1

“Playing the Targets Game” 1st March 2005

Targets before targets : The experience of controlling the

Nationalised Industries in the Old Public Management Era

By Christopher Foster

The ESRC and OxfordExecutive Government Group

2

Apology

Paper based on: Old reading Recent reading for another purpose My own experience

Therefore does not do the topic the justice it deserves

3

David Walker’s Criticism of my book

My book tries to answer what some may see as the prejudiced question “Why are we so badly governed?”

DW does not, I think, dispute my account of changes in how we are governed

He rejects my central thesis because “there is no ready evidence..that policymaking (and outcomes?) in pre-Blair history” was better

4

Response of some senior Civil Service Discussants

Most said that whether the process of policymaking was reasoned, well-evidenced, made intelligible to parliament and the general public, and was therefore democratic, was as important as outcomes

One said that public acceptability mattered more than outcomes,meeting targets as we understand them now

5

The 1970s’ Watershed

Recurrent Economic Crises always induced Public Expenditure Cutbacks

Yet after each one PE resumed its growth as % of GDP

Mid-1970s PE Crisis seemed much more serious. “The Party is Over”

Yet even then changing attitudes was slow

6

Targets before Targets

Yet there always were targets; Broad military and diplomatic targets Munitions in FFW Aircraft Production in SWW In peace-time, getting rid of rationing Macmillan’s 300,000 houses a year The first 1000 miles of motorways

7

Underlying Power Problem

20th Century War allowed governments to have the power to achieve certain outcomes

In peace a dichotomy between government departments and other bodies

for which ministers were responsible; local authorities and statutory bodies

8

Mid-19th Century Foundations of pre-1980s British State

The failed attempt to have freestanding public bodies – the Poor Law Commissioners

The proliferation of specific grants to LAs in the late 19th century: Control Sharing burden between tax and ratepayer Equalisation

Except in education most replaced by block grants from 1880s

9

Legal Underpinning

LAs: while almost everything they did since 1835 had to have a statutory basis, their statutory duties were facilitative, not prescriptive

Ditto NIs and other statutory bodies Though in the 1980s the law was used try to

turn LAs and SBs into agents, financial controls more effective

These considerations important for target-setting.

10

Development of the Public Trust Concept

Reaction against independent Commissioners led to re-affirmation of doctrine of ministerial responsibility: e.g for Prison Commission

Except for public trusts: Mersey Docks and Harbour Board, 1856 Port of London Authority, 1908

11

Establishing the Framework

Keynes and the Liberals’ advocacy in the 1920s

Herbert Morrison and the Socialisation of Transport: the LPTB

The Nationalisation Statutes of the late 1940s

12

Nationalised Industry Performance

Tracked in a series of studies. Pryke and Dodgson’s were the most thorough

After initial Hawthornden boost productivity improvement deteriorated

Remedies available were: SCNI reports Guidance on investment criteria Organisational change Board changesPointless to set targets

13

Pitfalls of Railway Policy

Requirement to break-even taking one year with another was Target

Rail deficits appear and increase from mid-1950s

Major re-organisation, new chairman and rail closures under Marples has no lasting effect

Conventional remedies exhausted

14

1966-8 Railways Policy

Intention to subsidise railways insofar as road decongestion justified it. Replacement target.

Hence CBA mechanism set up to review unremunerative lines and services

Required accounting changes which BR refused to deliver

No mandatory change in the law to impose new target thought feasible

Changing the chairman did not work

15

Aftermath

BR bankrupt again in early 1970s At last found a chairman in 1980s who took

efficiency seriously and had weight to overcome internal opposition

Treasury attempts to devise other statutory criteria

As with other NIs, privatisation and regulation promised better target-setting But that not without problems

16

Conclusion

Legal difficulties and NI hostility at top prevented development of management univariate targets (subject to requirement to meet profit/loss constraint)

Ditto LAs Instead a culture of multivariate targets grew up

but not backed as in 19th century by matching financial incentives

Satisfactory target-setting depends on a combination of outcomes, most valued and appropriate law

17

18

19

20

21

22

23

24