Chapter 4. The Transformation of the UK State

This post introduces chapter 4 of Politics and Policy Making in the UK by Paul Cairney and Sean Kippin.

What do we mean by state transformation?

State transformation describes a collection of major changes to policy and policymaking from the ‘post-war settlement’ towards ‘neoliberal reforms’ (towards a smaller state and less state intervention). There were many ‘neoliberal’ reforms to UK policy, policymaking, and delivery functions from the election of a Thatcher-led Conservative government from 1979.  However, we are not really describing a coherent and wholesale shift from one model of state intervention to another. Further, the election of a different party did not necessarily prompt a wholesale shift of approach.

What was the post-war consensus?

Consensus describes the maintenance of a similar approach to policy and policymaking throughout multiple changes of Labour and Conservative government (from 1945). This approach is characterised by higher state intervention to address policy problems. It includes:

• A Keynesian approach to economic policy (high state intervention via fiscal policies).
• An expanded welfare state, withnew entitlements to social security (including pension, unemployment and child benefits), access to free public services such as healthcare and education, and subsidized social housing.
• A large industrial state, with high state ownership of industry and public utilities.
• The funding and direct delivery of public services.

What were neoliberal reforms?

Neoliberal can mean the preference for: individual rather than state responsibility (e.g. for improving your health), market rather than state action (e.g. to promote economic growth), and economic growth as the primary aim. As such, reforms would include:

• The rejection of Keynesian intervention, based on belief that state intervention harms market forces, in favour of controlling inflation via monetary measures.
• Reduced policy commitments in relation to full employment and the welfare state, and being prepared to trade higher unemployment for low inflation. For example, the idea may be to seek a ‘natural rate of unemployment’, or the lowest level of unemployment that does not cause excessive inflation via inflationary wage demands, exacerbated by the negotiating power of trade unions, and too- high unemployment benefits.
• The privatisation of industry and reform of public services.

Economic Policy: From Keynesianism To Neoliberalism?

Chapter 4 describes a series of broad phases of activity, including:

1940s and 1950s: UK government policy changes consistent with Keynesian thought. For example, high taxation and spending to manage demand and seek full employment.

1960s: making state intervention work by modifying a Keynesian approach. For example, defending a Keynesian approach but modifying action to address unexpected problems (e.g. lower than expected growth, and a currency crisis)

1970s: a series of crises. They included the Conservative government (1970-74) seeking in vain to ‘roll back the state’, then a Labour government (1974–1979) facing rising inflation and unemployment, and a reduction in the value of sterling. The government’s need to borrow heavily, to finance major spending deficits, prompted initial attempts to reduce public expenditure.

1979–1997: a rejection of Keynesianism? Peter Hall describes a ‘paradigm change’ from Keynesianism to monetarism in the early 1980s, while Oliver and Pemberton describe longer term change towards neoliberal approaches.

1997 onwards: a mix of ‘neoliberal’ aims and new Keynesian’ policies. The New Labour government (1997-2010) sought to project an image of economic competence based on fiscal prudence (keeping government debt to 40% of GDP), granting independence to the Bank of England, and minimizing regulation of ‘the City’ (financial institutions).

Then came the global financial crisis, high state intervention, then ‘austerity’ (Chapter 9). Overall, we describe from 1979 an often-confusing mix of low-state intentions and unwanted high state action during crisis.

The story of employment policy is less confusing: from 1980 there has been a succession of Employment Acts to restrict the power of trades unions, based initially on Thatcher government antipathy to unions and consultation with interest groups (chapter 5), but maintained under Labour and accelerated by Conservative governments. The ability of trades unions to organize and call strike action has been reduced profoundly.

Privatisation and new public management

There has been a profound shift from a UK industrial state. For example, in 1950, the nationalized industries – water, coal, electricity, steel, gas, oil, rail, telecommunications and postal delivery – employed 2.3 million people. In 1980 they employed 1.8 million. By 1997: 0.24 million. UK governments sold £74 billion of state assets from 1979-1997 and £8 billion since then (2020 prices).

Thatcher governments also encouraged the mass sale of social housing. The 1980 Housing Act introduced a renter’s ‘right to buy’ their council house (and a discount based on years of renting).  From 1980-2003, 2.8 million homes were sold. To some extent, this obligation for councils was part of a wider challenge to local authorities, which included the ill-fated poll tax.

Privatisation also extended to:

• deregulating services (e.g. buses)
• obliging the private delivery of public services (e.g. making public bodies like councils ‘contract out’ some services)
• using private investment for capital projects (e.g. to fund investment in roads, bridges, hospitals, schools)
• reducing subsidies or increasing charges for services (e.g. for prescriptions, opticians, higher education tuition).

New public management reforms involve the application of private sector ideas or methods to the public sector. Examples include:

• NHS reforms to introduce an ‘internal market’
• Education (schools) reforms in England to foster ‘school choice’, shift from comprehensive schooling, and shift from local authority control.
• Civil service reforms, to reduce their number, recruit from outside, and separate policy and delivery (in Executive Agencies). Governments have also sought to establish new policy advisory systems (with more involvement from consultancy and think tanks)

Measures of state retrenchment or transformation

It is not always straightforward to demonstrate state transformation. For example, state spending as a proportion of GDP was 45% in 1988, which was lower than 1982 (54%) but higher than the mid-1950s (then it rose heavily under New Labour before ‘austerity’ from 2010 – Chapter 9). Still, the industrial state has vanished, and the role of the state in public service delivery has transformed (see Chapter 4 for examples). ‘Neoliberal’ also extends to a reluctance to foster ‘nanny state’ intervention.

The impact of devolution on state intervention

One the one hand, political devolution in 1999 represents the further transformation of the state towards multi-level policymaking. On the other hand, devolved governments are usually less keen on neoliberal reforms (although it is difficult to present a complete picture in Northern Ireland, since its Assembly was suspended in 2000, 2002–2007 and 2017–2020, and in flux from 2022-4). Examples include:

• Healthcare. The Scottish and Welsh governments sought to remove or slow UK reforms. All 3 governments phased out prescription charges.
• Schools. The Scottish and Welsh governments prefer comprehensive schooling. All 3 are less keen than the UK on ‘league tables’ of school performance.
• Local government. The Scottish and Welsh governments foster better central-local relations, and more trust in public bodies to deliver services.

Overall, there has been a transformation of the UK state

It moved from a ‘postwar consensus’, built on the belief that governments could and should intervene to benefit the UK population by delivering employment, education, healthcare, housing and social security. It moved towards ‘neoliberalism’, built on the belief that state intervention undermines the market and that individuals should take responsibility for their welfare. The size of the industrial state fell dramatically. The UK government is less committed to the ‘old’ Keynesian measures to tax and spend to manage demand in the economy. Tax- funded public services remain, but the state is much less likely to deliver them directly. Multiple reforms have changed how the civil service and policy advisory systems operate.

Parties made a difference to this transformation.  Labour introduced the policies associated with the post- war consensus, and the Conservatives pursued a commitment to neoliberalism. However, parties also inherited the commitments of their predecessors, accepting or accelerating policies of the past. Most elements of state transformation are here to stay, regardless of party.

See also Chapter 5 on how we can describe and explain the transformation.

Policy Concepts in 1000 Words: Complex Systems

(podcast download)

There is an unnecessary tendency for proponents of complexity theory to say that it is radically new; a scientific revolution; that it will change the way we think about, and study, the natural and social world. It suggests that we shift our analysis from individual parts of a system to the system as a whole; as a network of elements that interact and combine to produce systemic behaviour that cannot be broken down merely into the actions of its constituent parts. The metaphor of a microscope or telescope, in which we zoom in to analyse individual components or zoom out to see the system as a whole, sums up this alleged shift of approach.

Complexity theory has been applied to a wide range of activity, from the swarming behaviour of bees, the weather and the function of the brain, to social and political systems.  The argument is that all such systems have common properties, including:

1. A complex system is greater than the sum of its parts; those parts are interdependent – elements interact with each other, share information and combine to produce systemic behaviour.
2. Some attempts to influence complex systems are dampened (negative feedback) while others are amplified (positive feedback). Small actions can have large effects and large actions can have small effects.
3. Complex systems are particularly sensitive to initial conditions that produce a long-term momentum or ‘path dependence’.
4. They exhibit ‘emergence’, or behaviour that results from the interaction between elements at a local level rather than central direction.
5. They may contain ‘strange attractors’ or demonstrate extended regularities of behaviour which may be interrupted by short bursts of change.

As you might expect from a theory of many things, the language is vague and needs some interpretation in each field. In the policymaking field, the identification of a complex system is often used to make the following suggestions:

• Law-like behaviour is difficult to identify – so a policy that was successful in one context may not have the same effect in another.
• Policymaking systems are difficult to control; policy makers should not be surprised when their policy interventions do not have the desired effect.
• Policy makers in the UK have been too driven by the idea of order, maintaining rigid hierarchies and producing top-down, centrally driven policy strategies.  An attachment to performance indicators, to monitor and control local actors, may simply result in policy failure and demoralised policymakers.
• Policymaking systems or their environments change quickly. Therefore, organisations must adapt quickly and not rely on a single policy strategy.

On this basis, there is a tendency in the literature to encourage the delegation of decision-making to local actors:

1. Rely less on central government driven targets, in favour of giving local organisations more freedom to learn from their experience and adapt to their rapidly-changing environment.
2. To deal with uncertainty and change, encourage trial-and-error projects, or pilots, that can provide lessons, or be adopted or rejected, relatively quickly.
3. Encourage better ways to deal with alleged failure by treating ‘errors’ as sources of learning (rather than a means to punish organisations) or setting more realistic parameters for success/ failure.
4. Encourage a greater understanding, within the public sector, of the implications of complex systems and terms such as ‘emergence’ or ‘feedback loops’.

In other words, this literature, when applied to policymaking, tends to encourage a movement from centrally driven targets and performance indicators towards a more flexible understanding of rules and targets by local actors who are more able to understand and adapt to rapidly-changing local circumstances.

Although complexity theory is described as new, these are familiar arguments in policy studies. Relevant texts in the policymaking literature include punctuated equilibrium theory, historical institutionalism and the following:

Lipsky’s idea of ‘street level bureaucracy’. He suggests that there are so many targets, rules and laws that no public agency or official can be reasonably expected to fulfil them all.  In fact, many may be too vague or even contradictory, requiring ‘street level bureaucrats’ to choose some over others.  The potential irony is that the cumulative pressure from more central government rules and targets effectively provides implementers with a greater degree of freedom to manage their budgets and day-to-day activities. Alternatively, central governments must effectively reduce their expectations by introducing performance measures which relate to a small part of government business (see this discussion of Street Level Organizations https://paulcairney.wordpress.com/2013/09/09/street-level-bureacrats/).

Hjern’s focus on intra-departmental conflict, when central government departments pursue programmes with competing aims, and interdependence, when policies are implemented by multiple organizations. Programmes are implemented through ‘implementation structures’ where ‘parts of many public and private organizations cooperate in the implementation of a programme’. Although national governments create the overall framework of regulations and resources, and there are ‘administrative imperatives’ behind the legislation authorizing a programme, the main shaping of policy takes place at local levels.

Governance.  A lack of central control has prompted governments in the past to embrace New Public Management (NPM) and seek to impose order through hierarchy and targeting. However, local implementation networks (with members from the public, third and private sectors) have often proved not be amenable to such direct control.

Lindblom’s discussion of incrementalism in 1959: ‘Making policy is at best a very rough process. Neither social scientists, nor politicians, nor public administrators yet know enough about the social world to avoid repeated error in predicting the consequences of policy moves. A wise policy-maker consequently expects that his policies will achieve only part of what he hopes and at the same time will produce unanticipated consequences he would have preferred to avoid. If he proceeds through a succession of incremental changes, he avoids serious lasting mistakes’ (or she/ her).

Consequently, we should reject the idea of theoretical novelty for novelty’s sake. The value of complexity theory is not that it is trendy – it is that it allows us to use our knowledge of the natural and social world to understand and influence real world problems.

Where do we go from here?

Empirical issues: How does ‘complexity thinking’ improve our understanding of politics and policymaking?

Normative issues: The language of complexity does not mix well with the language of Westminster-style accountability

See ‘Complexity Theory in Political Science and Public Policy’ PDF Paywall Green and the introduction and conclusion to our Handbook on Complexity and Public Policy.

See also Professor Robert Geyer on Complexity and the Stacey Diagram – http://vimeo.com/25979052

Click on the picture at the top of this post for a nice surprise.

Series: Policy Concepts in 1000 words

Street Level Bureacrats

So, I went to a session at #apsa2013 on Lipsky and Street Level Bureaucrats (no, Lipsky wasn’t there) and it got me to thinking about a partial shift of thinking in this area. Consider my summary of Lipsky in Understanding Public Policy (p37):

Lipsky (1980) argues that policy is, to a large extent, made by the ‘street-level bureaucrats’ (including teachers, doctors, police officers, judges, and welfare officers) who deliver it. Bureaucrats are subject to an immense range of, often unclear, requirements laid down by regulations at the top, but are powerless to implement them all successfully (1980: 14). In other words, this is not necessarily an argument based on ‘disobedience’: committed workers do not have the resources to fulfil all of their job requirements (1980: xii). Instead, they use their discretion to establish routines to satisfy a proportion of central government objectives while preserving a sense of professional autonomy necessary to maintain morale. The irony is that the cumulative pressure associated with central government policy effectively provides implementers with a degree of freedom to manage their budgets and day-to-day activities. Therefore, policy change at the top will not necessarily translate to change at the bottom.

For me, the suggestion is that the routines are based on professional norms; each profession has its own formal and informal means to encourage professionals to act in a particular way. However, a lot of the discussion was about more modern studies of SLBs and a shift to a focus on street level organizations (SLOs). The argument here is that: (a) much of this work is now done by quasi or non-governmental organisations; (b) the rise of new public management has led to attempts to regulate that policy delivery through measures such as targets, contract management and performance management. It ties in neatly with the idea of a shift from government to governance which, in this case, refers to a shift from direct to indirect public service delivery. The phrase – from Evelyn Brodkin – that stuck with me is that performance management reduces policy down to a few aspects of the law. If I understood this correctly, it points to an important change in the Lipsky-style argument. When, under direct government delivery, the SLBs were the people reducing policy down into a smaller number of manageable acts, this role is often now performed by people higher up the chain when setting performance related targets. It reminded me of the ‘regulatory state’ style argument which speaks to the tension between professional discretion and rules-based action. This idea tied in neatly with another paper (Rubin/ Chiques) at the panel which suggested that there were fewer people in SLOs delivering policy with discretion. Rather, there were layers of management responsible for dealing with targets (although still, of course, there is an element of discretion when organisations game the system to meet targets). This informed the first paper (Schram et al) which talked about the routines evident in welfare policy work. Some of it was about familiar indicators of discretion to do with categorising people so that they didn’t lose out on social security payments. Some of it was about the routines associated simply with meeting targets and performing semi-automated tasks. So, Schram talked about a ‘dehumanising’ need to meet numerical targets and a form of discretion that was often ‘wide, not deep’. The papers were US based but the focus on a shift from direct delivery, by professions, to targets-based service delivery by quangos and/ or non-governmental organisations are relevant to countries like the UK.