Has Politics Influenced UK Public Management Reform

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Public Management can be simply described as performing certain tasks related to policy implementation in publicly supported programs (Jones, et al., 2011). Similarly, Bresser-Pereira, 2004, outlines that the main idea of Public Management is that activities that use government or state power should be within the control of the government; the government should mainly finance social, cultural, and scientific activities involving externalities and dealing with basic human rights, while a public non-government service should execute them. Whereas public management reform is concerned with the political character of government officials’ decisions (Bresser-Pereira, 2004). There are three common areas associated public management which are Principal Agent problem, described as a main ‘Principal’ choosing an incentive scheme to maximise expected utility subject to the agent’s utility being at one singular point (Grossman and Hart, 1983). However, in the case of politics and the public sector it is argued that the government set the rules and incentives for the public managers to implement (Blaug, et al., 2006). New Public Management theory is the next area associated, this theory takes commonly used practices from Private Sector management and applies it to the public sector. As described by Larbi, 2009, NPM reforms shift the emphasis from traditional public administration to public management. Key elements include decentralizing management within public services, increasing the use of competition in the provision of public services, and increasing emphasis on performance, outputs and customer orientation (Larbi, 2009). Lastly, Public Value theory,described as a technical idea that can be used to measure and guide government performance; it asks what ‘value’ is added by any given policy or programme, beyond simple monetary costs and benefits (Moore, 2017). Each of these theories and problems were introduced and faced by different governments, who were in charge, in the UK at different times which inevitably effected public management reform in different ways. In this essay I will run through a timeline of a series of events starting with the creation of the NHS, a brief run through of a period of stability in public reform, leading onto then the Thatcher reign and the implications of her more extreme approaches on public reform. This then leads into ‘Labour’s private paid partnership disaster’ (Benjamin and Jones, 2017) and again I will highlight the implications this then had on the public sector and therefore then, public management reforms. Next, I will run through the Great Financial Crash and how the Government’s recovery methods influenced public management reform. Finally, I will conclude with whether I believe politics has influenced public management reform in the past 70 years or not.

“The NHS remains a tax funded service, that provides comprehensive, universal health care that is free at the point of delivery. The values that inspired the founding fathers and shaped the NHS in the first place, still drive the service and command support from across the whole political spectrum,” (Klein, 2006). The NHS was launched on the 5th of July 1948. It was introduced by, the then, Health Secretary, Aneurin Bevin of the Labour Party. The current Prime minister at this time was Clement Attlee of the Labour Party, also. Attlee was keen to try and reduce post war austerity as much as possible; he nationalised major industries, like coal and steel and public services like the railways, while also starting to build a welfare state which included free healthcare for everyone in the UK through the NHS. The NHS was the biggest change that Attlee brought about to challenge the post war austerity, at the time of its creation it was a unique example of healthcare in a market society (Klein, 2006). The introduction of the NHS and nationalisation of the previously mentioned services, described as the greatest socialist achievement of the labour party (Klein, 2006), led to huge implications to public management. Firstly, the public management’s measurement of success would have completely changed. Before the NHS there was private healthcare which you either paid for or paid for health insurance to cover these expenses. If you could not afford this, you would have to use ‘voluntary hospitals’; these were for the ‘sick poor’ and made inequal and biased decisions on which patients should get which medicine and/or treatment. Health care managers previous to the introduction of the NHS would have been measured off efficiency and their ability to cut costs and therefore meaning their profitability. With the introduction of the NHS, health care management was reformed, and success measurements would be based off variables closer to customer satisfaction and maintaining a strong and reliable reputation in the public eye. Healthcare success was previously measured off the number of patients treated daily, with the introduction of the NHS success is measured by patient experience, short and long term performance, capability for change and the number of patients successfully treated (Howells, 2015). Another major reform to public management in public health care would be transparency, especially concerning the voluntary hospitals from before the NHS. It’s believed that if patients are made aware of all healthcare possibly available they will make more informed decisions and drive a higher level of healthcare in the long run (Spivey and McDonald, 2007); highlighting how Atlee’s Labour Party led to public management reforms especially in the health care sector through the forms of transparency, but mainly performance measurement, which resulted in public managers’ to completely change their management strategies from profitability to a more ethical standpoint in order to meet their new goals of success in the NHS.

Moving on from Attlee’s reign there was a period, from 1951 – 1964, of fairly stable public management reform. Following on from Attlee, Sir Winston Churchill, of the Conservative Party, again, came to power from 1951 – 1955. After Churchill, Sir Anthony Eden was next in charge from 1955 – 1957, also of the Conservative Party. Eden’s successor was Harold Macmillan; he was Prime Minister from 1957 -1963, again from the Conservative Party. Sir Alec Douglas-Home, also from the Conservative Party, followed on from Macmillan as Prime Minster from October 1963 to October 1964. The next four successors of Attlee were of the Conservative Party and had all criticised Attlee and his ‘socialistic’ reforms. In a speech at Kinnaird Hall, Dundee, Churchill described Socialism as having its own formulas and aims. Stating that Socialism would pull down wealth, destroy private interests, kill enterprise and attack capital (Churchill, 1908). However, no matter what criticisms the Conservative successors had for Attlee’s ‘socialistic’ reforms they still didn’t implement any new, major public policies themselves which resulted in the stable period of public management reforms. Although, nothing massive happened in these years it can be said that no political influence, like public policy changes, can also lead to no reforms in public management, possibly highlighting how political influence is a key variable in order to drive change in public management.

Margaret Thatcher was appointed as the Chief Education officer by, then, Prime minister Edward Heath; one of her unpopular suggestions while in this role was the return of selective secondary schooling and the drive for further privatisation of education services (Griffin, 2002). These reforms were a brief insight into the changes she would soon make as Prime Minister; one of the most key areas of public management reform of the last seventy years coincides with Thatcher’s reign as Prime Minister. Thatcher was the Prime Minister from 1979 to 1990; in her time in charge she managed to privatise industries, like the energy industries, and privatised services, such as the railways; she believed that privatisation was key for the UK to economically thrive. Previous to Thatcher, the main political parties, Labour and The Conservatives, had encouraged Keynesian themes, the growth of the Welfare State, nationalising industries and services and keeping taxes high. Although, Thatcher has never rejected wartime foundations of the welfare state (Moore, 2013), through Thatcherism she had systematically and decisively overhauled the post war consensus established by Attlee and this would lead to major public management reforms (Moore, 2013). Through Thatcherism, Thatcher was able to drive the theory of ‘New Public Management’, Kajimbwa, 2013, describes it as having multiple different levels. First level being the deregulation of management structures and financial management, secondly the conversion of government departments into privatised agencies; managers are now assessed on their performance through the evaluation of outputs rather than inputs. Thirdly, the introduction of competition within monopolised markets (Kajimbwa, 2013). Thatcher had believed that markets such as the railways and energy had become monopolies with very little competition. No competition meant that managers were able to get away with providing lazy and inadequate services and since their performance was not measured on outputs nothing was being flagged as there was nothing to go against.

Legislation, Thatcher had imposed, on Trade Unions meant that they would have less powers (Griffin, 2002); meaning that managers’ subordinates had less bargaining power when it came to wages as they would have limited support from the Trade Unions now. This legislation implemented, onto the trade Unions, reformed public management in the fact that managers were able to cut costs allowing them to make more efficient decisions, which was crucial as their performance was now being assessed on outputs like profit and revenue turnover meaning public management performance was now based a lot closer to the, previously mentioned, Public Value Theory. The Thatcher era was a period of substantial, long-term changes to public financial management and accounting procedures (Barzelay 2001); Thatcher also wanted to distance the government as far as possible from these new privatised branches; the implementation of non-departmental public bodies in which public services now had to go through for funding, meant that the government now had little say as to how funding was spent. These financial bodies, again, reformed the way managers now had to acquire funding. “Among other things, gentle administration was changing to hardnosed management, budgets had to be justified, and costs were becoming a real part of the equation. This led to strained relationships between managers seeking greater productivity and doctors feeling they were doing all that could be done with the available resources,” (Ham, 2002) different departments would have pitched against each other as to why one should get more of a share over another, this would have required the manager to be able to highlight the importance of their department being able to turnover a profit while also being able to adequately provide a service to the public in order to receive the desired funding. Also, having the non-departmental public bodies meant that the Principal Agent theory comes into play; if there are any mistakes made by a public service the non-government bodies, or in this instance the ‘principals’, would be held accountable, due to insufficient and asymmetric information the government now had, by the public or ‘agents’ (Walsh, 1995). This again is another public management reform as public managers will now be more accountable for their actions rather than the government taking the majority of the blame from the public; this meant managers had to be more cautious in their decision making but also had to be sure the decision they made would align with their output performance goals. Thatcher’s reign as Prime Minister has notably had a huge influence on public management reforms through the forms of privatisation, implementation of ‘NPM’ strategies and the introduction of legislation on Trade Unions; this is another reason as to why politics over the past 70 years has had a huge influence on public management reforms.

Another milestone in public management reform in the UK was Tony Blair’s ‘New Labour’ policies. Blair introduced ‘New Labour’ as a sign to show the public that Labour have started to tear away from their more traditional, socialistic policies. One way to do this was through the use of ‘Private Public Partnerships’; this was at the centre of Blair’s attempt to revive the UK public services and make the best use of the taxpayers’ money. Any collaboration between public services or the central government, with private firms is what can be described as a Private Public Partnership (BBC, 2003), whereas the UK government describes Private Public Partnerships to cover a range of business structures and partnerships, to the Private Finance Initiatives to joint ventures, to outsourcing and to the sale of stakes in state-owned businesses (Treasury, 2000). Tony Blair and ‘New Labour’s’ reliance on PPP’s in an attempt to add value through greater cooperation between private and public sectors (Steijn, et al., 2011), led to public management reforms in the UK; The Association of Chartered Certified Accountants describe PPPs to be the fourth most influential factor on public management reforms (ACCA, 2016). Public managers now have responsibilities split between themselves and the managers of the contracted, private firms in these partnerships (Verweij, Teisman and Gerrits, 2016), this can create conflicts of interest between public managers and private managers, one is looking to provide a complete, adequate service for the public while the other is looking for efficiency and increased profit margins. In order for public managers to compete with PPPs it has been said that they would have to improve efficiency as it’s believed private firms are generally more efficient; however, this is not the case, studies show private operators are no more efficient, and often create inefficiencies (Hall, 2015). PPP’s also challenge public managers’ forecasting abilities, unforeseen circumstances can come from physical sources, like unstable ground conditions. They can also originate from social sources, such as dissatisfied stakeholders, like taxpayers or the government, or changing laws and policies (Verweij, Teisman and Gerrits, 2016). Private firms are mostly concerned with profit, driving efficiency and cutting costs, this would have led to some questionable decisions when it comes to some of the private firms’ decisions. Conflicts of interest and ‘dodgy’ decisions made in a PPP between Northern Ireland’s Events Company and, private contractor, Joe Cockburn, resulted in a company getting a contract due to personal relationships and resulted in the company building a Motocross track that was used once then dismantled as it was built on cheap land not fit for purpose. This highlights how, Tony Blair’s ‘New Labour’ and their PPPs have reformed how public management in the fact that public and private managers would now have greater conflicts of interest and public managers would now need to deal with this ethically. While forecasting and damage control abilities, if something goes wrong, are now also key.

The Great Recession was a period of worldwide economic downturn that started in 2008. At the time Gordon Brown, of the Labour Party, was in the Prime Minister role. Initially, Brown continued to invest money into the public sector, in fact, public sector wages continued to grow, from 2008 – 2010, at a rate very close to the inflation rate of 5% at the time (Milne, 2017). In contrast, private sector workers wages were sticky and rose at 1%, much lower than the inflation rate. The public sector wage structure would have incentivised private sector managers to try and get a job within the public sector in order to receive a better and more secure pay, as many public sector worker’s wages were agreed in a 3-year deal (Milne, 2017). In 2008, a dip in productivity was experienced across the UK as so many people were now out of jobs, especially in the private sector (UKCES, 2014). A new, high quality supply of labour from the private sector now interested in public sector work would have led to small reforms in public management; public managers would now have to improve performance to remain favourable over tough competition form the private sector. Improving performance would mean increasing efficiency, cutting costs and driving a higher revenue turnover, depending on what public sector they were working within and what performance goals were set. In 2010, David Cameron took over as Prime Minister and, in an attempt, to increase the rate of spending in the UK he cut taxes, which freed up some income for the population, but he also cut spending for public departments. Local councils and public services began to struggle a bit more as they didn’t have the same funding as before. To tackle the budget cuts, local councils saw that cracking down on the level of fraud and debts owed to them was key (Hopkins, 2009). These budget cuts, again, would have resulted in public management reforms in the way they would now have to deal with clients and the general public a lot differently. At the time Charlotte Hogg, Managing Director of Experian, stated that it was important for the departments and local councils to understand the specific local challenges and they needed to respond to them in very specific ways (Hopkins, 2009), managers would have to have become more ‘cost-weary’ in order to allow their department to survive; ruthlessness would also have been a strong trait to have when chasing clients for money and when making decisions for where money should be spent and where to make cuts. Again, this highlights how the government and politics during the recession were a major influence in public management reform in the UK.

“Management changes within the public sector cannot be satisfactorily understood as some set of floating phenomena. Instead, they require to be interpreted as one element in a broader shift in the pattern of political problems and responses. In short, public management is always a part of the broader agenda of public governance,” (Pollit and Bouckaert, 2017), similar to Pollit and Bouckaert’s views on the relation of public management and politics, I too believe that politics has a major influence on public management reform. With the Brexit deadline impending on the UK, I believe that politics again will have a massive influence on how public managers reform to the changes it will bring. With negotiations still ongoing, there’s a lot of unknown decisions that will have to be made in the wake of the deal (Walker Morris, 2017), and these decisions then too will result changes to in the public sector, as this is one of the sectors with the highest amount of EU regulations against it (Walker Morris,  2017), which will require public managers to change with them. One of the main issues for the public sector will be funding after Brexit; it is said the membership fee that is paid into the EU from the UK will likely cover any costs that the EU have covered in the UK public sector previously. However, research shows that there is a spending bias towards London (Walker Morris, 2017), and if this continues after Brexit, the public sector outside of London could struggle and may result in managers having to cut down on certain resources and possibly result in the loss of some jobs. A spending bias would result in managers outside of London having to reform due to less budgets, this could result in managers having to become even more strategic and moneywise in order to stretch their funding as far as possible while still delivering a desirable service. Once again, this highlights how politics, and the decision to hold a referendum that has resulted in Brexit, will result in further reforms for public management in the future. To conclude, I believe that, yes, politics has had a huge influence on public management reform over the past 70 years, as Pollit and Bouckaert, 2017, state that public management requires the acquiescence, and more usually, the active support of leading politicians (Pollit and Bouckaert, 2017), and as politicians make reforms in public policies, public mangers then too also have to reform in order to remain successful.


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