Better control of "arm's length" council bodies needed, MSPs report

Arm’s length organisations set up by local authorities to deliver public services need stronger governance to deliver public accountability, according to a Scottish Parliament report published today.

Holyrood’s Local Government & Regeneration Committee, which conducted an inquiry looking at how the bodies, known as ALEOs, operate, concludes that as ALEOs are becoming responsible for delivering a greater number of public services, local authorities must ensure that adequate monitoring, governance and public accountability takes place.

ALEOs are increasingly being used to deliver public services, such as leisure services, arts and cultural services and social care. They include bodies such as Glasgow Life, which is responsible for delivering culture and art in Glasgow, Transport for Edinburgh, and Bon Accord Care in Aberdeen. Usually taking the form of a company or a trust, they are formally separate from councils but subject to their control and influence. Councils retain responsibility for the provision of services even though they are delivered by ALEOs.

There is no definitive list of ALEOs operating in Scotland, although a report issued by Audit Scotland in 2011 stated that at that time each local authority typically operated approximately four ALEOs. Figures provided to the Committee from Audit Scotland demonstrated that in 2012-13, ALEOs spent approximately £1.3bn and employ around 25,000 people.

Referring to the Christie Commission, which emphasised the need for involvement of users and the wider community in the development and delivery of services, and the Scottish Government’s drive for community empowerment as reflected in the recent Act of that name, the MSPs conclude: “There is an inherent tension between the involvement of citizens under the public reform agenda and the use of ALEOs which can lead to an increasingly fragmented service delivery environment. It is therefore important we continue to scrutinise this balance to ensure public services are delivered not only in the most efficient and effective manner with performance monitored in relation to outcomes, but that they are also designed in conjunction with the public to meet the Christie Commission aspirations.”

They highlight “three emerging areas” in relation to ALEOs which they believe should be subject to specific focus, and revisited in the next session of the Parliament:

• multiple ALEOs functioning in the same area delivering similar services or duplication of services, with potential to cause confusion to the public;
• merging of ALEOs to create greater efficiencies and savings, resulting in the creation of a “super” ALEO, but also less flexibility for local authorities and greater risk if non-performance is identified; and
• provision of services such as social care to vulnerable people by ALEOs, and whether outcomes are being achieved, the level of public involvement in service delivery and potential risks if non-performance is identified.

The report also notes that the definition of an ALEO can vary from local authority to local authority, and recommends that a legal definition should be provided by the Government.

Committee convener Kevin Stewart MSP commented: “Although ALEOs are set up for a number of reasons, what has become clear to us is that there must be a much more hands-on approach from the local authorities in which they operate.

“Our committee found that monitoring procedures for ALEOs vary widely across local authorities in Scotland – something which is simply not acceptable for services which are responsible for spending approximately £1.3bn of public money.

“This is why we suggest there should be greater democratic accountability, public awareness and involvement and that local authorities must continually monitor if an ALEO remains the most effective way of service delivery.”

Click here to view the report.