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The Department of Health has pledged to reform its 18 arm’s length bodies (ALBs) to make them more efficient, increase accountability and ensure they fit with planned reforms in the wider NHS.

The last review of ALBs, in 2003/04, reduced their number from 38 to 18, and in 2009/10 these spent £1.6bn and employed around 18,000 staff. But with the current economic climate and the government’s planned reforms of commissioning and providers, a consultation paper said it was time to ensure the ALBs were fit for purpose.

It also warned that ALBs would face greater financial restrictions. The government had already put in place spending controls around pay, expenses, travel, consultancy, communications and IT and we envisage that these controls will continue. The bodies will have less freedom to determine how they spend their money in these areas.

The government has also prioritised reductions in the cost of ALB business support functions, by increasing the level of integration and resource sharing, and making greater use of the private sector. This will realise initial savings with 12 to 18 months, with the process completed in the next two to three years. The programme will include identifying opportunities for estate rationalisation and co-location.

‘Liberating the NHS: report of the arm’s length bodies review’ proposed the abolition of four bodies – the NHS Institute for Innovation and Improvement, the Appointments Commission the National Patient Safety Agency and the Alcohol Education Research Council.

Six ALBs will remain, including Monitor, the National Institute for Health and Clinical Excellence (NICE) and the Care Quality Commission. A further two ALBs - NHS Litigation Authority and NHS Business Services Authority – will undergo a commercial review to identify opportunities for efficiencies through outsourcing, divestment and contestability and/ or employee ownership. The reviews should be completed by December.

The Council for Healthcare Regulatory Excellence, the body that scrutinises the UK’s nine healthcare professional regulators, will also be retained, but not as an ALB. It will become self-funding through a levy on the bodies it regulates.

A new research regulator may also be established to consolidate regulation, which is currently held by a number of ALBs, into one body. The Academy of Medical Sciences has been commissioned to review the options and report this autumn.

A quick guide to the government’s proposals for the future of the 18 ALBs can be found below.

Alcohol Education Research Council: abolished

Appointments Commission: abolished during 2012

Care Quality Commission: retained. The NHS Commissioning Board will take over responsibility for assessing NHS commissioners. The CQC will operate a joint licensing regime with Monitor and, in time, it is possible the commission will take on the functions of the Human Fertilisation and Embryology Authority and they Human Tissue Authority. Healthwatch England, a new independent consumer champion, which will be an advocate for patients’ rights and concerns, will be located with a distinct identity within the Care Quality Commission

Council for Healthcare Regulatory Excellence: will be moved out of the sector to operate on a full-cost recovery basis

General Social Care Council: abolished and function transferred to an existing professional regulator, probably the Health Professions Council, which will be renamed

Health and Social Care Information Centre (IC): retained as the national repository of data across healthcare, public health and adult social care, with lead responsibility for data collection and quality. The relationship between the IC and the NHS Commissioning Board will be crucial to allow the board to carry out its functions. An information strategy, due later this year, will set out how the IC will perform its new functions

Health Protection Agency: abolished and functions transferred to the health secretary as part of the new Public Health Service

Human Fertilisation and Embryology Authority and they Human Tissue Authority: functions transferred to other organisations to achieve greater synergies. The paper acknowledges further work is needed to examine the practicalities involved. They will remain ALBs in the short term, but the government aims to transfer their functions by the end of this Parliament

Medicines and Healthcare Products Regulatory Agency: retained and functions unchanged, though it may take some of the Human Tissue Authority’s licensing functions

Monitor: retained and will become the NHS economic regulator. See separate story for full details

National Patient Safety Agency: abolished with many of its functions transferring to the Department

National Treatment Agency: abolished and functions transferred to the health secretary as part of the new Public Health Service

NICE: retained and role expanded to developing quality standards for adult social care. It will retain a public health function, despite plans to create the Public Health Service

NHS Blood and Transplant: retained, though its Bio Products Laboratory will be transferred into a Department-owned limited company to allow it greater commercial freedom. The Department will also review the ALB’s commercial effectiveness, perhaps by contracting out discrete services. The government will approach the devolved administrations to explore the potential for greater cost-effective working between the UK blood services

NHS Business Services Authority: subject to commercial review

NHS Institute for Innovation and Improvement: abolished with some functions transferring to the NHS Commissioning Board. The Department will discuss with the institute whether some of the remaining functions could be delivered using commercial models. The future of the management training schemes managed by the institute will be considered in the context of the white paper

NHS Litigation Authority: subject to commercial review

The consultation paper: http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/@ps/documents/digitalasset/dh_117832.pdf