Arm’s-length bodies — non-departmental public bodies, executive agencies, and a range of other statutory forms with no single legal definition in common — account for around 13% of total government expenditure, yet the Institute for Government’s Read Before Burning report is blunt about the landscape they occupy: inconsistent in naming and status, unclear in who is responsible for what, and prone to being either micromanaged or neglected by their sponsoring departments. Three reform waves in the last fifteen years have each achieved a measure of success reducing the number of bodies — the Coalition’s 2010–13 Public Bodies Reform Programme completed 283 of 306 targeted abolitions and mergers, and a further programme completed 75 of 125 reviews between 2022 and 2025 — but the National Audit Office found the triennial review process meant to sustain the first wave rarely produced explicit recommendations for further reform, and the structural confusion Read Before Burning describes has persisted through both cycles.
The current review, launched in April 2025 by the then Chancellor of the Duchy of Lancaster, takes a different approach: rather than a centrally set target list, every department has been asked to justify the continued existence of each of its own arm’s-length bodies. One concrete result is already in train — the Clean Water Bill announced in the 2026 King’s Speech will abolish Ofwat, merging its functions into a new integrated environmental regulator — but the review as a whole remains ongoing and incomplete, with no announced date for its conclusion.
Read Before Burning’s more structural recommendations go further than this review’s remit: a statutory gateway requiring Parliamentary and National Audit Office scrutiny before any new arm’s-length body is created, and a replacement for the current confusing patchwork of statutory forms with three clear categories reflecting how much genuine independence each body actually needs. This submission sets out the choice between letting the current review conclude on its own terms; legislating the creation gateway; undertaking a fuller reclassification of the existing landscape; or concentrating review effort specifically on the small number of large bodies — around fifteen — that account for roughly three-quarters of all arm’s-length body spending.
Ministerial submission
To: The Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office
Issue
- The departmental-led review of arm’s-length bodies launched in April 2025 remains open-ended, and does not itself address the more structural recommendations — a statutory gateway for creating new bodies, and a clearer statutory taxonomy for existing ones — made by independent analysis of the arm’s-length body landscape. This submission concerns whether, and how, to go further.
Background
-
There is no single legal definition of “arm’s-length body”: the term covers non-departmental public bodies, executive agencies, non-ministerial departments, and a range of other statutory forms, each carrying different degrees of ministerial control, funding routes, and accountability to Parliament. The Institute for Government’s Read Before Burning report describes the resulting landscape bluntly: inconsistent in naming and status, such that “no one is clear who does what,” and prone to a management imbalance in which sponsoring departments either micromanage their arm’s-length bodies or neglect them, with public confidence in the impartiality of some bodies also affected by the confusion.
-
The scale of the landscape is heavily concentrated. Arm’s-length bodies together account for around 13% of total government expenditure, but just fifteen non-departmental public bodies account for approximately three-quarters of that spending. Reform efforts that focus on reducing the total number of bodies, rather than on where the spending actually sits, may therefore address the more visible but less financially significant part of the landscape while leaving its most consequential bodies comparatively unexamined.
-
The Coalition Government’s Public Bodies Reform Programme, running from 2010, targeted 306 bodies for abolition or merger and completed 283 of them, reducing the total number of public bodies to 621 and generating some £723 million in annual administrative savings. The National Audit Office’s assessment found the programme made good progress in reducing numbers, but that the triennial review process introduced to sustain reform in the following years struggled to collect quantifiable evidence of wider value and “tended not to make explicit recommendations on achieving savings or improving performance.” A further programme, running from 2022 to 2025, targeted 125 arm’s-length bodies, launched 104 reviews, completed 75, and claimed £172 million in savings before ending as planned on 31 March 2025.
-
The current review, launched in April 2025, takes a different approach from its two predecessors: rather than a centrally set target list, every department was asked to justify the continued existence of each of its own arm’s-length bodies, with a view to closure, merger, or reintegration into the core department. One concrete outcome is already in train: the Clean Water Bill, announced in the 2026 King’s Speech, will abolish Ofwat and merge its functions into a new integrated environmental regulator. The review as a whole remains ongoing across government, with no announced date for its conclusion.
-
Read Before Burning’s recommendations extend beyond the scope of the current review. It proposes that Parliament gain a formal scrutiny role whenever a new arm’s-length body is proposed, with the National Audit Office given a standing role assessing new bodies’ design before they are established; that the current patchwork of statutory forms be replaced with three clear categories — Constitutional bodies, Independent Public Interest Bodies, and Departmental Sponsored Bodies — so that each body’s form matches the degree of independence its function actually requires; and that standardised training be provided for both arm’s-length body appointees and the departmental officials who sponsor them.
-
You inherited the departmental-led review from your predecessor as Chancellor of the Duchy of Lancaster, and you have not yet indicated whether it should conclude on its current departmental-led basis, whether its findings should form the evidence base for the more structural reform Read Before Burning recommends, or whether a different approach should be adopted. The wider question of which functions should sit within core departments, within arm’s-length bodies, or be transferred to local or Strategic Authority level, considered from a different angle in the companion submissions on fast-track consenting and mission-led government, is a natural adjacent question this submission does not resolve, but which officials should keep in view.
The General Case
- The case for going beyond the current review rests on three grounds:
- (a) three successive reform waves since 2010 have each achieved partial success in reducing the number of bodies, but the structural confusion in terminology, form, and accountability that Read Before Burning identifies has persisted through all three, suggesting number-reduction alone will not resolve the deeper problem;
- (b) the concentration of spending in a small number of large bodies, set out at paragraph 3, means a review approach applied evenly across the landscape by department may be poorly matched to where the greatest scrutiny would have the most effect;
- (c) making it harder to create new arm’s-length bodies addresses the problem at its source, rather than relying on periodic reform waves to clear up bodies after they have already accumulated and become institutionally established.
- The case against rests on three grounds:
- (a) the current departmental-led review, barely a year old, has not yet concluded, and its findings should logically inform any decision about further structural reform rather than being pre-empted by it;
- (b) a new statutory gateway for creating arm’s-length bodies adds a step, and potential delay, to establishing bodies that may sometimes need to be stood up quickly, including in response to a genuine emergency or a specific legal or international obligation with a fixed deadline;
- (c) reclassifying the existing landscape into new statutory categories is itself a substantial one-off exercise, requiring every existing body to be reassessed and, in many cases, re-legislated for, a significant undertaking layered on top of the review already under way.
Options
Option A: Complete the current departmental-led review before considering further reform
-
Under this option, the review launched in April 2025 continues on its existing, departmental-led basis, with no further structural reform considered until it concludes and reports.
-
For:
- (a) avoids disrupting a review that is barely a year old and already producing concrete results, such as the Ofwat abolition provided for in the Clean Water Bill;
- (b) allows the review’s eventual findings, covering every arm’s-length body across government, to serve as the evidence base for any subsequent structural reform, rather than proceeding on more limited evidence now;
- (c) departmental ownership of the review, a deliberate departure from the previous two programmes’ centrally set target lists, may itself produce more durable results than a further externally imposed structural change layered on top before it has run its course.
- Against:
- (a) as with the two previous reform programmes, a review focused on individual bodies’ continued justification may again reduce the number of bodies without addressing the structural confusion of form and terminology that Read Before Burning identifies as the deeper problem;
- (b) provides no answer to the “harder to set up” recommendation, leaving the same conditions that produced the current landscape in place for any new body created while the review continues;
- (c) the review has no announced date for its conclusion, risking an open-ended timeline that defers a decision on further reform indefinitely.
Option B: A statutory gateway for creating new arm’s-length bodies
-
Under this option, primary legislation would require that any new arm’s-length body above a defined threshold of independence or spending be established only following a Parliamentary resolution and a published National Audit Office assessment of its proposed design, addressing new creations without touching the existing stock of bodies.
-
For:
- (a) directly implements Read Before Burning’s central recommendation, addressing the problem at the point bodies are created rather than relying on periodic after-the-fact review waves;
- (b) requires no reassessment of the existing landscape, and so can proceed in parallel with, rather than in competition with, the departmental-led review under Option A;
- (c) National Audit Office design assessment at the point of creation is likely to be cheaper and more effective than assessing an established body’s continued justification years later, once institutional inertia and accumulated stakeholder relationships have set in.
- Against:
- (a) adds a statutory step, and associated delay, to creating any qualifying body, including in circumstances where speed may matter more than the scrutiny gained;
- (b) does nothing for the several hundred bodies that already exist, leaving the structural confusion identified as the landscape’s defining feature unaddressed for the arm’s-length bodies that actually exist today;
- (c) defining the threshold at which the gateway applies is itself contestable, and a threshold set too low risks capturing minor administrative bodies in a scrutiny process designed for genuinely significant new institutions.
Option C: Adopt the three-category statutory taxonomy for the existing landscape
-
Under this option, Read Before Burning’s proposed three-category system — Constitutional bodies, Independent Public Interest Bodies, and Departmental Sponsored Bodies — would be given statutory form, and every existing arm’s-length body would be reassessed and formally reclassified into one of the three, using the current departmental review’s findings as the starting evidence base.
-
For:
- (a) most directly addresses the “no one is clear who does what” confusion identified as the core problem, rather than the number of bodies as such;
- (b) aligning each body’s form with its genuinely required degree of independence may resolve, rather than simply document, the management imbalance in which departments either micromanage or neglect their arm’s-length bodies;
- (c) uses the departmental review already under way as its evidence base, rather than requiring a wholly separate exercise, reducing duplication with Option A.
- Against:
- (a) the most administratively extensive of the four options, requiring every one of several hundred existing bodies to be individually reassessed and, in many cases, re-legislated for;
- (b) reclassification exercises of this kind have a mixed history: the triennial review process introduced after the 2010–13 programme was found by the National Audit Office rarely to generate explicit recommendations for reform, a risk a new classification exercise could repeat if not designed with clearer teeth from the outset;
- (c) some bodies’ appropriate category may itself be contested — a body a department regards as a Departmental Sponsored Body may be seen by its own board, or by the sector it regulates, as requiring the independence of an Independent Public Interest Body — generating dispute at exactly the bodies most likely to need reform.
Option D: A targeted review of the bodies accounting for the majority of spending
-
Under this option, rather than pursuing reform evenly across the landscape, the most intensive review resource would be directed specifically toward the fifteen or so large non-departmental public bodies that, per Read Before Burning, account for around three-quarters of total arm’s-length body spending.
-
For:
- (a) addresses directly the financial-concentration point at paragraph 3: past reform waves’ focus on reducing numbers has systematically under-scrutinised the bodies where the greatest spending, and therefore the greatest potential for improvement, actually sits;
- (b) a small number of large bodies is more tractable to review in genuine depth than several hundred small ones, allowing more thorough scrutiny within available resource than either Option A’s broad departmental sweep or Option C’s universal reclassification;
- (c) can proceed alongside Option B’s forward-looking creation gateway without requiring the same wholesale reassessment of the entire existing landscape as Option C.
- Against:
- (a) leaves the great majority of arm’s-length bodies, by number, outside the most intensive scrutiny, doing little to address the structural confusion of form and terminology across the landscape as a whole;
- (b) large, well-established bodies are also likely to be the most institutionally resilient to reform, with the most developed stakeholder relationships and the strongest arguments for their continued independence, potentially yielding less change in practice than the scale of spending involved might suggest;
- (c) risks being read as targeting a small number of politically identifiable large bodies for savings, rather than as a principled assessment of institutional form, a perception risk given the sensitivity historically attached to reform of the largest research, regulatory, or delivery bodies.
Resource and Cost Implications
- Option A carries no additional direct cost beyond the review already under way. Option B requires primary legislation and, on an ongoing basis, additional National Audit Office capacity to produce design assessments for each qualifying new body, likely modest relative to the cost of establishing the bodies themselves. Option C is the most resource-intensive, requiring legislation and a reassessment exercise across several hundred bodies, likely taking some years to complete in full even building on the current review’s findings. Option D requires concentrated review capacity applied to a small number of bodies, likely achievable within existing resource by redirecting effort from the broader departmental sweep under Option A.
Legal and Devolution Considerations
-
There is no single statute defining “arm’s-length body” as a legal category; the National Audit Office, the Cabinet Office’s own classification guidance, and individual departments’ own practice each apply somewhat different working definitions, itself an instance of the terminological confusion Read Before Burning identifies. Options B and C would require Parliament to legislate a category, or categories, that does not currently exist in law, a novel exercise rather than an amendment to an existing framework.
-
Many arm’s-length bodies operate on a UK-wide or reserved basis, but others are England-specific, with Scotland, Wales, and Northern Ireland operating separate arrangements for the equivalent devolved function; environmental and water regulation, of the kind affected by the Clean Water Bill’s abolition of Ofwat, is one such area, with the Scottish Environment Protection Agency and Natural Resources Wales operating separately. Any statutory gateway or reclassification under Options B or C would need to specify clearly which nations’ bodies it applies to, and would not itself alter the devolved status of any function.
Requested direction
- Ministers are invited to indicate whether the departmental-led review launched in April 2025 should be allowed to conclude before further reform is considered (Option A); whether a statutory gateway requiring Parliamentary and National Audit Office scrutiny of new arm’s-length bodies should be legislated now (Option B); whether the existing landscape should be reclassified under a new three-category statutory taxonomy, using the current review as its evidence base (Option C); or whether review resource should instead be concentrated on the small number of large bodies accounting for the majority of spending (Option D); and whether any combination of these options, rather than a single choice, should be pursued in parallel.