Public Service Agreements
Authors: Robinson Peter 
Published: March 2003

One of the most intriguing and indeed progressive features of the Labour government is its willingness to have itself judged against a wide range of targets, as set out in the Public Service Agreements (PSAs) which accompanied the Comprehensive Spending Review (CSR) in 1998.

The second Comprehensive Spending Review due in summer 2000 will be accompanied by a revised set of PSAs negotiated between the Treasury and individual departments. This second round of PSAs will rightly concentrate on the key policy outcomes which departments are aiming to deliver. The several hundred targets which assess the managerial effectiveness of the government machine will be covered by a separate series of Service Delivery Agreements. However, ironically the remarks by the Prime Minister on health service funding appear to undermine the whole CSR process, and threaten to turn the debate back to a focus on how much money gets spent on the public services, rather than the welcome focus on outcomes implied by the PSAs.

The PSAs in effect set out in detail the government’s strategy, which immediately raises the question of whether they should signal more clearly the government’s priorities across the many different policy outcomes. Several of the articles in this issue of New Economy focus on the key areas of policy which should be central to the agenda of a centre‐left government: restoring full employment, eliminating child poverty and putting sustainable development at the heart of government strategy rather than at its margins.

Matthew Taylor leads off by discussing the tensions which lie at the heart of the PSA process. Performance targets can have perverse outcomes if they are not designed carefully. The PSA process is highly centralising and may sti?e local initiative. It is not clear that modern government is best delivered by the Treasury telling everyone what to do.

In an act of modest self‐indulgence the editor contributes an article to this issue which argues that a commitment to the attainment of full employment alongside a commitment to eliminating child poverty would represent a really powerful and radical agenda for the Government. Less weight should be given to closing the productivity gap, which is less of a problem than usually thought.

Lisa Harker takes up the issues raised by the government’s anti‐poverty strategy noting the absence of any debate about which of the poverty indicators the government intends to track should be given priority. She also notes that adopting a clear measure of income poverty brings challenges for government, raising the question of how far it should explicitly address poverty through higher bene?ts to provide ‘security for those who cannot work’.

The urgency of tackling child poverty is given weight by the chilling conclusion set out by John Micklewright and Kitty Stewart that on three key measures of child well‐being – child poverty, children in workless households and the teenage birth rate – the UK’s performance is the worst in the EU. It is this ‘child poverty gap’ with our European partners which should make us ashamed not the productivity gap.

Fran Bennett and Chris Roche argue for genuinely participatory approaches to the development of indicators of poverty and social exclusion which focus not just on what is measured, but also on who decides which indicators are important. This approach features heavily in debates in the developing world, but the OECD countries could learn from this experience.

Chris Hewett and Matthew Rayment note discouragingly that seven major government departments made no reference to sustainable development in their aims and objectives as set out in the PSAs in 1998. By and large, the key environmental issues are still seen as only a priority for the DETR and no one else. It is not clear that any relationship between the PSAs and the government’s sustainable development strategy is evidence of joined up government or merely coincidental overlapping government.

The original PSAs made little or no reference to the goal of securing greater racial equality and Sarah Spencer takes up this omission by looking at a range of areas of public policy where a focus on outcome based measures relating to racial equality are needed. The achievement of race equality objectives necessitates a contribution from each of the key Whitehall departments responsible for domestic policy, and from all departments in relation to their own employment practices.

Damian Tambini discusses the ‘Ulysees Effect’ by which the announcing of targets amid great fanfare forces the government to nail its colours to the mast. In the area of electronic service delivery, targets have so far been quite successful in jolting government agencies into taking action. If potential problems relating to data protection and social exclusion do not emerge, targets in this area will be seen as a useful tool of radical modernisation. However, if the negative effects of electronic service delivery do become more severe, then the government will have to face some difficult choices: abandon the targets, fudge the ?gures, or push them through despite the negative consequences.

Andrea Westall discusses four recently published IPPR reports relating to business or industrial policy. A common theme is that government has a role as a market maker and catalyst by bringing players together to encourage the formation of innovative solutions rather than intervening in a broad and possibly blunt way. This role requires an element of risk and ‘letting go’ rather than devising programmes with clearly de?ned outcomes and targets – somewhat anathema to the Treasury with its emphasis on performance targets as set out in the PSAs.

Rebecca Harding looks at the establishment of regional venture capital funds, arguing that in the north of England the main problem may be the lack of demand for venture capital, so that it may not be the correct tool for supporting innovative small businesses in all regions.

Robert Atkinson explodes some of the myths held about the emerging ‘new economy’. This includes the notion that technological change is destroying employment (preposterous when viewed against the tremendous jobs growth in the US economy) or that economic change calls into question the continued viability of large corporations or the role of the state.

Finally David Osmon offers a different model from the government’s proposed public private partnership for achieving a more efficient London Underground. The combined infrastructure and operations of some underground lines could be leased to the private sector which could then compete with the publicly operated lines. If the private companies achieved efficiency savings they could then bid for further franchises and in the meantime those lines still in public ownership would be subject to competitive pressures to increase their efficiency. With all the uncertainty surrounding the current PPP this idea is worthy of consideration.