Although the coalition government could save more than £500m by either dissolving or selling off 13 education and skills quangos, spending decisions must be made objectively and transparently to avoid economically damaging consequences.

These are the findings of a policy paper entitled 'Quangos in the Education and Skills System’ published by the Chartered Institute of Personnel and Development (CIPD). In the document, the HR body urged the government to undertake a thorough review of the key skills quangos in order to determine whether they were having a positive, tangible and sustainable effect and to see how they could provide better value for money.

The quangos in question comprise the British Educational Communications and Technology Agency; the Learning and Skills Improvement Service; the Learning and Skills Network; Lifelong Learning UK; the National Institute of Adult Continuing Education and the nine Regional Development Agencies.

Tom Richmond, the CIPD’s policy advisor on skills, said: “Our new analysis highlights a number of worrying trends. For example, several quangos now offer free consultancy, free event management and free teaching materials for schools and colleges – courtesy of the taxpayer.”

There were also instances of quangos purchasing private sector rivals and lobbying the government using government funds, he added.

"With so much money at stake and with imminent spending reductions across many government departments, the role, purpose and operations of each individual quango must therefore be revisited as a matter of urgency," Richmond said.

While many quangos performed vital functions and represented good value for money, 'considerable scrutiny' was necessary if frontline services were to be protected. But simply cutting expenditure on quangos for political expediency could lead to a number of "unintended yet potentially serious consequences" in terms of job losses, union relations and even damage to the economy, Richmond said.

As a result, it was vital that spending decisions were made objectively and in an "open, transparent and consistent way," he added.

Key questions that should be asked were whether it was appropriate for the quango in question to receive taxpayers' money for the role it performed and did it offer value for money in terms of what it achieved.

Other queries related to whether the quango was crowding out or competing with private or third sector rivals and whether the private or third sector was either willing or able to provide the same service or function if the quango had few or no competitors.