Catching up on the papers this weekend I found myself nodding in agreement throughout an interview with BBC Director General Mark Thompson, right up until … but more of that later. First, what lessons does the success of the BBC have for local government?
I may be biased, (my main experience of the BBC is through Radio 4 and BBC1 comedies), but it seems to me to be a British institution we can really be proud of. Publicly funded and admirably fulfilling its mission to inform, educate and entertain, it produces high quality programmes, respected round the world. Its impartiality and independence make it a trusted source of news and a bulwark of democracy. Of course it has its faults, and a debate is needed on its size and role but on the whole I would say it’s a success story.
So what. It’s got all that guaranteed money from the licence fee and independence from the government, how could it not succeed? Easily. Those features could just as easily have made it soft, lazy and inefficient. The perceived failure of the nationalised industries in the 1960’s and 70’s contributed to the prevailing wisdom that public funded organisations could not be efficient and effective, leading to greater privatisation and reduced state activity.
It is the underlying causes of its success which is interesting for local government, especially given the move to greater sector-led improvement. This is sometimes set up as a dichotomy between public and private sector. Can the public sector ever have the motivation to excellence of the private sector’s competitive markets? But there are more than just two alternatives. There are many features that make the private sector successful, some of which can equally be applied in the public sector and vice versa.
Efficiency in the private sector results from many factors: free markets, competition, the profit motive, the ability of firms to go bust (providing motivation and the ’survival of the fittest’). In the public sector are democratic pressures, values (public sector ethos) and external pressures such as inspection and regulation. But councils can benefit from user voice, or commissioning services from competitive markets. Just as companies can build collaborative partnerships and motivate their employees with vision and mission statements. Similarly, the BBC has managed to combine a public oriented mission, contracting out through independent production companies and external competition (over ratings which may influence future licence fee settlements but also artistic and creative competition), to produce top quality output.
A common distinction is between organisation through markets, hierarchies or networks, (and hybrid forms). However, that is to focus simply on efficient organisation. Two other dimensions are important: power and motivation. Power is about getting people to do things they would not otherwise do, such as working hard to meet the organisation’s objectives. Motivation, is key for local government. The argument has long been that democratic processes are not sufficient to keep local government efficient. So the market (e.g. CCT, best value) or external regulation (best value, CPA, CAA) is needed to provide the necessary discipline.
Neither profit based markets nor public service ethos guarantee good customer service. However, with free markets, customers can at least take their custom elsewhere. We in the public sector therefore need to be more rigorous in ensuring the motivation exists for consistent, top quality fulfilment of local authority functions.
Some initial thoughts on the breakdown of mechanisms between these purposes and forms of organisation are given in the table below.
| |
Co-ordination |
Power |
Motivation |
System-wide / unintended consequences |
| Markets |
Prices
Exchange, contracts.
Full and open information.
Lack of uncertainty. |
Unequal income distribution.
Market distortion (by control of resources, legal control or violence). Enforcement of contracts through legal system |
Self-interest, transaction by transaction
Consumer choice.
Profits. |
Failing firms go bust leaving more successful ones. |
| Hierarchies |
Hierarchical control. |
Ownership, authority, legal power
Employment contracts. Employment law.
Control of information |
Shareholder value, profits. Persuasion (leadership, culture etc.). Contractual relationships (pay, bonuses, terms and conditions etc.).
Democratic process (elections).
Public pressure.
Ideology.
Public sector ethos.
Regulation, audit and inspection. |
Mutual challenge, shared learning and support between non-competing bodies. |
| Networks |
Trust.
Norms.
Lateral and point to point communication.
Negotiation |
Unequal personal relationships (persuading, bullying, etc.) |
Values
Self-interest.
Personal relationships.
Altruism. |
Rapid growth (and possible distortion) through ICT |
By combining these factors in different ways, we can ask more pertinent questions about alternative arrangements for producing local government improvement, both from the national perspective, under the control of government, and locally under the control of local authorities themselves.
It is easy to assume that there are more benefits from a given approach than exist. Tendering out services may be seen as bringing the benefits of private sector markets to local government, but it brings into play only a limited number of the mechanisms identified in the table. Profit may be a powerful source of motivation but it is not the only one. Indeed you might ask, is naked self-interest necessarily going to produce more socially beneficial results than social ideals such as a public service ethos? Where do you turn for in-depth, unbiased news?
There are other ways in which the various mechanisms can be combined. For instance, we could positively encourage league tables, not by regulators who tell you how to do things, but purely to inspire professional pride (this has downsides, such as potentially weakening collaboration, but it’s an idea). Could we make more use of social enterprises to get the benefits of some competition, and public service ethos, without the restrictions of having to increase stakeholder value? And could we use social media to bring more of the benefits of networking for greater efficiency and responsiveness?
And the point at which I diverged from my agreement with the BBC Director General? It was when he was defending BBC executive pay and said “The public will not get things like the iPlayer if some artificial lens is used that says people in the BBC are just like people who work in local councils.” So high pay is fine to get you nifty little aids to entertainment but not planning the areas in which we live, keeping us clean and safe and safeguarding children from harm? Grrrr!