PLANNING AND CONTROLLING PUBLIC EXPENDITURE IN THE UK, PART I: THE TREASURY'S PUBLIC EXPEIWITURE SURVEY

The Treasury's annual survey of public expenditure is the central element in planning and controlling public expenditure. While its purpose remains similar to that in the 1970s, the principles governing its preparation, the methodology employed and the conduct of negotiations between the Treasury and the departments have changed with successive attempts to control both the total and programme allocations more effectively. This article examines and explains the process of preparing the survey, through the main stages from the decisions about the size of total public spending in the context of the government's macroeconomic strategy to the announcement in the Autumn Statement of the planned totals and allocations for the next three years and finally to the publication in February of the departmental Public Expenditure Chapters. Part I1 [Summer issue] analyses the effects and effectiveness of the survey processes, and discusses whose interests have been best served.     

THE TREASURY AND PUBLIC INVESTMENT: A PERSPECTIVE ON INTER-WAR ECONOMIC MANAGEMENT

This paper examines certain administrative constraints which hampered inter-war governments in their operation of public works policies and reinforced their opposition to even more ambitious Keynesian employment programmes. The stabilizing effectiveness of public investment is assessed, as is central government's ability to promote greater capital expenditure by the local authorities, the principal agencies for public investment. To this end, a special study is made of the large-scale public works programmes proposed by Mosley in 1930 and Lloyd George in 1935. It is concluded that there were cogent administrative and political reasons why such programmes were viewed as inappropriate solutions to unemployment between the wars, apart from the more nominally cited economic-theoretic foundations of orthodox opposition to Keynesian policies.     

REINTERPRETING THE WESTEAND AFFAIR: THEORIES OF THE STATE AND CORE EXECUTIVE DECISION MAKING

This article applies four theories of the state to the analysis of a major policy crisis, the Westland affair of 1985–6. The pluralist governmental politics model offers a narrowly political account stressing that multiple actors were involved, and that policy emerged from a complex sequence of individual decisions, with plenty of room for misunderstandings and slip-ups. The instrumental Marxist view by contrast emphasizes the penetration of government by business interests and the closed, elite character of decision making. The policy entrepreneur explanation offers a 'new right' account: the affair was born from a clash between a spending minister using public monies to pursue personal interests, and central actors and agencies seeking to limit the commitment of state expenditure. Finally, the 'symbolic politics' interpretation analyses the crisis as the interaction of four ideologically resonant 'games'– about leadership challenges, leaking of government 'secrets', executive-Parliament relations, and mass media 'battles'.     

ORGANIZATIONAL STRATEGY,EXTERNAL REGULATION AND PUBLIC SERVICE PERFORMANCE

We test the separate and joint effects of strategy and regulation on public service performance. Strategy is measured as the extent to which service providers are prospectors, defenders and reactors. Regulation is assessed on the basis of the number of inspection events and service managers’ perceptions of the supportiveness of regulators. We find that, controlling for prior performance and the level of service expenditure, prospecting is a more successful strategy than defending or reacting. In addition, inspection events generally disrupt the relationship between strategy and performance, but regulation that is supportive reinforces this relationship. The evidence suggests that the impact of organizational strategies in the public sector is contingent on the characteristics of regulatory regimes.     

CONTROLLING LOCAL GOVERNMENT EXPENDITURE: THE CASE OF NORTHERN IRELAND

The purposes of this paper are twofold, namely to outline the basic features of local government finance in Northern Ireland and to discuss how this financial system has been affected by the concerns of central government to control public expenditure. It will be argued that there has been no radical revision of the local government financial system but that central government used traditional methods of moral suasion and capital controls to induce councils to restrict their spending. The reasons for this include the small size of local expenditure and the political risks involved in further curbing local government in Northern Ireland.     

Testing The Limits of Incrementalism: An Empirical Analysis of Expenditure Decisions by English Local Authorities, 1981–1996

Studies of budgetary outputs in public organizations are dominated by the theory of incrementalism. This perspective suggests that expenditure decisions are based on simple rules of thumb. We evaluate the validity of incrementalism by examining the annual spending decisions of 403 English local authorities over 15 budgetary cycles. Two budgetary norms are tested empirically: protect the real level of service provision, and follow central expenditure guidelines. Each of these norms is translated into two decision rules: marginality, or the size of deviations from the norm, and regularity, which refers to the consistency of such deviations over time. Few of the statistical results support the hypothesis that local expenditure decisions are dominated by general budgetary norms or specific decision rules. Our evidence therefore casts doubt on the validity of incrementalism as a theory of local budgetary outputs, and as an explanation of spending decisions in the public sector as a whole.     

PETTY BUREAUCRACY AND WOOLLYMINDED LIBERALISM? THE CHANGING ETHOS OF LOCAL GOVERNMENT OFFICERS

Most discussions of the public service ethos ( pse ) have offered polemical accounts of how recent reforms have eroded the distinguishing values of public servants without ever defining this ethos or considering its relationship to other aspects of the public sector. This article considers the deeper and more structural implications of the pse by characterizing it as a political institution that shares the features of'new institutionalism'. It concentrates upon the pse as it manifests itself in local government and uses case studies of four authorities to analyse the extent to which external changes are altering the fundamental values of the ethos. In using the'new institutionalist'perspective it argues that the pse , a vital institution of the UK polity, has been resistant to external pressures for change. Hence, to be successful, public sector reform must take into account the interdependent relationship between the pse and other political institutions.     

Local Expenditure Interaction in Italian Municipalities: Do Local Council Partnerships Make a Difference?

This paper investigates interdependence among local councils in Italy in their public spending and distinguishes between possible sources of this interdependence. We find significant positive interaction among neighbouring local councils in regard to both spending at the level of total expenditure and spending on different sub-categories. Attempts to identify the source of this horizontal interaction seem to reject the yardstick competition hypothesis. Addressing the role that local council partnerships may play in internalising fiscal externalities, we suggest that expenditure interaction may be driven by spill-over.     

No miracles here: Trade policy,fiscal policy and economic growth

In this paper we consider whether the rate of growth following trade liberalisation differs significantly from growth in other developing countries. We find that it does not. Given this result we explore whether these growth effects are offset by changes in other policy variables, namely changes in fiscal policy. Governments increase welfare spending as a response to greater exposure to international trade. We find evidence that countries that liberalise their trade regimes increase their spending on welfare but not other forms of expenditure. However, once we control for the effects of fiscal policy, trade liberalisation still has no growth effects.     

Negative feedback,political attention,and public policy

More than 50 years of policy research has provided evidence of negative feedback where self‐correcting mechanisms reinforce stability in public policies over time. While such mechanisms are at the heart of understanding change and stability in public policies, little attention has been given to the responses of individual policy‐makers to public policies as a potential driver of negative feedback. Based on a unique survey dataset of spending preferences of local government politicians covering more than 90 Danish municipalities, three years, seven policy issues, and around 3,000 entries, we find that the expressed spending preferences of politicians are indeed negatively affected by previous spending levels. Moreover, such negative feedback effects are stronger, the less the political attention to the issue and even disappear at high levels of attention. Our analysis thus provides important evidence on the micro foundations and conditions of negative feedback in public policy.     

CENTRAL GRANTS AND LOCAL POLICY VARIATION

This paper estimates the impact of central grants on local spending decisions in England in the 19%. The analysis is based on a more explicit conceptual framework and a more appropriate methodology than conventionally used to measure grant effects in 'output' studies' of local policy variation. A set of six hypotheses is derived from political and economic theories of grant impact. The relationship between grants and expenditure change is estimated through a TSLS (Two Stage Least Squares) regression model. The main empirical results are that grants are an important constraint on spending decisions and that different types of grants have different effects: lump sum grants are substitutive and matching grants are stimulative. The evidence also indicates that spending is influenced by party politics, service needs and the local tax base.     

PERFORMANCE MANAGEMENT AND CITIZEN SATISFACTION WITH THE GOVERNMENT: EVIDENCE FROM CHINESE MUNICIPALITIES

Despite the fact that performance management has been ubiquitously adopted in the public sector across the world today, there is limited and inconclusive evidence that it improves citizen satisfaction with the government. In this article, we use survey data and multilevel modelling to analyse the effects of multiple performance management components on citizens' perceptions of government performance across 19 major cities in China. The results reveal that performance management does have a positive impact on citizen satisfaction. In addition, citizen participation, performance feedback and accountability, and information openness are positively associated with citizen satisfaction along various performance dimensions in different magnitudes. While we should take account of and mitigate its unintended consequences, our results suggest that it is still promising for public organizations to implement performance management.     

Reinventing the Treasury: Economic Rationalism or an Econocrat’s Fallacy of Control?

The 1994 Fundamental Expenditure Review (FER) of the UK Treasury was a radical overhaul of organization that had major implications for the way the Treasury conducts its business. This article examines the origins and implications of FER, paying particular attention to the 'strategic' philosophy of controlling public expenditure encapsulated within it. Ostensibly an expression of modern economic rationalism overturning outmoded administrative practices, the FER approach to public spending control might alternatively be interpreted as a manifestation of a recurring 'econocrat's fallacy of control' which aims to remove redundancy, random search mechanisms and external veto points from control systems.     

THE FINAL OUTCOMES OF THE REVIEW OF PUBLIC ADMINISTRATION IN NORTHERN IRELAND. TENSIONS AND COMPATIBILITY WITH DEVOLUTION,PARITY AND MODERNIZATION

In terms of the configuration of structures and the distribution of functions for the delivery of public services, the final decisions on the Review of Public Administration in Northern Ireland encompass significant changes compared to those proposed in 2005. This article places that review in the context of a devolved system of public administration. It identifies four different phases of the review process which have had a differential impact on the predominant themes, principles and structures. A range of tensions are identified, particularly between the proposals for structural change in the final outcomes and earlier recommendations, and also between the final decisions on structural changes and the guiding principles set out as underpinning these changes. The review proposals can be located within the public service reforms of the UK government and a number of perspectives are suggested for evaluating the extent to which the outcomes of the review are compatible with key components of the modernizing and devolution agendas of the UK government.     

MINISTERIAL ADVISERS,POLITICIZATION AND THE RETREAT FROM WESTMINSTER: THE CASE OF NEW ZEALAND

Political advisers are an established third element in a number of Westminster‐styled jurisdictions, as they are in New Zealand’s institution of executive government. In this paper we report the initial findings of a research project focusing on the role and accountabilities of ministerial advisers in New Zealand. We locate these findings in the context of a growing body of international and comparative research on the role and accountabilities of non civil‐ or public‐service advisers within political executives and comment on the extent to which the findings affirm or refute the view that the ‘third element’ constitutes a threat to the continued application of Westminster principles and practices in New Zealand’s system of government – once described as more Westminster than Westminster. In doing so, we highlight deficiencies in standard conceptions of politicization and argue that there is a need to more clearly differentiate between its procedural and substantive dimensions.     

Competitive Tendering In Local Government: A Review Of Theory And Evidence

The introduction of compulsory competitive tendering in UK local government reflected conventional public choice theories of bureaucracy. These theories suggest that competition for service contracts will lead to lower expenditure and higher efficiency. Extensions and criticisms of the classical public choice model yield very different conclusions. First, the problems of bureaucratic supply are less severe than originally assumed, and secondly competition may itself generate new problems such as transaction costs, erosion of trust between principals and agents, and rent seeking. The impact of competition on spending and efficiency is therefore indeterminate, and must be established empirically. However, studies which evaluate the effects of competitive tendering in local government are few in number, cover a limited range of services, and are methodologically flawed. Therefore neither the initial imposition of competitive tendering by the Conservatives, nor its planned abolition by Labour, can be traced to a solid foundation of theoretical or empirical support. Theoretical and methodological problems that need to be resolved by further empirical studies are identified.     

THE NEW SYSTEM OF LOCAL TAXATION IN SCOTLAND: PRINCIPLES AND PRACTICE

This article examines the new system of Scottish local government finance in theory and practice. It argues that reform is based on an economic theory of local fiscal behaviour, and examines the empirical evidence regarding the application of marginal cost pricing principles through the linking of marginal spending to taxation. The research reveals that the application of such principles in practice will be difficult, as only a few services offer direct benefits to all individuals, and as yet the technical precision needed in assessing needs for grant distribution has not materialized. There is little evidence of any impact of financial reform on local expenditure, as a number of intervening variables and assumptions can skew the accountability process.     

THE IMPACT OF OPEN DATA IN THE UK: COMPLEX,UNPREDICTABLE, AND POLITICAL

This article examines the democratic impact of the UK coalition government's Transparency Agenda, focusing on the publication of all local government spending over £500 by councils in England. It looks at whether the new data have driven increased democratic accountability, public participation, and information transmission. The evidence suggests that the local government spending data have driven some accountability. However, rather than forging new ‘performance regimes’, creating ‘armchair auditors’, or bringing mass use and involvement, the publication creates a further element of political disruption. Assessment of the use and impact of the new spending data finds it is more complex, more unpredictable, and more political than the rhetoric around Open Data indicates. The danger is that the gap between aims and impact invites disappointment from supporters.     

THE CONTENT AND CONTEXT OF ORGANIZATIONAL ETHICS

The aim of this paper is to provide an empirical contextual picture of what is truly valued most in different public and private sector organizations. Through a series of qualitative in‐depth interviews (n = 38), that were a follow‐up to an earlier survey study among public and private sector managers (n = 382), a number of crucial organizational values were presented to and discussed with a selection of top managers from a variety of Dutch public and private sector organizations. The decision‐making context from the interviews provides insight into why, when, how and to what extent specific values are important. A number of unexpected differences and similarities between organizations with a different sectoral status emerge from the data, which shed new light on existing predispositions on value preferences in government and business conduct.     

PUBLIC EXPENDITURE AND POLICY IMPLEMENTATION: THE CASE OF COMMUNITY CARE

This article explores the contention that the conventions of public expenditure accounting conceal, rather than reveal, the real nature and implications of resource trends. A benchmark — a constant level of service output — is established as a basis for examining the relationship between trends in expenditure inputs and service outputs. Changes in unit costs are identified as the major source of deviation between expenditure and output trends. The impact of resource constraint on policy and policy-implementation is then examined in relation to one, essentially stable, area of policy in the personal social services: community care.
The meaning of the term'policy' is far from straightforward and community care is best understood as the interaction of relatively independent streams of policy, towards service outputs and resource inputs, extant in both central and local government. Mechanisms by which policy streams could be reconciled are of particular interest and an innovative example — joint finance — is examined in some detail.