Memorandum by John Napier (RG 76)
This is a difficult subject to constructively
comment on without defining what is meant by Regional Government.
The perception of the electorate in Yorkshire, Humber and the
North East, was that it involved two broad aspects:
1. The devolution of more decision making
power and influence to the Regions.
2. Some form of increased political Regional
accountability via an additional elected representational agency.
There was clearly widespread general scepticism
about the first aspect and rejection of the specific proposals,
even by those in favour of Regionalisation, because of the limited
powers transferred.
The main downside of linking the two points
above, is that it obscured the fundamental economic efficiency,
service gains and improved decision making that could be obtained
from a greater degree of decentralisation in the management and
provision of Government services, and related improved decision
making in Central Government.
In discussing this opinion, a model is used
that focuses on the improvements in cost and efficiency and in
service delivery that could be achieved and are available to National
Government, without requiring a change in political processes
at a Regional level, ie it is in the control of Government.
THE MODEL
The model assumes:
— There is a National Government
that controls the National legislature and determines policies
and legislation in all areas, legitimised by a General Election.
It normally attempts to implement a detailed programme or a manifesto
on which it feels it is mandated.
— That the implementation of policy
and National Government decisions, including the delivery of related
outputs and services, is achieved via Departments of State, managed
and operated by the Civil Service, permanently responsible for
the administration and executive management and the performance
of the relevant Department of State.
— That the required organisation
of any Department of State should depend on the nature of the
activity and the type of service outputs it delivers and an ongoing
management responsibility to achieve continuous improvements in
performance.
THE RANGE
OF GOVERNMENT
SERVICES OR
OUTPUTS
The range of Government services and outputs
can be broadly grouped as follows:
Type 1: Those that are principally involved
with the collection of tax and other major revenues and/or with
the transfer of cash to individual citizens on a continuous and
regular basis.
Examples of such Departments are the newly
combined Tax and Excise Department and welfare payments.
Type 2: Those that provide actual physical
services involving employing specialised skills in dedicated premises
where service needs are on a "free" or demand basis.
Examples of outputs here are Education and
Health
Type 3: Those that interface with other
non-National Government Bodies eg Local Authorities and non-Government
private sector organisations and involve either advisory and discretionary
services or significant strategic infrastructure and resource
decisions, eg Transport, Housing and DTI, and ODPM.
THE USE
OF REGIONAL
OR DECENTRALISED
ORGANISATIONS
A key question becomes to what extent there
is use of effective Regional or Decentralised management structures
within the relevant Departments of State. Each Department type
for this purpose is considered separately.
Type 1
The essential activity of these types of Department
are the collection and allocations of monies from or to individuals
and organisations, or to other Government Departments or directly
to individuals. It also involves the management of the Treasury
and finance functions, cash flow and cash management as well as
the measurement, financial management and control of the government
itself and managing and forecasting the total economy.
Such Departments are expected to be heavily
centralised, apply strict guidelines on collection and payments
and are suitable for large scale computer operations. The service
they deal with is essentially money. They should be and are centralised.
Type 2
There are invariably a number of essentially
common characteristics in this category
— They provide real services involving
the organisation of people and premises and other financial inputs
to provide services to families and individuals on a "free"
on demand basis.
These services are delivered across the country
in free standing locations, largely distributed on a population
basis.
— They involve elements of "expertise
scarcity" and research needs but have a very significant
core of standard activities and outputs.
— They are of significant scale,
measured by total resource and are a large employer of people.
— Outputs can be time critical
or subject to significant quality factors. All outputs have high
public awareness and failures can have a very high reputational
impact.
The type or organisational structures which
would be best suited from an efficiency and service outlook would
include:
A tightly controlled central function which
dealt with
— Strategic planning to avoid
duplication of scarce knowledge and optimum use of capital and
technological resources.
— The identification of research
needs and provision in-house or from the market.
— Financial planning and budgeting
— Policy interface with any external
regulatory reporting and requirement
— The setting of internal policy
standards and key performance indicators
— Consolidated National reporting
performance on:
— Budget and financial outcomes,
— Cost and output standards, and
— Compliance where relevant to policy
standards.
The actual operational performance would be
devolved into a Regional management structure which would have
the responsibility for, and capacity to, be fully empowered to
deliver the required results. It would also feed into the Centre:
— Regional inputs into strategic
planning of specialised resources.
— Standardised information and
financial reports on key outputs related to cost and efficiency
and quality of service.
— The corrective action taken
to remedy performance failures in individual units.
In addition the Centre would have available
to it, through time, a rich set of comparative data which would
be sufficient to assess the performance of the decentralised management
functions and make senior management fully accountable. The Centre
would not attempt to directly manage individual units.
The benefits to this type or organisational
approach would be very significant, given the scale of the NHS.
For instance, no private sector Corporate could effectively manage
the NHS scale in any other way than that proposed above. A Regional
Manager would have a job size commensurate with a Footsie 250
company. The National Heath Service would have effectively not
one high calibre Chief Executive but nine or 10. The impact of
people of this calibre, allowed to manage should not be understated.
It is possible to estimate, from experience,
that the benefits of greater Regional identity and decentralised
real accountability, working with inter-regional data comparators
could provide:
— An average 20% reduction in
labour and management costs.
— A 10% increase in the volume
of existing outputs and increases in the quality of outputs.
It is an extreme organisational paradox that
the two Departments of State, that deliver such key services on
a City, Town and Regional basis, are so heavily over centralised.
The focus on unit performance and information
is correct, but the attempt to manage from centre to individual
unit is always likely to be seriously sub-optimum. It cannot identify
and define the real issues early enough and it is always going
to be deficient in applying sustainable remedies on a timely basis.
It also leads to a massive expansion and proliferation
of IT requirements and exposes units to the distraction of many
competing Central initiatives and controls.
In the private sector the increases in output
and performance that would arise, would translate to a loss of
employment, if services and sales could not be expanded. In the
Public Sector, given the trend of demand for Health and Educational
services and known deficits in average standards, such improvements
could be transformed into additional services and outputs within
current budget limits. It would require a radical management and
organisational rethink.
The current constraint to these organisations
is not people and capital resources. There is already evidence
of significant marginal declines in output from increasing capital
and labour inputs. The constraint is organisational, managerial
and motivational.
The third type of Department of State is more
complex:
— Services provided are more intermittent
and can have a longer time span eg a transport plan.
— Outputs are difficult to define
and measure eg business support.
— There can be significant Regional
differences in what is required eg housing and transport.
— Strategic conditions can be
subject to external events eg energy supply and price, sudden
emergencies.
— Decision options tend to be
constrained by Central Departmental planning and policy guidelines
which are not sufficiently flexible to accommodate different Regional
requirements eg affordable housing.
— Consultative arrangements with
private and public companies and bodies can be complex and inconsistently
applied.
— Special fit for purpose bodies
and NDPB's are created, prove to be effective or fail may be superceded
but continue to exist in a reduced form, thereby increasing confusion
and complexity.
— The role of the Regional Government
Office remains ambiguous and under developed with some Departments
of State embedded in a common location but retaining a more separate
ambassadorial rather than a regional role with Regional authority
to decide.
The dominant form of organisation should therefore
be central as these Departments have a larger strategic element
and consider decisions over longer periods of time. They should
however, have more well defined structures for getting strategic
information and input from Regions and a disposition to share
strategic and other essential information and decision making
with Government agencies in the Regions, particularly RGO's and
RDA's.
As an example the RDA Regional Economic Planning
process has become better informed on housing and transport information,
but the transport elements still exclude inputs and advice on
major road schemes and prioritises rail and airport projects.
Housing allocations are centrally pre-allocated. Other Departments
of State have less Regional awareness.
Transport planning should be much more Regional.
The recent "Northern Way" Initiative has value as a
wider regional transport infrastructure planning concept. It would
be better informed and more effective had it been based on an
existing inclusive Regional transport planning activity. There
is a danger the "Northern Way" concept will be extended
to other less appropriate areas and cause confusion and inhibit
a first priority recommendation of increased Regional Government
within the Civil Service, namely a more defined and strengthened
role for Regional Government Offices with some surrender of policy
and power to those offices. This initiative should be lead by
the ODTPM and DTI. There should also be a review of Regional effectiveness
within each Department of State.
In general more care is required to adopting
the "isms" of the moment. In particular words like "sustainable
development" have different interpretations within Departments
and are a cause of communication confusion and have the potential
to significantly distort decision making eg DEFRA, the DTI, Housing
and Transport, may have quite different interpretations of "sustainability".
WHY IS
NOT REGIONAL
GOVERNMENT MORE
PREVALENT IN
DEPARTMENTS OF
STATE
Given the benefits to strategic decision making
and operational performance in terms of efficient delivery of
public service outputs that could arise from improved Regional
Government as defined in this memorandum, the question has to
be asked "why is it not more proactively championed and achieved".
The Civil Service in particular contains a great number of very
able people, both seem biased against regional or decentralised
management concepts. Why is that? My view is that factors include:
1. The Historic Legacy
— Growth of Government activity
in society at a national level with national policy initiatives.
— Transfer of finance and responsibility
for key services like Health and Education from Local Authorities
to Department of State.
— Experience of poor Regional
delivery from Local Authority Departments more dependent on reallocated
finance from general taxation.
2. Cultural Aspects
— The current doctrine and Ministerial
accountability tends to reinforce the centralising tendencies
of information gathering and attempting management of operations
from the Centre.
— Their historic excellence is
in administration rather than in operations and the delivery of
physical services.
— A reluctance to prioritise new
Regional initiatives when reduced and failing Regional Delivery
Agencies are still involved on a Regional basis.
— Senior Civil Service career
opportunities are seen nationally across Government rather than
vertically within a particular Department. The Civil Service Executive
is more structured in this direction.
— The attractions of London culture
and being at the "heart of things".
3. Technology
— Information, technology and
computing power has increased and made it more possible to centrally
administer and manage remote units.
— Supports increased functionalism
and a wider decision making involvement via emails.
— More dependent upon large scale
information system providers and external consultants than is
normal in private industry.
4. Role of Secretary of State
— A Secretary of State, with his
roles as constituency MP, Member of the National Government, introducer
of legislation in Parliament, has very limited time to interest
himself in long term policy aspects of the efficient operation
of the Department for which he is responsible for.
— The short time of average tenure
in office in a particular Department of State.
HOW DO
WE CHANGE
THE SITUATION
1. The relative under performance of Type
2 Departments, given the insignificant increase in investment
may lead to:
— More analysis of the reasons.
— More challenge of the status
quo.
— More use of an external review
process.
2. In the Type 3 area a more active role
for the DTI and ODPM is proposed in promoting more Regional considerations
within all Government Departments and extending the role and powers
of Regional Government Offices.
3. Regional Government will not increase
without effective champions within National Government and in
the Departments of State.
4. There is need of a culture change in
the Civil Service.
5. There should be a more independent third
party measurement of the real economic and efficiency performance
of Government Departments. Note: If the data does not exist within
a Department to facilitate this, it is a "classic" indicator
that this is an area that receives very limited attention, therefore
needs urgent attention.
6. That we expand Regional government concepts
within the existing Departments of State as a first priority.
7. We minimise further confusion by ensuring
Central initiatives like the "Northern Way" are closely
defined in scope as fit for purpose specified outputs, ie transport
infrastructures and strengthen the role of Regional Government
Offices.
8. We make efficiency, cost and quality
of outputs a much higher general priority.
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