Identifying the Cause of the Child Support Agency's Problems
by G Bates, D Hutchinson, T Robertson, A Wadsworth, R Watson
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Issues of Internal Management under the New Public Management principles

The creation of the Child Support Agency was preceded by societal factors that contributed toward the 'progression' from Public Administration to New Public Management as a method of organising the provision of public services. From the very start the developments made to the Liable Relatives Unit to turn it into the CSA were based on New Public Management principles because the government believed it to be the way forward.

The "inadequacies of the traditional model of administration" (Hughes 1998:52) saw both prevalent productive and allocative inefficiency throughout the public sector. These failings were present in many government arms and the Liable Relatives Unit was no different. Therefore, with what was viewed as an unacceptable level of failure and inefficiency, the Liable Relatives Unit was modernised and developed into the CSA as a "Next Step Agency [that] was to operate according to the best principles of New Public Management" (Harlow 1999: 163).

The theory of New Public Management operated upon the foundation of a number of features. It was possible to incorporate some of these features into the CSA whilst others were not. The features of decentralisation, performance measures and market forces, and the extent to which they were applicable to the CSA, are to be examined to see if reasons for the CSA's problems can be identified.

Decentralisation

Decentralisation is a key aspect of New Public Management. As a separate agency the CSA had a much greater degree of autonomy than the Liable Relatives Unit had been permitted. The restructuring of departments and creation of Next Step agencies allowed responsibility for policy to be separated from service delivery (Policy/Provider divide). "The United Kingdom's Next Step Agencies reflect equally a form of delegation of authority…It is based on broad grants of powers from the ministry in framework documents with little specific legal content" (Elder and Page).

This is clearly introduction of a decentralised approach to management of the CSA as decision making and resources allocation responsibilities were passed down the hierarchy to the Chief Executive of the agency. NSAs are headed by chief executives who are responsible for day-to-day operations and management of clearly defined areas of administration. The parent department "in theory, has arms-length control, leaving agency CEs with freedom and flexibility to manage" (Horton, S. and Farnham, D, 1999: 147). Therefore their "relationship with the parental department rests on the common law principle of delegation" (Harlow, 1999: 151). Each agency is then in theory able to respond to its own individual market, clients, and users in an effective way, allowing an increase service efficiency and performance.

In the case of the CSA the role of the agency was set out in a management plan, which the Chief Executive was required to implement. "A business plan had been agreed with ministers before the launch and were regularly published," (Harlow, 1999: 163).

The theoretical base of the superiority of business management and ensuring "policy decisions [were] entrusted to professional experts" (Hughes 1998:62) was provided by the staff who were employed to run the agency. Approximately half the staff came from the old Liable Relatives Unit that previously dealt with child support. However, the other half were staff drafted in from the private sector. These were generally employees of banking and insurance. (Harlow, 1999: 162) These people were to provide the 'professional management' needed for a market system to work it was intended that these employees would be able to drive for efficiency whilst still providing a public service. As Ms Hepplewhite stated it was an organisation, "not like a business and not like the public sector," (Harlow, 1999: 162).

Market Forces

In a market system resources are allocated by consumer demand. As Adam Smith stated, the consumer is king, consumers have sovereignty and are the most important people in the market. In its attempts to resemble this market system the CSA placed emphasis on being 'Consumer Friendly'. However, a customer focus was the limit the CSA saw to its exposure to market forces. There was no competition and therefore no other substitutes available to the users of the service. It is certainly possible that as a foundation of the market mechanism, the lack of competition could be one of the reasons why the CSA was classed as a failure after its birth as a modern agency.

This focus on customers led to the creation of an attractive booklet detailing a 'Charter' that listed various promises to the customer. Examples include, answering all telephone calls within 10 seconds, replying to any letter within 10 days, reducing the interview waiting time to 20 minutes, promising full confidentiality and regular surveys to gain constructive feedback.

Performance Measurement

The aforementioned Charter was all part of a system of Performance Measurement; another prominent feature of New Public Management applied extensively to the CSA. The devolution of the agency meant that ministers and senior civil servants needed to be able to monitor its performance. Performance measures included financial targets, customer satisfaction rates, measures of work efficiency and compliance to the aforementioned business plan. These performance measures were important because they offer a way of holding the operational members of the public service accountable for their results, a feature not generally present in public administration.

The main issue regarding such a system was, and still is, that the measures and targets being set were beyond the control or influence of the Agency's managers. Targets were set by ministers and central policy makers and in the case of the CSA have been criticised for being "unrealistic as well as inflexible" (Harlow, 1999:164). Ministers have to set high targets to appease the public; however, if they aren't agreed as being realistic by the operational levels then when failings occur blame is still placed by both parties in the same way it was under Public Administration.

In reality the performance measures were not being met and inefficiency persisted, indeed "inefficiency was freely admitted" to exist by representatives of the CSA (Harlow, 1999: 163). There were seen to be "regular breaches of confidentiality [and] letters that were unacknowledged" (Harlow, 1999: 162) despite the new charter in place. No targets were met in the years immediately after implementation of New Public Management; benefit savings were below target as were the number of maintenance payments secured. (Harlow, 1999:162). The reasons why these performance measures were not being met are unclear but a link to the features of New Public Management adopted by the CSA cannot be excluded from consideration. Could it be due to the unusual combination of the agency's staffing that was brought in to run the agency? Was too much authority and responsibility devolved too soon to such an inexperienced organisation? Would the failure have still occurred in an old bureaucratic government department managed under Public Administration? Or was the CSA just an exception to the rule and other Next Step Agencies have prospered under New Public Management?

Theoretical underpinnings: Public Choice Theory

Public Choice Theory was the academic underpinning of all the changes made to the way maintenance was obtained for lone parents. This sub-branch of economic thought is "concerned with the application of microeconomics to political and social areas" (Mueller in Hughes, O.E. 1998:10), and challenges many of the basic assumptions of public administration. A key objective was to reduce government bureaucracy, which was seen to greatly restrict the freedom of individuals and needed to be reduced in the name of choice. A number of features of public choice theory have been highlighted previously in this paper, which support the idea that public choice theory influenced the management of the CSA as it emerged from the Liable Relatives Unit.

To overcome the issue of productive and allocative inefficiency, as well as a lack of accountability due to clear bureaucracy in the Liable Relatives Unit, the market was seen to represent a viable solution. "Markets are argued to have better mechanisms for accountability as opposed to a bureaucracy accountable to no one" (Hughes, O.E. 1998:11). However as mentioned previously a market system was deliberately omitted from the CSA's formation.

Public choice theorists generally conclude that government should take a minimal role, but Horton and Farnham (1999) state that the government have changed direction, strengthening political control and reaffirming full ministerial responsibility for the CSA. However whether this would have been the case if the CSA hadn't been such a focus of media attention is a valid question to consider? The Minister being held accountable could not be seen to stand by whilst so many problems were being highlighted and one could argue whether this was ultimately useful. The problems plagued the CSA despite numerous policy changes and ministerial intervention. Was such action more concerned with limiting the political damage rather than solving the CSA's problems?

A key assumption of public choice theory is a comprehensive view of rationality. "A rational man must be guided by the incentive system within which he operates. No matter what his own personal desires…" (Hughes, O.E, 1998:11).

The rational man can be seen to be guided by an 'incentive system', and in the initial introduction of the CSA the CE was employed on a contract which included performance-related pay. However bureaucrats are not motivated by the public interest but by their own selfish interest, and ministers and politicians can be seen to be only interested in maximising votes. The theory drives for public sector organisations to be run like a private business, or as much as possible.

Failure of the Theory?

However, despite the application of this 'economic theory' throughout the CSA, problems only seemed to worsen. In reality many failings seen in Public Administration persist within New Public Management in the example of the CSA. The minister blames the Chief Executive for the Agency's failings and the Chief Executive blames the minister for being too demanding and unrealistic; clearly the Policy/Provider divide has caused problems. Whilst operationally the preceding Liable relatives Unit and the current CSA are considerably different, the resulting service that the public has been receiving has arguably changed little. The reforms implemented seem to have provided little in the way of improvement that theoretically might have been expected.

Can the failings of the CSA, that are so similar to the failings of the Liable Relatives Unit, be seen as a simple failure of New Public Management? Or are there other environmental variables affecting upon the CSA that caused it to be defective? The problem with analysing such an agency as this is that, whilst in essence the CSA may have a distinct identity it is never really separated from central government and the minister responsible for the parent department. Therefore only looking at the 'Provider' side of the relationship is unlikely to reveal the complete picture. Analysis of the 'Policy' side is required as well as the way that the two interrelate.

Notes

Elder, N.C.M. and Page, E. C. Accountability and Control in Next Step Agencies

Harlow, C. (1999) 'Accountancy, New Public management and the Problems of the Child Support Agency,' Journal of Law and Society Vol. 26 (2) pp. 150-74.

Horton, S. and Farnham, D. (1999) Public Management in Britain, Basingstoke: Macmillan.

Hughes, O. E. (1998) Public Management and Administration - An Introduction 2nd Edition, Basingstoke: Macmillan Press Ltd.

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