Thatcher and the rise of New Public Management

The Target Culture arrives

Today we can see the limitations in Simon’s philosophy. But we have to remember that at the time, people were in the grips of a kind of computer worship. I clearly remember meeting otherwise sensible people in the 1970s and 1980s who sincerely believed that data that had passed through a computer was inherently more useful, was better and was certainly more believable than anything else. It was as if computers produced results that that could not be questioned.

I seem to remember an experiment in the late 1970s in which people were shown similar pieces of text in four different formats: hand-written, typewritten, typeset and as output by a dot-matrix printer on fanfold paper. When they were asked which text was more credible, the huge majority of people said, as one might expect, that the handwritten text was the least credible, followed by typewritten text. But most credible of all  – in the 1970-s – was invariably the text output by a dot-matrix printer. It seems that the fact that its appeared to have emerged from a computer gave it a special kudos.

I would argue that it was the spirit of the times as well as Simon's reputation as an economist and computer scientist, that lay behind the extraordinary and uncritical acceptance and amplification of Simon’s ideas by scholars.

The New Public Administrators went on to create a new vocabulary and research methodology, promoting a belief that public services like health, policing and state education suffered and became inefficient because they were not subject to market forces and competition: business was efficient because companies were subject to a Darwinian survival of the most efficient

The theory went that if you wanted public services to become efficient, you would need to find something that would do for them what competition did for business. The way to do this, went the theory, was to begin by studying what the service did, collecting evidence (looking of course only at what could be measured numerically) and thereby to establish a baseline, a benchmark. Then you could set targets in strategic areas, and create incentives to push public services to meet them to perform better, and to achieve greater efficiencies.This was the beginning of the target culture.

In  a later post, I'll looks at the target culture in the context of Goodhart's law, “When a measure becomes a target, it ceases to be a good measure.”

Thatcherism Mark I and Mark II

It was under Margaret Thatcher here in the UK, that these ideas were put into practice for the first time. It is not hard to see why. In his biography of Thatcher, Charles Moore quotes her:

“‘We were Methodist,’ she liked to say of her Grantham childhood, ‘and Methodist means method’ … she was much more proud of being the first prime minister with a science degree than she was to be the first woman prime minister”[1] 

She could claim that all this would lead to less bureaucracy:

“We have moved from large state-owned bureaucracies … to networks of organisations which can operate with a fair degree of autonomy provided they meet specified performance targets.”[2]

Politicians liked the introduction of performance indicators and numerical targets into the public sector. They could be seen to be doing something. It gave them power, and critically, it gave them power without responsibility (“We set the targets: it will be your fault if you can’t keep up”).

As the Audit Commission wrote later,

“Poor public sector performance is a product of poor public sector management and the solution to these problems is the creation of frameworks which mirror the private sector.” [3]

The first step was for Government to measure the work done by the NHS, the police and education and then to devise suitable targets and suitable incentives.

The New Public Managers acted like good disciples of Herbert Simon. Knowing that they couldn't measure all the work that the public services did, they excluded all the ‘soft’ issues of quality, ethics, motivation and cultural context that had no numbers attached.

But now they went further than even Simon had suggested. They set out to transform each area they were studying in such a way that it naturally produced numerical data as the key signifiers. When the very nature of an organisations’ work made it hard to set nationally valid targets (as, for example, when the Schools Inspectorate took into account local situations and contexts), then they would reconstruct the organisation so that it would produce national targets – in this case by replacing the Schools Inspectorate with a new inspectorate called Ofsted, that would be required to ignore local situations and contexts.

Even Simon had not suggested that you should change what you measure to make measurement easier.

Not all of this came from central government. The Committee of University Vice-Chancellors and Principals themselves commissioned Alex Jarratt (a businessman with little experience of university management) to chair an investigation into their work. It was almost certainly an attempt to curry favour with Thatcher, and to persuade her to stop some of the cutbacks she was imposing,

The report has been described as mischievous and malevolent, and one of the most damaging inquiries into higher education over the last half-century. [4]

It recommended that Universities abandon the idea of education for its own sake, to think of themselves as learning-factories with layers of managers and customers rather than students, all working towards the numerical targets and performance indicators would let them take up a role in Thatcher’s New World Order. Amazingly, the Universities adopted the recommendations in their entirety.

Later, when Tony Blair came to power, he and his advisors embraced New Public Management so warmly that some people called his policies ‘Thatcherism Mark II [5]

The system appealed to New Labour with its claim to be rational, new, and modern, and perhaps also because it centralised power on the one hand, while devolving responsibility on the other.

Here is Blair’s Home Secretary David Blunkett talking the talk in terms of policing: “It is vital to measure crime accurately if we are to be able to tackle it effectively.” [6]

But it was not only the crime figures and the police. New Public Administrators wanted to counter the power of professional groups and trade unions, by attacking the practice of self-regulation, bringing in performance assessment and increasing external inspections and audits – particularly in large professions such as health and education.

[ Next: The Target Culture: Evidence based management ]

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[1]   Runciman, David. "Rat-a-tat-a-tat-a-tat-a-tat" London Review of Books Vol 35 Issue 11, London, 6 June 2013
[2]   idem
[3]   Adcrodt, Andy; Willis, Robert. "The (un)Intended Outcome of Performance Measurement in the Public Sector". International Journal of Public Sector Management, Vol 18 Issue 5, University of Surrey, UK 2005
[4]   Alderman, Geoffrey  "A review of Malcolm Tight's "Higher Education in the United Kingdom since 1945"" http://www.timeshighereducation.co.uk/407560.article, Times Higher Education 20-09 accessed March 2015
[5]   Driver, Stephen; Martell, Luke.  "Blair's Britain", Polity Press, London 2002
[6]   Simmons, Jon; Legg, Clarissa; Hosking, Rachel.  "National Crime Recording Standard (NCRS): an analysis of the impact on recorded crime" at http://webarchive.nationalarchives.gov.uk/20110218135832/http:/rds.homeoffice.gov.uk/rds/pdfs2/rdsolr3103.pdf on  Webarchives.nationalarchives.gov.uk, The Home Office 2003, accessed February 2015