Table Of ContentGrowing the Productivity of Government
Services
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd ii 1177//1122//22001122 0099::1100
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd iiii 1177//1122//22001122 0099::1100
Growing the
Productivity of
Government Services
Patrick Dunleavy
London School of Economics and Political Science, UK
Leandro Carrera
Pensions Policy Institute, King’s College, London, UK
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd iiiiii 1177//1122//22001122 0099::1100
© Patrick Dunleavy and Leandro Carrera 2013
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, electronic,
mechanical or photocopying, recording, or otherwise without the prior
permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2012947334
ISBN 978 0 85793 498 7 (cased)
ISBN 978 1 78195 610 6 (paperback)
Typeset by Servis Filmsetting Ltd, Stockport, Cheshire
Printed and bound by MPG Books Group, UK
3
0
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd iivv 1177//1122//22001122 0099::1100
Contents
Preface vii
Acknowledgements x
Glossary and list of abbreviations xiv
1 Introduction: why has government productivity been so
neglected in economics and public management? 1
PART I NATIONALLY PROVIDED GOVERNMENT
SERVICES
2 Studying national agencies’ productivity 33
3 Rapid productivity growth – customs regulation 57
4 Growing productivity gradually – tax services 73
5 How productivity can remain unchanged despite major
investments – social security 120
6 Broadening the picture – two national regulatory agencies 161
PART II ANALYSING DECENTRALIZED GOVERNMENT
SERVICES
7 Methods and quality issues in analysing complex and
localized services 199
8 Hospital productivity in England’s National Health Service 233
PART III SUSTAINABLE INCREASES IN PRODUCTIVITY
9 Embracing digital change and enhancing organizational
learning 273
10 Pushing through to productivity advances 299
Appendix: Data and methods 329
References 334
Index 361
v
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd vv 1177//1122//22001122 0099::1100
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd vvii 1177//1122//22001122 0099::1100
Preface
At root, productivity is a fairly simple performance measure. It is cal-
culated as the ratio of all the outputs produced by a given organization
divided by all the inputs or the resources used in producing those outputs.
In the private sector, the measurement of firms’ productivity, and the
analysis of the factors causing productivity growth, have developed a great
deal. However, this is not the case in the public sector and for government
agencies. The main reason for the lack of reliable productivity estimates
for government services has been that public sector outputs do not have a
price, unlike those in the market sector, so we cannot use prices to weight
the different outputs produced by a given organization. Until the late
1990s this led to public sector outputs being measured by their inputs,
that is, by the cost of producing them. This approach was equivalent to
assuming that productivity in the public sector is always completely flat
and unchanging.
Methodological advances since the late 1990s now allow us to estimate
productivity ratios for government services by using the costs of produc-
ing each type of outputs to weight them. So where a government depart-
ment does many things, we can now arrive at a useful overall measure of
its outputs. In addition, the increasing availability of government services’
activity data in the UK now allows us to compare productivity ratios for
different government services, and to begin assessing the different factors
that may be systematically related to productivity growth. This book
aims to fill the large gap in the existing literature by providing a practi-
cal, organization- level approach to measuring productivity in the public
sector. We show how productivity data over time and across comparator
organizations can be combined with rich qualitative information about
departments and agencies so as to begin analysing the different factors
that may be related to government agencies’ productivity growth.
Developing reliable productivity estimates for government services,
and showing in detail how productivity trends relate to organizational
changes, are not just of interest from an academic point of view. For
public managers these steps forward are vital if they are to know how
their organization performs compared to others. Productivity estimates
may also usefully inform policy- makers’ decisions on how to organize or
vii
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd vviiii 1177//1122//22001122 0099::1100
viii Growing the productivity of government services
restructure key government services, paying special attention to ensure
that service levels are not affected. Better information on public sector
productivity could also help citizens to hold policy- makers and public
managers more accountable for the provision of government services,
and to counteract the otherwise strong tendencies for government service
costs to rise relative to those of other economic sectors. We also show
that productivity change in government is integrally linked to innovation,
much more closely so than in private industries. So focusing on continu-
ous productivity advance also entails a lot more than simple cost- cutting,
and innovations can also be very positive for enhancing the modernity and
usefulness of government services.
The book has three parts. The longest, Part I, focuses on the analysis of
nationally provided services, looking in detail at the processing of goods
for customs, the collection of taxes, the processing and payment of social
security benefits, and two aspects of government regulation (passports and
driver/vehicle registration). The analysis of such services in productivity
terms has been especially difficult because they are administered by large
departments or agencies that are unique in each country. We show in every
case a strong interaction between advances in information and communi-
cation technologies (ICTs, or IT) on the one hand, and cultural resistance
to change in long- lived bureaucracies on the other. This dialectic can
explain why contemporary productivity outcomes in national government
bodies have varied a lot, but overall have tended to remain broadly flat or
grow only slowly over long periods of time.
Part II shifts focus to government services where there are multiple
providers, so allowing us to look across productivity levels in different
organizations and to track down the factors that explain variations, using
regression or other analyses that control for multiple variables. One main
problem here has been that services with multiple providers are often more
complex and professionally delivered. They are less standardized, and
hence quality variations can have far more direct and substantial impor-
tance for the accurate measurement of outputs. A second problem has
been that previous studies have made only limited progress in measuring
organizational factors that may have a bearing on overall organizational
performance, again especially ICT changes and management innovations.
We look at the measurement of productivity across NHS trusts in England
and Wales, and apply a new approach (a web- census) to develop data on
the use of management techniques and ICT and their links to productivity
performance.
Part III steps back from the empirical analysis to draw out some of the
key lessons across all our chapters for government organizations. To shift
from previous erratic or slow progress, and to move instead towards serial
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd vviiiiii 1177//1122//22001122 0099::1100
Preface i x
innovations and sustainable productivity advances, year in and year out,
entails a wide ranging set of changes:
– embracing digital change enthusiastically but realistically;
– really understanding innovation in government organizations, so as
to best foster it;
– shedding the managerialist obsession with reorganizations;
– engaging public sector workers more in promoting change; and
above all
– focusing hard and continuously on productivity levels.
We welcome comments on and enquiries about this work:
E- mail: [email protected]
Leandro Carrera
Patrick Dunleavy
LSE Public Policy Group
Government Department
London School of Economics
May 2012
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd iixx 1177//1122//22001122 0099::1100
Acknowledgements
It took more than five years to undertake the research involved in this
book, and two more years to write up the analysis. It was only made
possible through the generous help of many dozens of public policy prac-
titioners in government and the outsourcing industries, without whose
active engagement and unstinting cooperation it could not have been
undertaken.
Our biggest debt is to the systems integrator company EDS, and later
Hewlett Packard after it took over EDS. They most generously funded and
supported this research for five years as the main research project under-
taken by LSE Public Policy Group (PPG) for the EDS- LSE Innovation
Research Programme. We could not have developed this project without
the far- sighted and no- strings funding that the company donated. And
the analysis would have been much poorer without the active support and
engagement of a large number of EDS and later EDS- HP executives and
senior managers in the UK. They attended more than 15 major seminars
and mini- conferences held during 2005–09, and also helped to involve
dozens of senior government civil servants and local government and NHS
staff in these key events. We owe a special debt to the late and much missed
Charles Cox, and to Sheelagh D. Whittaker, two outstanding and intel-
lectually committed business executives, who first helped the Innovation
Research Programme get launched. We also learnt a great deal about
practical government computing, public administration and ICT change
issues from a large number of EDS and EDS- HP executives responsible
for liaison with the project over the years, and who commented on earlier
version of papers presented at different seminars, which subsequently
became part of this book. We are especially grateful to Craig Wilson and
later James Johns for their unstinting and generous help, while others
(including David Rimmer and Michael Gough) provided valuable specific
inputs. We should double stress, however, that none of these EDS or HP
people have read or approved any part of this book, and nor have they in
any way agreed to or signed off the analysis. The responsibility for every-
thing written here and for all the judgements made, is ours alone – reflect-
ing a complete intellectual and analytic independence that was always
fully respected by the company and its staff.
x
MM33004499 -- DDUUNNLLEEAAVVYY 99778800885577993344998877 PPRRIINNTT..iinndddd xx 1177//1122//22001122 0099::1100
