New Public Management may have neither been the saviour its enthusiasts promised nor the devil its critics worried it would be. Discuss.

The Promise of New Public Management

NPM promised a radical improvement in public sector performance through several key mechanisms:

• Decentralization: Shifting authority from central government to agencies and departments, fostering greater responsiveness and flexibility.
• Performance Measurement: Introducing Key Performance Indicators (KPIs) and targets to assess efficiency and effectiveness.
• Competition: Introducing competitive tendering and contracting out services to the private sector.
• Customer Focus: Treating citizens as ‘customers’ and prioritizing service quality.
• Market Mechanisms: Utilizing pricing, user charges, and internal markets to allocate resources more efficiently.

The underlying rationale was that by applying principles of market discipline to the public sector, governments could deliver better services at lower costs.

Realizing the Promises: Successes of NPM

NPM did achieve some notable successes:

• Increased Efficiency: In many cases, NPM initiatives led to streamlined processes and reduced administrative costs. For example, the UK’s Next Steps agencies, established in the late 1980s, demonstrated improvements in service delivery and cost-effectiveness.
• Enhanced Accountability: The emphasis on performance measurement and reporting increased transparency and accountability, at least in theory.
• Greater Responsiveness: Decentralization and customer focus initiatives led to more responsive public services in some areas.
• Innovation: Competition and contracting out encouraged innovation and the adoption of best practices.

The Unfulfilled Promises and Unintended Consequences

However, NPM also faced significant criticisms and generated several unintended consequences:

• Erosion of Public Service Values: The focus on efficiency and cost-cutting sometimes came at the expense of equity, fairness, and public service ethics.
• Short-Termism: The emphasis on short-term performance targets encouraged a focus on easily measurable outcomes, neglecting long-term strategic goals.
• Gaming and Manipulation of Targets: Agencies and departments were often incentivized to manipulate performance data to meet targets, rather than genuinely improving performance. This is known as ‘creaming’ and ‘parking lot’ accounting.
• Increased Fragmentation and Coordination Problems: Decentralization and the proliferation of agencies sometimes led to fragmentation and difficulties in coordinating policy across government.
• Loss of Democratic Control: Contracting out services to the private sector raised concerns about accountability and democratic control.
• Rise of Quasi-Governmental Organizations (QUANGOs): The proliferation of QUANGOs, while intended to be more efficient, often lacked transparency and were less accountable to Parliament.

Comparative Experiences

The experience of NPM varied across countries:

Country	NPM Implementation	Outcomes
United Kingdom	Extensive implementation through Next Steps agencies and market testing.	Initial improvements in efficiency, but also concerns about accountability and equity.
New Zealand	Radical reforms, including the separation of policy and delivery functions.	Significant cost savings, but also concerns about the fragmentation of public services.
Australia	More cautious implementation, focusing on agency modernization and performance management.	Moderate improvements in efficiency, with less disruption to existing structures.

The Evolution Beyond NPM

In recent years, there has been a growing recognition of the limitations of NPM. Concepts like ‘New Public Governance’ (NPG) and ‘Digital Era Governance’ have emerged, emphasizing collaboration, citizen engagement, and the use of technology to improve public services. These approaches seek to address the shortcomings of NPM while retaining some of its positive features.