The value of everything, by Colin Talbot

8 Jun 06
Is 'public value' a useful tool for democratising public services or a load of airy-fairy nonsense? Colin Talbot sets out the case for taking it seriously

09 June 2006

Is 'public value' a useful tool for democratising public services – or a load of airy-fairy nonsense? Colin Talbot sets out the case for taking it seriously

There is a new phrase percolating slowly through the policy and public management community in the UK: public value. It made its debut in about 2001, when the Cabinet Office Strategy Unit latched on to Harvard academic Mark Moore's ideas, set out in his 1996 book, Creating public value. These concepts were adopted and adapted through a series of workshops and seminars and eventually emerged as a Strategy Unit paper, published in 2002 and revised in 2004.

Although the paper was authored by unit staffers, including Geoff Mulgan, the discussions had included the enthusiastic participation of Douglas Alexander, then Cabinet Office minister and one of the rising stars of the New Labour government.

After this initial flurry of activity, things seemed to go quiet for a while – possibly because the Treasury appeared to be at best lukewarm about the ideas. However, over the past couple of years, another round of activity has begun. The BBC used 'public value' ideas in its charter renewal submission and continues to develop the notion as a device for evaluating new services.

The Work Foundation, under Will Hutton, has been running a consortium of public organisations developing the ideas further, including the BBC; Department for Culture, Media and Sport; Home Office; Learning and Skills Development Agency; London Borough of Lewisham; Metropolitan Police; NHS Modernisation Agency; Ofcom; and the Royal Opera House.

The influential think-tank the Institute for Public Policy Research has published a couple of reports using public value ideas. If it is not yet a fashion, it is possibly the start of one. So what is it all about?

In some ways, Moore's ideas can be seen as an attempt to weld together the old concerns for the 'public interest' embedded in traditional public administration with the emphasis on efficiency and responsive delivery in the so-called 'new public management'.

NPM thinking has dominated discussions about public sector reform for more than two decades now, especially in the 'anglo' countries but also in cultures as diverse as Japan and Jamaica. It is based on some fairly narrow ideas from economics – about 'rational choice' and 'principal agent' problems. It assumes that ideas from private sector businesses can be imported willy-nilly into the public sector, and so we got internal markets, performance-related pay and all sorts of contractualisation, among other things.

Public value, as conceived by Moore and others, seeks to inject ideas about trust and legitimacy back into thinking about public services. As my colleague

at Manchester, Gerry Stoker, puts it, it is a new way

of reconciling the search for efficiency with the requirements of democracy in the public sector.

Moore's particular focus is from the perspective of senior public officials running services, and he uses the language of strategic management. How, he asks, do you demonstrate that your service is delivering value for the money the taxpayer puts into it? He argues that senior public managers have to play an active role in shaping the mandate that their agency is given. This runs counter to some of the old versions of public administration, which see public servants as passive implementers of elected politicians' will. Moore says that, as the people most closely involved in running services, public managers have an obligation, as well

as an interest, in making sure they get the best and clearest mandate from politicians.

This view is not uncontroversial. David Walker of the Guardian, for example, recently asked what would happen if a Conservative public manager tried to thwart the will of elected Labour politicians – the classic 'Sir Humphrey' problem. Of course, there is a real danger here. But to pretend that public managers don't try to influence policy is just naïve – Yes, Minister was funny precisely because everyone knew that senior civil servants did just that, but maintained the polite fiction that they didn't.

Moore's suggestion that we get these discussions out into the open seems perfectly sensible, so long as the ultimate decisions are still taken by democratically elected politicians.

Public managers – indeed all public service workers – are a valuable knowledge asset. They know how services run best. Does that mean they should be given free rein to run services, as some current fashionable ideas about 'devolving power to the front line' suggest? No, of course not. But it does mean they should be listened to, and we should think very carefully about where we try to draw the boundaries between 'policy' and 'operations'.

Let's take a recent example. There was a small but significant shift in this boundary in the legislation that merged Customs & Excise and the Inland Revenue. For historic reasons, both Customs and the Revenue had total operational independence and a great deal of control over policy. This was done for the good and proper reason that it stopped elected politicians manipulating detailed tax rules to suit their constituencies – and kept their hands out of the till. The new Revenue & Customs has ceded some of this power over policy to the Treasury, in effect to the chancellor. Whether this turns out to be a robust and safe system remains to be seen. What it illustrates is that the boundary between elected politicians and permanent officials is always shifting and somewhat fuzzy, but also always needs to be carefully patrolled.

The second focus of public value is on the radical notion that what the public values is what it values, not some elite-imposed notion of the 'public interest'. Ultimately, public services will create value only if the public sees that it gets more from contributing taxes than from simply buying what it wants in the market place. But what does 'create value' mean?

As Moore points out, public services do two things: provide services and (hopefully) deliver social outcomes. So when an NHS hospital provides a hip operation, it also aims to deliver a healthy and pain-free patient and ultimately maybe even an active citizen, contributing to society and the economy. So all services have a double aspect – immediate delivery to individuals or communities and eventual outcomes. They have to be seen to be creating value in both ways – in delivering services and in their outcomes.

Secondly, who are they creating value for? Here is where it starts to get a little complicated, because, as they say up north, there's nowt so queer as folk. People are fundamentally contradictory. They are both selfish and altruistic. In public service terms, this means people want services that give them what they, or their family, need, but they also usually want public services to operate in public-spirited, altruistic ways – helping the poor and needy regardless of their ability to pay. We value public services for both things, and it makes it very complicated satisfying such contradictory desires.

But I would add a third dimension to self-interest and public interest: procedural interest. A 2002 book, Happiness and economics, illustrates this desire with various experimental and survey evidence. Essentially, authors Bruno Frey and Alois Stutzer argue that humans value 'fair play' even when they personally lose. And 'fair play', in a public service context, includes not only fair processes in deciding who gets what, but fair and inclusive processes for deciding public policy in the first place – ie, democracy. With some fascinating data they show that the Swiss cantons that most use referendums achieve higher levels of happiness with public institutions than others.

So public value is a trade-off between self, public and procedural interests. The weight given to each of these aspects varies considerably. For example, we tend to value procedural fairness very highly when it comes to things such as paying taxes, collecting benefits and locking people up. We favour, usually, public-spirited action when it comes to helping the very poor or the very sick or victims of man-made or natural disasters. We place a high value on personal interest when it comes to things such as schools for our children.

None of these balances is, however, fixed and none can ignore the other two completely. In many ways, the recent education debate can be seen in these terms: self-interest (parental choice) versus public interest (no two-tier education system) versus procedural interest (fair selection processes).

Creating public value is a constant process of balancing and rebalancing these trade-offs by finding out what the public actually wants from services. Moreover, this three-way yardstick has to be applied at all levels from what resources we dedicate to services, through to the outputs and outcomes they produce.

This might seem to be a fiendishly complicated process, as indeed it is. But when it doesn't work, it soon becomes apparent. If a public service satisfies individuals but ignores public and procedural interests, taxpayers and voters will soon think twice about supporting it. Those in the government who claim that services can be completely 'customer-driven' would soon find that, if they were, the public would stop wanting to pay for them. But the reverse is also true – if a service is oblivious to the needs of the individuals who use it, they will soon let their dissatisfaction be known – either verbally or often these days through the courts.

To all those who think this is airy-fairy nonsense and what is needed is some hard-headed numbers rather than this subjective stuff, there is a simple question: what happened to Arthur Andersen? One of the 'big five' accounting firms, which lasted almost a century, disappeared virtually overnight when its value in the eyes of the public and markets disintegrated in the wake of the Enron scandal. Subjective? Certainly, but most issues of value are. The Child Support Agency has never recovered from its initial failures and probably never will, because nobody really trusts it. That is why the notion of public value is so… valuable.

Colin Talbot is professor of public policy and management at Manchester Business School. He is speaking on 'Shaping the public services — is big beautiful?' at the CIPFA conference on Thursday, June 15


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