Bonfire of the quangos is mostly hot air

There are over 1,000 quangos in the UK. Today’s news that 192 of them are to be abolished appears to be concrete evidence that the coalition is taking radical action to reduce the role of government and cut the deficit. But then one reads the small print.

In reality most of these quangos will be abolished in name only. Their functions, and in all likelihood their staff, will simply be transferred to other government bureaucracies. The Regional Development Agencies, for example, will be transformed into Local Enterprise Partnerships with some of their responsibilities offloaded to BIS. Rather than abolishing a pointless layer of government, the coalition is rebranding it. With this process repeated across the quangocracy, it is far from clear that there will be big savings in expenditure.

The underlying problem is arguably the government’s attitude to regulation. Unless it takes serious steps to rescind the huge volume of legislation introduced in recent years, the coalition will find it difficult to scale back the associated bureaucracies. This relationship between regulation and quangos is clearly seen in the field of financial regulation where the government’s attempts to increase the volume of regulation will lead to one quango evolving into three or more. The important role of the European Union in the regulatory sphere is another obstacle to cutting many of these agencies.

The “fairness” agenda also appears to have hampered the process of scaling back the quangos. It is notable, for example, that the Low Pay Commission, which advises on the level of the minimum wage, has survived. A genuinely liberal government would of course abolish the minimum wage, together with the bureaucracy that goes with it – just as, in another Conservative age, the wages councils were abolished. Even a prudent socialist administration could save money by replacing this quango with a simple inflation-linked formula.

Cutting the quangocracy is in many ways an open goal. Many of the agencies have low profiles and are not highly valued by the public. The coalition’s failure to use this opportunity to achieve a significant reduction in the role of the state therefore augurs badly for next week’s Comprehensive Spending Review.

Richard, I’ll bet you that, far from being abolished, the Low Pay Commission will be extended to cover Top Pay as well after Will Hutton Reports. The Fair Pay Commission, anyone?

There’s a great spoonerism on the Guardian website today:Quagmire of the bongos.

Keynes used to talk about the ‘non-agenda’ of government. I wonder if it would help the government to shrink its size and influence (and, maybe, deficit) if some enterprising think tank were to try to identify some of the things that governments try to do currently that they could (and should)simply stop trying to do. I remember having a go at one aspect of this more than forty years ago for Aims of Industry. The result (!) was a major programme of denationalisation, also known as privatisation.

D.R. Myddelton hits the nail.Endless purges and clear-outs will not be useful while the State and to a significant extent large sections of society think the State should be involved in this or that.If something does not demand a monopoly, then the State should really not be doing it at all, of only for the reason that once the State gets involved it will create one to the detriment of all around (but not within, naturally).

A genuinely ‘liberal’ government might well abolish the minimum wage. A government genuinely committed to upholding the family might well increase it to a level sufficient to support one.

Michael – Raising the minimum wage would increase unemployment. How would this help the family?

Richard, how do you know that raising the minimum wage would increase unemployment? By how much? Have you seen or done any empirical work on this?

Michael – I would recommend the IEA monograph, The Minimum Wage: No Way to Help the Poor, by Deepak Lal. Several empirical studies are examined in this overview.Do you really believe that employment is completely inelastic vis-a-vis labour costs?

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