The evolution of NPM since 1997

In many respects, the story of NPM since 1997 has been one of continuity. Successive governments of different political complexions have maintained purchaser/pro- vider splits where they already existed, and have extended the policy to previously untouched areas of service provision.

1. Continuity

It might have been expected that a Labour government would oppose NPM on ideological grounds, but an important part of Labour's ‘reinvention' as New Labour involved abandoning the party's traditional preference for public over private service provision, and adopting instead the ‘third way' approach to politics as described by Giddens.^[1215] The ‘third way' sought to draw on the strengths of both the public and the private sectors and was neatly captured in Tony Blair's mantra ‘what counts is what works'.^[1216] Thus, the government continued to advocate the use of contracts and pseudo-contracts in the delivery of public services, and extended the approach into new sectors such as London Underground (through the ultimately unsuc­cessful Public Private Partnership for infrastructure maintenance).^[1217] Nevertheless, there were some subtle differences in the presentation and operation of NPM after 1997. In terms of rhetoric, the use of ‘private sector' terminology was reduced significantly. For example, in the National Health Service, the term ‘purchasing' was replaced with ‘commissioning' in official documents. More importantly, there was much greater recognition that contracts or pseudo-contracts for public services should be regarded as long-term, relational arrangements with complex quality standards rather than short-term, discrete contracts for standard goods or services. The most obvious manifestation of this was the replacement of compulsory competitive tendering in local government with the ‘Best Value' policy.^[1218] Local authorities were still encouraged to contract services out but they were allowed to make decisions based on quality and service design instead of being required to award the contract to the lowest bidder.

Since 2010, the Conservatives have returned to power in coalition with the Liberal Democrats. Although it is too early to form a settled view, the evidence so far suggests that—as might be expected—NPM techniques are likely to remain at the heart of the government's approach to public service delivery. A number of features of current government policy render NPM a particularly attractive model. Both coalition partners are committed, perhaps with slightly different ideological emphases, to the delegation of power to the local level and to public participation in decision-making.^[1219] The NPM approach of encouraging entrepreneurship and responsiveness to ‘consumers' among those delivering public services fits well with these ideas. But perhaps most importantly, the substantial budget cuts required to address the deficit in public spending are generating an unprecedented need to do more with less. The proponents of NPM often present contracting out as a way of achieving this, because the government can set out its objectives and leave to potential bidders the task of developing innovative ways of meeting those objectives at a lower cost. Of course, critics argue that contractors will make savings by cutting corners, not least because private firms will want to extract a profit from the contract price.

2. New developments

NPM, then, is here to stay. But as governments and public bodies have made use of NPM techniques, they have also changed and developed those techniques in new directions. Here, we will introduce two of these new versions of NPM, labelling them deep NPM and post NPM.

Under NPM as originally conceived, the role of the state was to be the ‘pur­chaser’ of public services. Public bodies would be able to focus more clearly on determining what services were needed and on monitoring the quality of those services if they were freed from the distractions of provision. In the well-known boating metaphor coined by Osborne and Gaebler, the founding fathers of NPM, the state should ‘steer’ not ‘row’.^[1220] In recent times, there has been a grow­ing trend—which we will label ‘deep’ NPM—of contracting out some or all of the government’s purchasing tasks in a particular sector.

Another central tenet of NPM as originally conceived was that service providers should be encouraged to specialize. It was argued that large public bodies providing a variety of different services were ‘jacks of all trades; masters of none’. The quality of provision would improve if providers (whether firms or smaller units within public bodies) focused on a particular service. More recently, there has been something of a backlash against this idea. Critics have expressed concern that small specialist units can become what are pejoratively referred to as ‘silos’: they are closed off from the rest of the world and are unable or unwilling to communicate with each other.^[1222] From an efficiency perspective, these small specialist bodies may either be dupli­cating each other’s efforts, or achieving their own targets by shifting costs onto other bodies. And from the perspective of service users, it can be difficult to know where to turn for help or how to deal with the situation in which several different public bodies blame each other for problems. This has led to the emergence of what we might term ‘post’ NPM arrangements in which public bodies have been encouraged to pool their budgets—particularly in a local area—to tackle a shared set of problems, or have opted to contract out several services to the same pro­vider under a single contract. In both cases, the aim is to create opportunities to redesign services. Most obviously, this might be a way to save money in a time of budget cuts, but there may also be opportunities to make the services more user-friendly.

3. Implications for accountability

Both deep and post NPM are much more challenging from the perspective of accountability than NPM itself. As we saw above, NPM gave the government a clear role as the purchaser of public services and an opportunity to set and enforce budgets and targets for the provision of particular public services. Although there were many failures, the lines of accountability—from providers to purchasers to ministers or councillors—remained reasonably obvious. By contrast, under deep NPM, the government’s role as purchaser is shared with private contractors. As we shall see, it is sometimes claimed that contractors can be used simply to support the government’s decision-making, while the decisions themselves remain in public hands. However, the boundary between these two activities is hard to draw, opening up the prospect of private firms taking on the traditionally public role of deciding what services should be provided. Although the public body should, in theory, be able to call the contractor to account for these decisions, this is problematic in practice because the public body is dependent on the contractor for information and expertise. Under post NPM, similar problems appear. Sharing budgets between public bodies is worrying since it may no longer be clear what role each particular public body played in decision-making for the purposes of calling that body to account. Where a contractor is invited to provide multiple services and permitted to redesign them, the government’s role in deciding what should be provided is, again, much reduced. And, in order to facilitate the adoption of post NPM, the government may remove some mechanisms of accountability previously applicable to public bodies so that they have greater discretion to reorganize or to participate in shared arrangements.

To illustrate these claims, the next two sections will present two case stud­ies. The first, an example of deep NPM, is the use of management consultants and others to provide ‘commissioning support’ to purchasers in the NHS, a policy which began under Labour and has continued under the coalition govern­ment, forming an important plank of the reforms under the Health and Social Care Act 2012. The second case study is an example of post NPM and involves an examination of the Labour government’s Total Place policy for local govern­ment and the coalition’s development of that policy, particularly through com­munity budgeting and the new powers for local authorities introduced by the Localism Act 2011. In both cases, our focus will be on the issues they raise for accountability.

D.