Credibility and agency termination under parliamentarism

We investigate the life span and risk of termination of 723 arm’s length agencies in the United Kingdom between 1985 and 2008, an under investigated question in parliamentary systems. We hypothesize that termination risk depends on three groups of factors: (1) factors relating to the rationales for initial delegation of responsibility to the arm’s length agency; (2) factors relating to the political and economic position of the government; and (3) factors relating to the institutional form of the agency. We find that agencies intended to generate credible commitments in regulation are less likely than others to be terminated in any given year. Agencies operating under right-wing governments and under heavily indebted governments are more likely to be terminated, although left-wing governments are more sensitive to the effects of debt. Agencies structured as executive non-departmental public bodies and non-ministerial departments are also longer lived than others. Contrary to expectations about arm’s length agencies in parliamentary systems with single-party government, partisan change does not affect the risk of termination.