Speakers:

Warren Hatter, Head - Research Unit - New Local Government Network
Paolo de Renzio, Research Fellow - ODI
Chair:

Simon Maxwell, Director - ODI

1. The overview meeting on Targets, Voice and Choice was held in the Jubilee Room in the Palace of Westminster on Tuesday 27 October. The speakers were Warren Hatter from the new Local Government Network and Paolo de Renzio from ODI. The meeting was chaired by Simon Maxwell, Director of ODI.

2. Warren Hatter spoke to a PowerPoint presentation. He began by introducing a conceptual model linking targets, voice and choice. An initial way to think about the issue was the extreme of what he called "pure municipalism", in which all services were provided by local authorities, with no targets, no voice and no choice. As one began to move away from this model, issues arose about the sovereignty of local agencies and about delegation to and from the centre.

3. Beginning with targets, Warren Hatter noted the origin of thinking about targets in the new public management, focusing on outcomes and outputs rather than inputs. A general philosophy was that "if you can't measure it, you can't manage it", but targets represented a further step beyond simple measurement. There were different types of targets: (a) floor or minimum targets; (b) high or threshold targets; and (c) relative targets (e.g. with respect to past performance).

4. Targets could be set by the centre and inspected or agreed locally in local public service agreements. In the latter case, there were often rewards for hitting targets, for example, extra resources or "earned autonomy".

5. There were issues with respect to targets, however. Accountability was much more complex and difficult to trace than in the case of the private sector, there were obvious problems with perverse incentives, "silo targets" could make joined up thinking more difficult, and, finally, Goodhart's Law which said that any indicator adopted as a performance measure became useless.

6. Turning to voice and choice, which he linked together, Warren Hatter noted how important the issue had become in political debate. Broadly speaking, the Labour Party was presenting an agenda of choice combined with fairness. This was driven by a desire not to lose the middle classes, but also by a concern that the poor might be left behind if choice became more common. This latter point had really only emerged in the last year. The Conservative Party, he said, was interested mainly in choice as an end in itself. Its main concern was with exit options. The Liberal Democrats, on the other hand, generally felt that choice was something of a red herring.

7. There were a number of options for choice and voice, ranging from limited participation at one extreme, through a more serious role for public participation, to complete delegation of decisions to local communities. Warren Hatter described these as "little voice", "big voice" and "choice".

8. With regard to "little voice"; options included market research, user surveys and focus groups, all intended essentially to provide local authorities with better information about public opinion on which to base decisions. In terms of "big voice", the voice of local people was louder, to the point where it was often very difficult to take decisions that were different from the view taken in public consultations. Examples included community workshops and citizens' juries. In terms of the wider choice agenda, there were many examples of community empowerment, choice-based letting, direct payments to care users, businesses paying for business improvements districts, the setting up of local park trusts, and area forums. In all these cases, there were choices to make about whether or not choice and voice were collective or individual and about the degree of local accountability.

9. Commenting on these, Warren Hatter said that the research showed that most people wanted to be "informed not involved" - in other words, they were less concerned about taking decisions than about having good information. He also made the point that innovations in participation tended to weaken over time.

10. Paolo de Renzio also spoke to a PowerPoint presentation. He began by noting that most of the debate about the Millennium Development Goals had been concerned with quantity of service delivery, but that quality was also important. This was an issue highlighted, for example, by the World Development Report 2004, "Making Services Work for the Poor".

11. He then reviewed the case for and against each of the three options of targets, voice and choice. With respect to targets, the arguments in favour had to do with efficiency and effectiveness, a focus on outcomes and greater accountability. On the other hand, targets were hard to use constructively when there was little administrative capacity, monitoring costs were high, and when targets set up perverse incentives.

12. Turning to voice, Paolo de Renzio said that greater participation seemed like a good response to problems with conventional accountability, for example when democratic structures were not in place. Voice mechanisms could induce a response by public providers. They could also empower clients. On the other hand, there was a real risk of elite capture, particularly where civil society organisations were weak and there was no representative political system. In addition, participation had high costs, especially for poor people.

13. Finally, with respect to choice, Paolo de Renzio noted that this topic had received less attention. However, there was a case for looking at private provision of public goods, in order to achieve market-based efficiency gains, and in order to overcome demand-side constraints. The concerns, however, had to do with access and equity and with the lack of accountability to public policy.

14. Summing up the argument, Paolo de Renzio argued that targets were not sufficient on their own to reform the quality of public services. Results-based management did have a role, however. There were then important questions about how to promote effective voice, and about whether or not governments should finance alternative service providers.

15. There was a brief discussion at the end of the session. Some interesting links were made to parallel debates about the creation of markets in other sectors, for example in agriculture. Here, research evidence showed that there was little point in introducing market-based innovations if market structures were weak. It was often necessary for governments to support markets, for example, overcoming coordination failures and providing greater information. A further line of discussion was about the "reformability" of public services. Links were made to subsequent discussions in the series about the management of complex systems.

Simon Maxwell

28 October 2004