Arms-length bodies, which form a major part of the quango state, directly cost taxpayers hundreds of billions of pounds a year. £353.3 billion in 2022-23, to be precise. And excluded from this are a number of organisations which undoubtedly qualify as quangos under any reasonable definition, such as the Financial Conduct Authority.
For the first time, the Government has revealed how much quangos raise in fees and levies. In 2022-23, this was £9.5bn, accounting for 2.6% of their total budgeted income.
This is significant. Firstly on the principle. It’s a reminder that there are a wide variety of ways that the state imposes costs on businesses and individuals that don’t appear in the national accounting of taxation. Taxes by any other name. It’s also a reminder that despite a soon to be record tax burden, there are a significant number of important services that taxpayers pay extra for. In many cases it’s right they do so. But it adds context to the general dismay at the inability of the state to deliver services, despite its vast budget.
We can also use this information, the basis of a new briefing note by the TaxPayers’ Alliance, as a useful datapoint to start sketching what to do about the quango state. As part of our Britain’s Quangos Uncovered initiative, we’ve previously revealed that, while the number of quangos has shrunk in recent decades, their budgets and staffing numbers have ballooned. From just 13.2% of public sector total managed expenditure in 2012-13, it now accounts for just shy of 30%. Staffing headcount has shot up from 238,847 to 390,808.
For those who believe in aligning governmental competence with political accountability, this is a disaster. Of course, if arms-length bodies were staffed by nimble, effective teams, driven by a public service ethos and cognizant of the non-political nature of their role with a senior management that is responsive to ministers when necessary, this wouldn’t be a problem. But that’s not how the public sector works. Instead, organisations grow out of control, develop their own institutional interests and engage in inevitable mission creep.
So there needs to be significant reform which cuts the number of quangos, their budgets and their functions. But given that many do perform important services, it should be done with a genuine strategic plan which diferentiates between quangos that provide a service the state should provide, and which do not need ministerial oversight; quangos which provide a service the state should provide, but which should have direct ministerial oversight; quangos which provide an important service but the state need not provide itself; and quangos which need not exist at all.
Looking at which quangos raise income from fees and levies, and what proportion of that income they raise provides clues. Let’s examine three, the Disclosure and Barring Service (DBS), the Driver and Vehicle Standards Authority (DVSA) and Homes England.
Take the DBS. It sits under the Home Office and was founded in 2012, albeit with antecedents. It raises 100% of its income via fees and levies – £189 million. Among other activities, it’s responsible for conducting criminal record checks on individuals working in regulated sectors – predominantly involving children or vulnerable adults – which are usually purchased by employers, or prospective employers. There are problems with it, undoubtedly. Most notably, it was revealed last year that 163,345 people have had childhood offences – some very minor – reported to prospective employers, seriously harming career prospects. But this is at least in principle a relatively uncontroversial service. There doesn’t seem to be any reason why it needs ministerial control, there is a strong case for it to be state-provided given the information it is handling, and it is appropriate that the users of the service pay for the service.
Then we have the DVSA: the body responsible for driving tests. No one disputes the need to have a system of examinations for prospective drivers. But need it be provided by the state? Is there any reason why a number of private sector organisations couldn’t compete to provide driving tests, using a nationally set standard, and monitoring of accident rates for new drivers? Because if one thing is clear, the state can’t provide driving tests. Despite the Government’s pledge to fix waiting times for driving tests, and the DVSA setting the end of 2025 as its target to bring average waiting times down to seven weeks, data published for April 2025 found that the situation is continuing to deteriorate. From February to April of this year, the average wait time increased from 20.4 weeks to 22 weeks. And this is not for a free service – the DVSA raises 94% of its income from fees and levies. Learners are therefore paying extra for an inadequate service.
Then there are quangos that need not exist at all. Homes England is the obvious one. Of all the quangos, it receives the most in income in monetary terms in fees and levies – almost £1.1bn to be precise, over a fifth of its income. It was set up to help tackle the housing crisis, yet claims to have only achieved the completion of 32,300 homes in 2023-24. The housing crisis is not driven by a lack of government intervention, but because of it. And every penny Homes England raises in fees and levies is not a penny saved for taxpayers, but a cost for developers.
Ultimately, where there are quangos raising significant amounts of money from sources other than taxpayers, it should beg the question: does it need to be state-run or state-owned at all?
