It is evident that Arms Length Body (ALB) transformation is hard to sustain, and whilst the government’s reform agenda for ALBs is well underway, the work we do at Reinvigoration with operations leaders across the public sector shows the same patterns. The structural reform is real, but arms length bodies transformation remains elusive because the approach addresses governance, not operations.
In April 2025, the Chancellor of the Duchy of Lancaster wrote to every department instructing them to justify each quango’s continued existence, with a presumption that bodies would be closed, merged, or have functions brought back into departments. NHS England, the largest ALB of all, was folded into the Department of Health and Social Care. The Valuation Office Agency was scrapped.
The Cabinet Office’s own ALB landscape analysis identified 305 Arms Length Bodies, with the largest ten accounting for roughly 90% of all ALB government funding. These are vast, operationally complex organisations. When they are restructured or merged, the processes, system dependencies, and team-level workarounds that made them inefficient do not vanish because the governance structure changes. They persist, often becoming harder to see under a new organisational chart.
The Institute for Government’s commentary on the latest review is instructive. Without an overarching strategy for how public bodies contribute to a well-functioning state, the government risks undermining capability rather than strengthening it.
The missing piece in arms length bodies transformation is not structural reform. It is operational simplification.
Why Restructuring Fails to Deliver Arms-Length Bodies Transformation
Consider what actually happens when an ALB is merged into a department or combined with another body:
- Reporting lines change
- Governance structures are redesigned
- Senior leadership is reconfigured
On paper, the organisation looks simpler, yet the overarching picture is different. The same service journeys still cross the same system boundaries, with added operational complexities layered on top.
This is the pattern that we see plays out consistently. Restructuring addresses where decisions are made, but it does not address how work flows. And it is the flow of work, the end-to-end service journeys that cross teams, systems, and organisational boundaries, where operational complexity lives.
A merger that does not simplify the underlying operating model is not a merger. It is a consolidation of complexity.
This dynamic is not unique to ALBs. As we explored in our analysis of the wider Public Sector transformation challenge, the constraint holding back change across the sector is not ambition or investment, it is the accumulated operational complexity that makes every change harder, slower, and more fragile than the last.
What Operations Leaders in ALBs and Quangos Should Focus on Instead
If the constraint is operational rather than structural, then the approach to arms length bodies transformation needs to change. For ALBs facing restructuring, merger, or absorption into a parent department, three priorities are critical.
Understand operational reality before redesigning governance
Most restructuring begins with a target operating model and works backwards. But if the starting point is poorly understood, the restructured organisation inherits the same friction under a new name. Mapping end-to-end service journeys, quantifying handoffs, and identifying where exceptions have become the norm must come before any structural change.
Simplify before you integrate
Merging two sets of fragmented processes creates one larger set of fragmented processes. Before combining teams, systems, or service areas, the unnecessary variation within each needs to be removed. It is important that you clarify ownership and eliminate handoffs that exist because of legacy organisational boundaries. Only then does integration have a realistic chance of delivering the efficiency gains it promises.
Build internal capability to sustain simplification
The reform agenda will not be a one-off event. Policy shifts, regulatory updates, and further restructuring are permanent features of the ALB landscape. Organisations that depend on external consultants to diagnose and fix complexity find themselves back in the same position every time the environment changes. A proven approach to operational transformation transfers methods that your teams can apply, from which an organisation is built that is capable of continuous simplification as complexity inevitably returns.
The Opportunity Inside the Government Quango Reforms
The current review of arms length bodies is, in many ways, an opportunity. It has created the political mandate and organisational urgency to examine how these bodies actually work, not just whether they should exist. For COOs and operations leaders, that is a rare opening.
But the opportunity will be wasted if the response stops at structural reform. Closing, merging, or absorbing an ALB without addressing its operational foundations simply transfers complexity to its successor. The bodies that emerge from this period in the strongest position will be those that used it to simplify how work flows, not just where it sits.
Reinvigoration’s whitepaper, The New Shape of Public Sector Transformation ,examines these dynamics in depth. For operations leaders navigating the current reform environment, it provides a structured framework for thinking differently about what sustainable Arms Length Body transformation actually requires.
If you are leading operations in an ALB that is facing restructuring, merger, or review, Reinvigoration works with public sector organisations to diagnose operational complexity, simplify core service journeys, and build lasting internal capability. If that challenge resonates, we would welcome a conversation.
