Public Bodies Handbook – Part 1. Classification of Public Bodies: Guidance for Departments

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Public Bodies Handbook – Part 1. Classification of Public Bodies: Guidance for Departments Public Bodies Handbook – Part 1 Classification Of Public Bodies: Guidance For Departments Introduction 2 Introduction The Importance Of Classification About This Guidance Administrative classification will provide departments with the guidance and ability to create This ‘Classification of Public Bodies’ document is departmental guidance from the Cabinet arm’s length bodies that fulfil their governance objectives within a clear, consistent and Office. It sets out the different categories of the UK’s public bodies, and: comparable system. This system will lead to a simplified and more transparent public bodies’ landscape, promoting greater accountability. It will provide a clear and intelligible map of the provides a high level introduction to the early decision making process for establishing different landscape and aid public and internal understanding of relationships between public bodies types of public bodies; and government ministers. It will also promote efficiency and effectiveness, helping to drive strategic reform of the landscape and the development of best practice models. summarises and provides a first point of reference on the main characteristics of each of the ALBs that the Cabinet Office focusses on, as well as those of other forms of public bodies; and The Classification Framework provides information on the some of the now defunct or legacy forms of public bodies that The system of administrative classification comprises the ‘framework’, and the ‘process’ of still exist. applying that framework to public bodies. This is the part of the classification system that handles the application of the framework as public bodies are established, modified or closed. This document is to be read as an introduction and high-level guide for establishing public The framework is the supporting structure to administrative classification. bodies. It should be read in conjunction with the rest of the Public Bodies Guidance Handbook, which will cover in more detail the actual steps required to setting up ALBs, and related The guiding principle underlying the framework is that the classification of an arm’s issues. Part 1 of the Handbook provides guidance on the classification of public bodies and length body (‘ALB’) should be determined by the degree of freedom that body needs provides definitions of the categories ofpublic bodies that operate within the public sector. from ministerial control to perform its functions. The main focus is on arm’s length bodies, though for context it also provides an overview of public corporations, certain Parliamentary bodies, public bodies belonging to the Devolved It is made up of three categories of ALBs: Executive Agency, Non Departmental Public Body, Assemblies, Local Government public bodies and some entities that operate within Ministerial and Non Ministerial Department. The framework establishes the differences between these Departments. Whilst there may be other entities that perform a public or Government function categories and the relationship each has to its home or sponsoring department if it has one. unless they fall into the above forms, they are out of scope, as are private sector entities. It updates and replaces the Categories of Public Bodies: A guide for Departments issued by the Cabinet Office in April 2012. 3 Introduction Public bodies are diverse, which means classification is not always a simple process. For ease of reference, and to help departments understand the different delivery models that exist, this guidance sets out the main categories of public body. This guidance covers: The ALBs that are classified. Other non-classified central government and parliamentary entities. Department Specific, Devolved Assembly and Local Government public bodies. Public corporations. The information on bodies that are not administratively classified has been included to provide an overview of the wider UK public bodies landscape. It does this in a way that allows for relatively easy comparison between these different types of public bodies, by looking at the sorts of factors that impact on their design and creation, then listing the key common characteristics that make up and differentiate each category of public body. The Role Of The Public Bodies Reform Team The Cabinet Office’s Public Bodies Reform Team should be contacted by departments that wish to establish new ALBs. Early involvement of all relevant parties, including the department’s central governance (or dedicated public bodies) team and the relevant HM Treasury Spending Team, is important to ensure that a body is classified correctly and in accordance with Government and departmental intentions for the body in question. This also allows scope for amendments to the governance and control arrangements to be considered before the public body is formally classified to a particular category of public body. 4 Introduction The Public Sector & Its Public Bodies Public Sector Once the ONS has classified a body as public More details on sectoral classification for the Charities sector (its general corporate policy is controlled national accounts are available from the ONS The ‘public sector’ is defined by the Office by the government) it is classified to a particular website http://www.ons.gov.uk/ons/guide- It is worth noting that some Public Bodies are of National Statistics (‘ONS’) with reference sub-sector based on its characteristics. These method/classifications/na-classifications/ also classified and registered as charities by to the European System of Accounts 1995 sub-sectors are: the-ons-classification-process/index. the Charities Commission. This is a separate in accordance with EU requirements for html. system of classification that applies to Governments to produce accurate public Central Government: institutions that are established for charitable sector finances and national accounts. The includes Government Departments and their Public Bodies purposes only and subject to the control of National Accounts (or Sectoral) classification ALBs: Executive Agencies, Non-Departmental the High Court’s charity law jurisdiction. This of entities as public or private depends on the Public Bodies, Non Ministerial Departments, A ‘public body’ is a formally established is mentioned for information only, and is not level of government control over the general and any other non-market bodies controlled organisation that is (at least in part) publically within the scope of this document. More corporate policy of the entity being classified. and mainly financed by them; funded to deliver a public or government information about UK charities can be found This can be direct or indirect and may be service, though not as a ministerial department. here: https://www.gov.uk/government/ evidenced by indicators that include: Local Government: The term refers to a wide range of entities that publications/what-makes-a-charity-cc4/ includes those types of public administration are covered as within the Public Sector. This what-makes-a-charity-cc4 The ability to appoint those in control, or those that only cover a specific locality and any non- does not include forms of public entity that who determine the policy of the entity; and / or market bodies controlled and mainly financed do not require staff to carry out their functions, by them (see chapter 5); and such as public funds or trusts. A right to be consulted over such appointments, or to have a veto over appointments; and / or Public Corporations: Arm’s Length Bodies market bodies controlled by either Central The provision of funding accompanied by Government or Local Government. These The main focus of this document and of rights of control over how that funding is include any type of public entity that is a market most interest to departments are ‘arm’s spent; and / or body. Market bodies are defined as entities length bodies’ or ‘ALBs’. These are a specific that gain over 50 per cent of their income from category of public body that are administratively A general right to control the day-to-day purely commercial activities (see chapter 6). classified by the Cabinet Office. ALBs include: running of the body. Executive Agencies (‘EA’), Non Departmental Public Bodies (‘NDPBs’) and Non Ministerial Departments (‘NMDs’). 5 Chapter One How To Reach The Right Category Of Public Body 6 Chapter 1 | How To Reach The Right Category Of Public Body 1.1 Determinant Factors Chart 1 Initial Questions On Setting Up Public Bodies New public bodies should only be created if there is a clear and pressing requirement, a Is the proposed public or government Yes: clear need for the state to provide the function service or function really needed, and Required Function or service through a public body, and no should it be provided by the state? viable alternative - effectively establishing new public bodies as a last resort. This is to prevent any unnecessary increase in the number of public bodies. Is there sufficient demand for this, No: Consider Waiting Yes: Consider and does it contribute to Government Until Actual Demand Next Step Departments should consider whether the policy, committment or legal Before Setting Up. proposed functions are needed, and whether obligation? there are any alternatives to establishing a new public body (this requires at least a basic understanding of the various alternatives for Is it unique or something sufficiently Similar: Link Yes: Consider delivering new services or functions). These similar already being provided To Existing Next Step initial considerations form the first
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