Chapter 9: The Spread of Public Sector Reform
The last chapter considered the results of the British Government’s introduction of executive agencies and drew some general lessons from the experience of implementation. There had been considerable interest in the developments following the Next Steps Report, Ministers and oﬃcials from many countries visited London to discuss the changes being made to the organisation of central government. This was partly a reﬂection of the international standing of Mrs Thatcher and her government but was also because the United Kingdom was not alone in the 1980s facing the need to modernise and increase eﬃciency in government. THE FISCAL CRISIS Many governments were under pressure to reduce costs and improve the eﬃciency of their public sector. Growth in public expenditure, rising costs in public services, the growth of transfer payment costs driven by demographic changes all forced governments to investigate ways of reducing or holding costs steady while facing demands from their voters for better services and fewer taxes. Improvements in management were part of the solution. Ministries of Finance in many countries brought pressure to bear on their colleagues to ﬁnd ways to deal with uncontrolled public ﬁnances. The international ﬁnancial institutions demanded government reform in countries needing external support. They were less helpful in the recommendations they made for reform. Structural adjustment programmes, under the auspices of the IMF, demonstrated the weakness of their analysis: managing a public sector eﬀectively could not be done by simple economic modelling. Stiglitz commented that ‘once a country was...
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