  

Even at the time, problems with arms-length agencies soon became apparent that help to explain ministerial dissatisfaction with NHS England thirty-five years later. By the early 1990s, perhaps not surprisingly, Whitehall permanent secretaries began to worry about the implications of a more fragmented civil service. It appeared that senior officials were gradually losing control of service delivery and administrative tasks.

Moreover, departments were in danger of no longer understanding the practicalities and exigencies of frontline delivery. At the same time, ‘arms-length’ agencies created increasingly confused accountabilities. In particular, there was a crucial question as to whether Agency chief executives should be directly accountable to Parliament, even though the Osmotherly rules dictated that only Ministers could be held to account before select committees.

The paradox was that reinforcing ministerial accountability meant setting strict financial and operational targets for agencies, where possible through direct oversight of day to day operations. Yet the entire purpose of agencies was to use their relative autonomy from central government and freedom to manage to improve outcomes for the service user or ‘customer’ of public services. There is a compelling argument that in principle, the NHS would be better run if managers did indeed have genuine freedom to manage as ‘mission-driven bureaucrats’, while there was radical decentralisation of decision-making in the provision of care.

Nonetheless, the difficulty is that in a politically sensitive arena such as the NHS, it is simply not tenable for Ministers in the Westminster system to delegate managerial autonomy to agency bodies given the constitutional imperative of ministerial accountability. Moreover, creating that institutional framework would entail a fundamental rewiring of our political and constitutional system, of a kind the current generation of Ministers appear distinctly unwilling to contemplate.

Patrick Diamond is Professor of Public Policy at Queen Mary University of London.