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As a doctrine, the new public management, points to the failures and inadequacies of public sector reference over time, and locates the problem as lying squarely in the nature and processes of public sector activity and public administration. Centralized bureaucracies, waste and inefficiency in resource use, Inadequate mechanisms of accountability and redress are all problems which the new public management sought to address. This paper outlines the ‘shift’ from public administration to new public management and considers the principal expression of the new public management In the [J.
Finally, the paper suggests lessons that may be drawn from the UK experience which might inform the more international shift towards the new public management in public. The study of public administration since the early sass has been concerned predominantly with the so-called ‘paradigm shift’ from principles of public administration to those of public management; that is, the apparent move away from what is now seen as a traditional, progressive-era set of doctrines of good administration, emphasizing orderly hierarchies, duplicities bureaucracies, and the elimination of duplication or overlap, and toward what has… En described as the ‘new public management’ (Hood, 1996, p. 268). In Its application, the term ‘new public management’ has come to Identify a series of themes aimed at reforming the organization and procedures of the public sector In order to make It more competitive and efficient In resource use and service delivery. In a very real sense, the new public management is concerned with the commercialism’s, as far as is possible, of the state’s role in providing services to its citizens, and of the state’s relationship with its citizens. The central ‘doctrines’ of the new public management, together with brief statements of their meaning and rationale, are set out In Table 1 below.
Table 1 Doctrinal Components of the New Public Management DOCTRINE Hands-on management organization. MEANING professional Voluble managers at the top of public of the organization, free to manage by use of discretionary power. Explicit standards and Goals and targets defined measures of performance. And measurable as indicators of success. Greater JUSTIFICATION Accountability requires clear assignment of responsibility, not diffusion of power. Shift to greater competition in the public sector. Stress on styles of practice. Private- sector management Stress on greater discipline and economy in public sector resource use. Source: Hood, 1996, p. 271. Accountability means clearly stated aims; efficiency requires a ‘hard look at objectives.
Resource allocation and Need to stress results rather rewards are linked to than procedures. Performance. Disaggregate public sector Make units manageable; split into corporations units of provision and production, activity, organized by use contracts or franchises products, with devolved inside as well as outside the budgets. Units dealing at public sector. Arm’s length with each other. Move to term contracts and Rivalry via competition as public tendering procedures; he key to lower costs and introduction of market better standards. Disciplines in public sector. Move away from traditional Need to apply ‘proven’ public service ethic to more private sector management flexible pay, hiring, rules, tools in the public sector. Etc.
Cutting direct costs, raising Need to check resource labor discipline, limiting demands of the public sector, compliance costs to and do more with less. Business. Underlying this new public management is the central belief that public service provision is improved by the introduction of those changes listed in Table 1, which river to transform both the organizational structure of public organizations and the processes by which public services are delivered. Falconer (1997) provides a summary of these central characteristics: Hands-on Professional Management Those people responsible for public service delivery should be proactive managers rather than reactive administrators. The modern public manager should have discretion in decision making within his or her particular area of responsibility.
Unlike the traditional public administrator, who operated in accordance with established rules and regulations, 2 ND who implemented the policies of government with little or no discretion and with no direct responsibility, the public manager is a much more active individual, with decommissioning authority over, and responsibility for, the public service he or she delivers. Under the new public management, management lies at the core of public sector activity, and professional managers are viewed as the key to improved public sector performance. Explicit Standards of Performance Public management embodies the important belief that public sector organizations should increasingly be subjected to rigorous measures of performance.
This means that these Subjecting public managers to performance evaluation introduces disciplinary mechanisms which compel public sector bodies to focus on their specific responsibilities and carry out those tasks efficiently and effectively. As the public management school of thought argues, performance measurement also enables public sector bodies to be held directly to account for their activities (as will be discussed below). Under the regime of performance measurement, public sector organizations should be committed to an ethos of continuous improvement in levels and standards of service delivery. Greater Emphasis on Output Controls Allied to performance measurement is the need for a focus on results rather than processes.
For too long, public sector organizations failed to concern themselves with their outputs (I. E. The quality of services). Rather, the focus was on inputs, given that political debates on public sector matters usually revolved around the question of resources. Under the new public management, the focus is shifted to that of results. The important question for the proactive public manager is what he or she actually achieves with the resources available. As such, the most important concern of the public manager is with results. Disaggregating of Public Sector Units In order to facilitate much of the above, the new public management calls for decentralization in public sector organization.
Given that public management embodies a strong criticism of the bureaucratic form of organization, it is not surprising that it advocates a disaggregating of bureaucratic units in order to form a more efficient, accountable public service. It is more efficient because smaller units of activity are better able to establish objectives and work toward achieving them more quickly and more directly. It is more accountable, because the new public management replaces the ‘faceless bureaucrat’ with visible, responsible managers who are directly accountable to the public. Greater Competition in Public Service Provision Two central arguments within the public management approach are that: the market, not government, is the best locator of resources; individuals are the best Judges of their own welfare.
As such, market disciplines are advocated for the public sector, in line with the belief that the threat of competition and rivalry between providers fosters efficiency in service revision and choice for the customer. This has important implications for both public service providers and users. On the provider side, public service delivery agencies, 3 through market forces, will supposedly be compelled to improve the quality of service. On the customer side, the member of the public is supposedly transformed into a consumer with rights in the new public sector marketplace. Private Sector Styles of Management An important theme within public management is that the public sector should seek, as far as possible, to behave in a more business-like manner (I. E. More like the private sector).
The recommendation is that the efficiency of public service provision is enhanced where a public sector agency conducts its affairs in accordance with business principles. Therefore, public service agencies should adopt reward structures for their employees, much like those in the private flexible working practices. Greater Discipline and Economy in Resource Use Underpinning these different recommendations is the important requirement that public service agencies must pay much greater attention to the way in which they use the financial and human resources at their disposal. The emphasis in the new public management is very much on cutting the cost of public service provision, while, at the same time, increasing its quality (I. E. Doing more with less).
The fundamental nature of the shift from public administration to new public management is illustrated in Figure 1 below. Figure 1 From Traditional Public Administration to New Public Management High Density of rules limiting freedom of public officials in handling money, staff, contracts, etc. New Public Management Traditional Public Administration Low High Degree to which public sector is ‘insulated’ from the private sector in personnel, Truckee and business methods. Source: P. Duodenal and C. C. Hood, 1994, p. 10. 4 As Figure 1 indicates, the ‘shift’ from public administration to new public management involves a move in the basic design co-ordinates of public sector organization.
On the one hand, the public sector becomes less distinctive from the private sector, while on the other, the degree of discretionary power (particularly over staff, contracts and money) enjoyed by public managers is increased, as the procedural rules emanating from the centre are relaxed. More specifically, this ‘shift’ consists of. Reworking budgets to be transparent in accounting terms, with costs attributed to outputs not inputs, and outputs measured by quantitative performance indicators. Viewing organizations as a chain of low-trust principal/agent relationships (rather than fiduciary or trustee-beneficiary ones), a network of contracts linking incentives to performance.
Disaggregating separable functions into quasi-contractual or quasi-market forms, particularly by introducing purchaser/ provider distinctions. Opening up provider roles to competition between agencies or tenet public agencies, firms and not-for-profit bodies. Deconsecrating provider roles to the minimum-feasible sized agency, allowing users more scope for ‘exit’ from one provider to another, rather than relying on Voice’ options to influence how public service provision affects them (Duodenal and Hood, 1994, p. 9). THE NEW PUBLIC MANAGEMENT: THE UK EXPERIENCE In the K, the new public management has found expression in the economic policies and related public sector reforms of Conservative governments since 1979. Such has been the impact of of Conservative reforms.
Indeed, since taking office in April 1997, the Labor Party in government has vigorously pursued policies which it had strongly contested in Opposition. Essentially, the new public management has revolved around a central goal of making public sector organizations more economically efficient and more accountable for performance to the public they serve. A key to the achievement of this objective has been a major decentralization exercise, through which large public bureaucracies have been disaggregated into smaller units of operation that are more visible and, thus, allegedly more accountable. Along with this decentralization effort came the policy of ‘improvisation’, by which public sector organizations were to be subjected to the disciplines of the market.
In this way, the public sector would operate in a competitive market environment in which members of the public could make demands of the public sector, holding public service providers accountable for performance in the same way as they did in the private sector. It is not possible, here, to provide a comprehensive review of the I-J public management reform experience. However, we can consider briefly the central tenets of new public management in the ‘Next Steps’ initiative and the establishment of executive agencies; Britain. decentralization; the ‘new contractual’ in public administration; 5 accountability for performance; the establishment of markets or quasi-markets the separation of policy making from policy implementation; the Citizen’s Charter initiative.
The ‘Next Steps’ Initiative and the Establishment of Executive Agencies Perhaps the most important development in public service reform in the UK has been the establishment of executive agencies, designed to carry out the service livery activities of central government departments. Following its 1987 general election victory, the Conservative Government published a report, Improving Management in Government: the Next Steps, which advocated far-reaching reforms in the organization of the British civil service. Under these reforms, the civil service would be disaggregated into a series of distinct agencies, each responsible for delivering a particular public service.
These agencies (first referred to as Next Steps agencies, but now described as executive agencies) would be responsible to the respective ministries of government. Currently, there are over 100 executive agencies, ranging from the very large Benefits Agency (around 66,000 staff to the Hilton Park Conference Centre (30 staff. Some two-thirds of the civil service are now employed in executive agencies which deliver the bulk of services previously provided under the auspices of the centralized departments of state. Decentralization The principal rationale for the Next Steps programmer was the then Government’s desire for decentralization, a policy which has been at the heart of public management reform in the I-J.
As Falconer (1997: 92) states, during the sass and 1990 significant centralization has occurred throughout the British governmental system: through a vigorous and wide-ranging programmer of prevarication, under which the public industries and many public service organizations were removed from the public sector and subjected to the disciplines of the private market; through the increased area of social care and residential care of the elderly; through a dramatic increase in the number of appointed bodies responsible for the delivery of important public services, such as higher and further education, and the management of hospitals. Through a devolution of responsibility within local government by way of the introduction of market disciplines in local service provision. The ‘New Contractual’ An important part of this reform effort has been the advent of ‘contractual’ in the public sector. This has taken the form of ‘market testing in central government and compulsory competitive tendering (ACT) in local government.
Under market testing 6 and ACT, private companies can compete with public agencies for the contract to deliver public services. There can be either contracting-out (where the service interact is won by a private company), or contracting-in (where the contact is won by the public agency’s own direct service organization). As an essential precondition for the establishment of market relationships in the public sector, a separation was instituted between the role of deciding what to provide and the role of actually providing it. This purchaser-provider distinction has promoted a movement toward contracts as the basis for public service delivery. Through contracts, public sector managers or local authorities act as agents for the definitive client, namely the public.
As an important element in the desire of the Thatcher Government in the early sass to reduce the level of public expenditure, the decision was taken to first encourage then compel public sector bodies to open many of their services to competitive tendering. Moreover, the introduction of contracts in public service delivery was consistent with a second objective of the Conservative Government, namely to separate the process of service provision from politics (Walsh, 1995: 112). The scope of ACT in local government was significantly enhanced through the Local Government Act of 1992. Under the terms of this legislation, the Audit Commission was empowered to publish performance indicators for local authorities and to monitor performance in regard to these indicators.
As such, local authorities were required for the first time to publish information on their performance. This requirement was specified by the Audit Commission in December 1992 as part of its role under the Act and as part of the Citizen’s Charter initiative (Audit Commission, 1994). In local government, the introduction of compulsory competition had a number of important implications for service provision. First among its main effects was the way in which competition provided an impetus for service review, in the sense that local authorities were now more concerned with monitoring the management of services. According to one local government officer, competition ‘sharpens people up and shakes old practices out of the system.
People had to take a long hard look at what they do’ (Walsh and Davis, 1993: 165) Second, competition facilitated an improvement in the level of knowledge within local authorities of the cost of service provision (Layton and Rose, 1991: 145-6; Walsh and Davis, 1993: 165). Third, local authorities now have clearer statements of performance targets to be achieved. Indeed, these targets have become something of a Justification and a rationale for of competition highlights the issue of accountability, both to elected members and the public: elected members were having to learn to operate new approaches, for example with more concern for strategic issues.
Questions were raised about the appropriate form of local democracy in a competitive system, for example whether existing reporting systems are adapted to the new circumstances. The public had ad little involvement in the process of compulsory competitive tendering in the early stages, for example in the definition of specifications (Walsh and Davis, 1993: 166). In terms of accountability, the increasing shift to service on the basis of contract has significant implications. Under contractual, we have two sets of actors: the public sector body or local authority which puts the contract out to tender, and the contractor 7 who physically provides the service. As such, the basis of their relationship is the contract.
The public sector agency responsible for drawing up the contract is squired to specify the standard of performance required in service delivery and thus becomes acutely aware of the true cost of service provision. As such, the process of accountability is sharpened. The contract becomes the focus and the increased concern with performance standards embodied within contracts makes public sector agencies and local authorities more directly concerned with efficiency in resource use and quality of service. Moreover, the contractor is responsible for delivering the service as specified in the contract and will be Judged on that basis by the client, the public sector agency.
Accountability for Performance Underlying these reforms has been an attempt to enhance the accountability of public sector institutions to the public they serve through a greater concern with performance measurement. Through the shift toward service on the basis of contract, public service providers are forced to engage directly with the question of service standard and service quality. This links directly to a central issue which lies at the heart of the consumerist ethos and the Citizen’s Charter, namely the establishment of performance indicators and performance targets in the public sector. Concern with the improvement of public services has focused on the pursuit of greater efficiency and effectiveness. Indeed, the quest for improvement in these areas has dominated government thinking toward public sector management since the early sass.
However, while it is not difficult to subject private sector enterprises to performance measurement, a similar exercise in the public sector is more problematic. There are a number of reasons for this difficulty. First, many public sector organizations are monopoly suppliers of services. For example, there is only one Department of Social Security. Consequently, a member of the public dissatisfied with the quality of service received at his or her local benefits office cannot go elsewhere. In a competitive environment, the producer has a clear incentive to maintain a high level of performance in relation to the service provided to the customer. Monopolists lack that incentive.
In order to counter this situation, as will be discussed, the Citizen’s Charter embodies strong complaints mechanisms whereby the public sector consumer can claim redress should he or she always provide a clearly identifiable product. What, for example, does a university reduce? What is the ‘product’ rendered by the prison service? Such ambiguities make performance measurement more difficult in the public sector. Third, the public sector often lacks a clearly identifiable customer. In the private sector, the customer is the individual to whom the provider wishes to sell his or her goods. In the public sector, however, the situation is not so straightforward.
For example, a civil servant working in an executive agency established under the Next Steps programmer could view several people as customers: the member of the public with whom he or she is leaning; the minister with responsibility for the service; Parliament which is elected by, and accountable to, the electorate and which approves the level of funding for agencies; or the taxpayer who might not use the service in question but who contributes through taxation. These problems render the pursuit of efficiency and effectiveness in the public sector more difficult. Nevertheless, a great deal of effort has gone into subjecting the public 8 sector to strict performance measurement.
Indeed, this lies at the core of the Citizens Charter which has enshrined within its pages a clear commitment to service laity on the part of the public sector; clear and agreed criteria of assessment for public service providers; increased visibility of people working in the public sector to provide a more tangible and accountable posture for the customers; a strong commitment to the public sector and to continued improvement in service provision; and a requirement that those delivering services be directly answerable to the public. Indeed, through the establishment of performance targets within the Citizen’s Charter, public sector managers are supposed to be responsible for, and accountable o, the public for their organization’s use of resources.
The Establishment of Markets or Quasi-Markets ‘Traditionally, the public services have been monolithic organizations with overall management, finance control and budgetary control all held in the centre’ (Major, 1989: 4). A key element of reform has been the replacement of this centralist organizational structure with a decentralized, market- oriented structure in which the different parts of the public sector are subjected to competitive forces. In this way, attempts were made to create multiple service revisers in as many individual public services as possible as, for example, through ACT. Furthermore, as Stewart and Walsh (1992: 506) assert, in the government’s proposals on community care, local authorities are to be encouraged to use many alternative sources of provision.
In health and education, the emphasis is placed on the independence of the separate institutions through opting out, or on greater control over their own management by the institutions through devolved control. The ‘monolithic’ institutions of the health service and of the education service is being Rosen down into its component parts. As such, the possibility arises for competition between alternative providers in the different sectors of public service. Of course, not all these markets which have been established are consumer-led. For example, in the National Health Service, markets are still largely dominated by health care providers, of their patients.
Even where the consumer does have a degree of choice, as in education where parents have some discretion over the choice of school for their children, we still have not moved to a fully market-oriented environment. As Stewart ND Walsh (1992: 507) state, ‘because there is no question of direct payment, and because of the limitation on the number of places available, what are being created are quasi-markets rather than markets. There is limited freedom on the demand side, with very little change as yet on the supply side’. A further element in the effort to subject the public sector to market forces has been the increased use of fees and charges for public services (Bailey, Falconer and McElroy, 1993; Walsh, 1995: 83-109).
Across a wide range of public services, including health care, education and wide range of local authority services, charges are used in different ways and for different purposes. Charges for prescriptions, dental and ophthalmic treatment in health care, for school meals, school trips and music lessons in schools, and for admittance to museums, recreational facilities and care for the elderly in local authorities; all these charges serve as signals of demand to service providers as to what 9 consumers are willing to pay for a service. Charging is thus deemed to be fair in the sense that an individual who makes use of a particular service is paying directly for he benefit he or she receives.
As such, charges serve not only as a way of introducing market mechanisms into the delivery of public services, but also as a means of reducing public expenditure since people are paying for a service which otherwise would require to be funded publicly (Bailey, Falconer and McElroy, 1993: 10 The Separation of Policy Making from Policy Implementation Traditionally, public service delivery was subject to political control exercised through departments of state, their ministers and thereby the government of the day and the elected legislature. (The House of Commons). An important element of reform has been the attempt to separate the process of policy making from the operational management of the public services. For example, in the National Health Service, responsibility at the national level is exercised through both a Policy Board and a Management Executive. Basically, the role of government lies in setting the broad policy goals for the service, funding the service, and being accountable to Parliament for these policy decisions.
Operationally, however, government has removed itself from the day-to- day management of the service, responsibility for which lies with the Management Executive. We see a similar pattern emerging across the public services. This change has clear implications for the nature of accountability in the public sector, as more traditional forms of political accountability are being replaced with a more direct form of managerial accountability which forges a linear relationship between public from political to managerial accountability has not been accompanied by a commensurate alteration in the constitutional convention governing the relationship between elected politicians and the citizenry (see Paper, 1996).
Consequently, while overspent ministers might wish to transfer responsibility to public sector managers for the delivery and quality of public services, these same ministers cannot escape the fact that they are still constitutionally accountable for public services by virtue of their status as elected representatives of the people. Public service deliverers may indeed be directly responsible in managerial terms to the public as consumers, but ministers remain equally accountable politically for that service to the public as citizens. The Citizen’s Charter The Citizen’s Charter emerged in 1991 as he centerpiece of John Major’s ‘commitment to quality public sector reform agenda.
In its application, the Citizen’s Charter initiative represents ‘a systematic attempt to focus on four main themes across the public services: quality, choice, standards and value’ (Wilson, 1995: 94). According to the original Charter document (Major, 1991 : 4-5), these would be pursued through a range of reforms by which the public sector would operate more in line with its private sector counterpart: prevarication, competition and contracting-out, performance measurement, clear complaints procedures and better forms of redress for citizens. Overall, the principal focus of the Citizen’s Charter is on improved public service for the individual citizen. However, while appealing to the interests and values of the ‘citizen’, it is the citizen as consumer whose interests and values the Charter addresses.
The nature of the relationship between the government and its citizens was to be determined by way of changes in the management of service delivery, with the emphasis placed firmly on the concept of customer satisfaction. The Citizen’s Charter was characterized by an optimistic view of the role of the public sector and a predominant concern with raising the standard’ of service delivery across the range of public sector activities (Prior, 1995). This improvement in the standard of public service provision was viewed as deriving primarily from the development of a direct relationship between the service provider and 11 the customer. At time of writing, there are 42 national Charters and more than 100,000 local charters in operation across the I-J, each of which set out minimum service standards for public service provision.
Under these Charters, as Wilson (1995: 94) states, the citizen is now recognized as a consumer entitled to a given standard and variety of service. The traditional model for public service delivery, whereby bureaucrats sought to ensure equitable treatment for taxpayers through the provision of uniform services, has been Jettisoned. Competition, responsiveness and choice prevent the standardization of services in the private sector and should do so in the public sector. As such, Characters, as established through the various Charter documents, has been aimed at enshrining the principle of consumer sovereignty in public service provision.