BS2032 Public Services Management 7: Agencies, Quangos, Privatisation.

BS2032 Public Services Management

7: Agencies, Quangos, Privatisation

BS2032 Public Services Management 7:Agencies, Quangos, Privatisations

Next Steps Report (1988) proposes:

• All the executive functions of government (paying benefits, issuing licences, collecting taxes) should be responsibility of agencies

• Agency managers should have considerable freedom to manage their agency, leading to managerial efficiency

• By 1998 there were 138 agencies operating


Next Steps Report (1988) proposes:

• Own Chief Executives (not Ministers)

• Own internal accounting procedures

• Own responsibility for ‘pay and rations’ within a fixed budget

• A framework document to define responsibilities

• Series of performance indicators to judge effectiveness


Examples:

• Employment Service Meteorological Office

• Prison Service UK Passport Agency

• Benefits Agency Ordnance Survey

• DVLA Office of National

• Highways Agency Statistics


Has it worked ? [1]

Survey by Karbhari & Pendlebury concludes:

• Agency managers perceive they have more freedom

• Argue for increased effectiveness, value-for-money

• But accounting systems (annuality, virement) do not fit easily with agencification

• Budgetary controls were restrictive


Has it worked ? [2]

• As the civil servants were previously unenthusiastic, this might be considered a good test

• Respondents from trading fund agencies much more enthusiastic than others

• Views of users has not yet been sought!


Pessimistic view of Next Steps

• Private sector working practices needed to pervade Whitehall

• ‘Public service ethos’ does not exist

• Not ‘what can we sell’ but ‘what must we keep’

• Accountability is fudged

• All agencies should be considered for privatisation at least once every five years


Optimistic view of Next Steps

• Logical development from Raynor efficiency scrutinies

• Move from a monolithic to a more federal structure

• Benefits perceived for both Ministers and Chief Executives as well as the customer, the taxpayer, and agency staff


Accountability [1]

• Constitutional theory is that policy is decided by the Minister who is answerable to Parliament

• Day-to-day operations are handled by the agency

• A ‘framework’ document defines the responsibility of each to the other

• Neither should ‘dabble’ in the affairs of the other


Accountability [2]

• But in the case of a large agency (e.g. Prisons) it is hard to divorce ‘policy’ from ‘operations’ e.g. is ‘locking up prisoners up all day’ a policy descision or an operational decision ?

• In practice, accountability is weakened if chief executives cannot be questioned by Parliament

• Small agencies now have no political control (because they are under control of civil servants)


Recent Developments• Accent not on creating new agencies but

developing performance initiatives within them

• Two thirds of agencies are now engaged in benchmarking against the Business Excellence Model

• Agency Performance and Efficiency


• QUANGOS (Quasi Autonomous Non Governmental Organisations) have a ‘role in the process of national government but at arm’s length from ministers’

• Officially Non-Departmental Public Bodies

• Cabinet office maintains 1000, academics maintain there are far more


• Types of QUANGO

• Judicial (e.g. BSE enquiry)

• Advisory (e.g. Safety of Drugs)

• Consultative (e.g. former NEDC)

• Crown Bodies (e.g. British Museum)

• Commercial (e.g. Public corporation)

• Regulatory (Food Standards Agency)

• Self-financing Regulatory agency (DVLC)


• Implications of QUANGOS

• Is this a return to Plato’s guardians (i.e. experts run the state)

• Now a massive ‘democratic deficit’

• Power of patronage enormously extended

• Question becomes to get the right degree of ‘expertness’ and ‘accountability’


Privatisations

took place in three stages (HM Treasury)

• Initial commercial phase (British Airways, BritOil)

• Utilities phase (BT, British Gas, Water companies)

• Third phase, involving companies that still require some subsidy from government for socially desirable purposes (Railtrack)


Regulators currently…OFGEM Office of Gas and Electricity

Markets

OFWAT Office of Water Services

OFTEL Office of Telecommunications

ORR Office of the Rail Regulator

OFREG Office for Reg. Of Elec and Gas - NI


Who regulates the regulators ?

(Quis custodet custodes ipsos – who guards the guards ?)

The dilemma is for a government to leave the market to itself but also to have a degree of control when necessary (Railtrack)


Who shaves the barber?

Consider a town where there is a barber, and the barber shaves. The barber shaves all - and only - those people who do not shave themselves. Now, who shaves the barber?

If the barber shaves himself, that can't be right because the rule is, 'The barber shaves all - and only - those people who do not shave themselves.

...but, if someone else shaves the barber that can't be right either because the rule is, The barber shaves all - and only - those people who do not shave themselves.


But note the following paper…

Giulietti, Price and Waterson(2000) ‘Competition and Consumer Choice in the Residential Energy Markets’

Warwick Business School

Centre for Management under Regulation

http://www.wbs.warwick.ac.uk/cmur

BS2032 Public Services Management 7: Agencies, Quangos, Privatisation.

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