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Is efficient government necessarily good government?

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by William Davies, Senior Research Fellow, Digital Society
Public Service Director - 06 January 2005

Ask any senior manager what they hope to achieve through the use of Information and Communication Technology (ICT), and their reply is likely to centre around one central paradox: they want it to provide their organisation with flexibility and control simultaneously. From the ‘paperless office’ through to multi-billion dollar profitless companies, ICT has a long record of eliciting deluded enthusiasm.

The suggestion that ICT can square this particular circle is based on wishful thinking, rather than analysis or common sense. The cause of this wishful thinking is clear. Social, cultural and economic change has backed many public and private sector organisations into a corner. Expectations placed on managers continue to rise, leading many organisations to adopt a strategy of head-hunting famed individuals, luring them with inflated salaries. The tenure of CEOs is falling almost as fast as their remuneration is rising, while the public sector is littered with ‘Tsars’ and ‘Chiefs’, each a response to a public that demands ever greater accountability at the top. But all the while, ever more whimsical consumers and competitive markets mean that the sources of organisational advantage are shifting towards front-line service and often haphazard innovation, and away from high command. Management courses, with titles such as “Embracing Chaos” and “Investing in Anarchy”, are the result. One of the questions thrown up by the Gershon agenda, currently at the forefront of public sector managers’ minds, is whether this is where the efficiency review is leading. Could the release of ‘resources to the front line’ paradoxically heighten the pressure on those remaining at the centre?

Efficient and effective public services may require power and influence to be devolved to professional service deliverers, but accountability is a far harder asset to give away. This dilemma will emerge more fully as time passes, but for the moment it is too easily concealed by passing references to ICT, and the miracles that it is expected to work. It is worth exploring the function that ICT plays in organisations, and why it is the focus of such high hopes. As the great social theorist Max Weber explained, organisations have three ways of establishing and imposing themselves. Firstly, they can make a claim to authority based on tradition, winning acceptance from the public on the basis that they have always been in control. Before the Big Bang, much of the City of London might have been considered an example of this, as was the Tory party in its heyday.

Secondly, they can demonstrate an unrivalled ability to manage and process information, or what Weber called ‘bureaucratic legitimacy’. Since Victorian times, this has been the principle basis for governments’ legitimacy, and the birth of the welfare state greatly heightened the demands placed on bureaucratic competence. Finally, there is ‘charismatic legitimacy’, or what might more colloquially be known as ‘chutzpah’. This is the realm of leadership, decision-making, imagination and creativity. It is how leading CEOs manage to retain investor confidence even while the numbers are turning ugly, and how politicians make the case for ‘radical change’, without even explaining where they want that change to take us. Leaving aside aristocratic, traditional claims to authority, this leaves organisations facing a simple trade-off. Do they sell themselves on their ability to control information, or on their ability to appeal to their audience emotionally?

The critique of the ‘faceless bureaucrat’ who never gets anything done is a call for the latter. And yet, running organisations on the scale of the NHS is only possible through immensely complex technocratic processing of information. While 1990s ‘New Economy’ ideologues salivated as entrepreneurs and start-ups challenged large bureaucratic incumbents, the public sector finds it far harder to embrace vibrancy at the expense of accountability. Give or take the odd Foundation Trust Hospital, government is lumbered with control at the expense of flexibility. The Gershon review is the first time that the British government has attempted to use ICT to carve a different path altogether. The stigmatisation of public sector bureaucracy dates back to the arrival of New Public Management thinking in the 1980s. But that was largely a stigmatisation of the public sector, not of bureaucracy itself. The remedy to faceless, inefficient public sector bureaucrats was sought from no less faceless, but slightly more efficient private sector bureaucrats. Privatisation and out-sourcing were done in order to inject market discipline, as PFIs have been under Gordon Brown. The Gershon cuts, on the other hand, are being done in order to liberate public sector staff, to give them more time and greater flexibility.

The hope being placed upon ICT is that it can perform the information-processing functions of a bureaucracy, but in an agile, decentralised and ‘proactive’ decision-making culture. As the renowned American sociologist, Manuel Castells, has argued, ICTs potentially enable an entirely new organisational form, the ‘networked enterprise’, defined as a “specific form of enterprise whose system of means is constituted by the intersection of segments of autonomous systems of goals”. In slightly plainer English, what this means is that the technology enables workers and teams to operate with a high degree of independence and flexibility, but without separating off from broader organisational strategies. This touches on one of the more enigmatic of the six areas identified by Gershon as potential sources of efficiency savings: ‘Productive Time’. The review states that ICTs “offer great potential for enhanced frontline delivery through for example reducing time spent by professionals in accessing and handling information.” The hope is that a frontline public sector worker is released from form-filling and permission-seeking to perform subtle human functions, such as judgement, care, and providing a sense of purpose to those around them.

Authority is neither bureaucratic nor charismatic, but comes from well-informed, ground-level decision-making. Portable devices in the hands of council repairmen are one example. Electronic patient records in the hands of GPs are another. By decentralising the control and processing of information, the public sector is seeking the holy grail: control and flexibility. Although the job cuts inevitably – and rightly – preoccupy the media in all of this, the equation made between cutting and efficiency is too simplistic. The longer, harder but more profound path to efficiency is through the decentralisation of decision-making. ICTs rarely replace jobs, but they do enhance the quality of decisions. If service quality is to remain constant or rise, then it goes without saying that cuts will have to be accompanied by gains in labour productivity. The relationship between ICT and productivity is a lengthy and complicated story, which doesn’t even have a happy ending. But what economists are now agreed upon is that there is no correlation between ICT investment and productivity, but there is some correlation between the management of ICT implementation and productivity. In short, if the key attribute of ICT is to decentralise decision-making, then exploiting this potential requires that staff are trusted with greater responsibility to take decisions. If the Government is serious about transforming the public sector using ICT, it will have to be prepared to invest heavily in management. It may even have to risk forgoing many of the short term efficiency savings in order to benefit from longer term productivity gains.

The news that the Department of Health’s National Programme for IT could end up costing £30bn rather than £15bn was met with a shrug from many quarters, given that the alleged cost ‘over-run’ was simply the cost of correctly training and managing the implementation process. The good news for public sector professionals is that the fiscal imperatives in all of this could end up working in their favour. Decentralised decision-making is far more efficient than bureaucratic structures, because a great deal of time is saved between information becoming apparent, and an action being performed. The council repairman using his Ordnance Survey-based GIS system doesn’t need to return to a central depot for instructions or information – and if well-managed, he doesn’t need to waste any time seeking authority from above. With adequate management and trust, the ‘informed entrepreneur’ model of the public servant could oust the bureaucratic model, and deliver considerable efficiency savings along the way.

So much for the fiscal and technological challenges. But what of the politics? The political pressure point is likely to be the question of professionalism. All along it is assumed that teachers, doctors, social workers and the massed ranks of front-line service deliverers have an almost unchallengeable right to be left alone to do their jobs. This is what their professions and unions call for, and it is from this that the popular appeal of the Gershon agenda derives - the public are currently far more trusting towards public sector professionals than towards politicians. Without ICT, such an appeal would be in vain: bureaucracy was traditionally the unfortunate but necessary way in which information was gathered, processed and disseminated around the public sector. But today, there is both the technological and the managerial potential to cut out bureaucracy, to decentralise decision-taking without that impinging on the quality of information involved. What’s missing from this picture is the issue of political accountability. Those at the centre remain accountable for public services, even while they cut red tape, and release the best NHS consultants and Head-teachers to shape services as they see fit. Entrepreneurship is more attractive than bureaucracy, and cheaper. But what regulates it? Who apologises for it when it fails? ICT is what will facilitate this leaner, more flexible public sector, but it will not take on political accountability. Even as a fully integrated network, a flexible model of public services may prove a vicious one to try and control once professionalism is found wanting.