Debate: The need for procurement risk management

Improvement boards offer a new approach to supporting stronger performance by public service organizations, and especially those facing significant issues of change. They involve formalized peer challenge and support by senior politicians and managers from other agencies. The authors document early experiences with improvement boards in local government and draw conclusions for policy and practice. Improvement boards will have the most impact where the organization's leadership already has some understanding of the performance improvement task, and is able to position the board as part of a wider strategy for change.     

Accountability and Transparency in English Local Government: Moving from ‘Matching Parts’ to ‘Awkward Couple’?

Although excessive transparency and accountability demands can have a counterproductive effect on organisational performance (Bovens, 2005), longstanding hierarchical accountability structures to ensure financial conformance in English local government continue to endure. Interestingly however, the previously top‐down regime for performance accountability in English local government has been replaced by bottom‐up mechanisms such as greater transparency and a more open market for public services. Using the framework developed by Hood (2010), this paper will show how such reforms mean that transparency and accountability are moving from being ‘matching parts’ to an ‘awkward couple’, and how this has significant implications for public services.     

Best Value Audits in Scotland: Winning Without Scoring?

Best Value audits have encouraged improvements in the corporate capacity of Scottish local authorities. They are seen by local government as credible and, in contrast to Comprehensive Performance Assessments in England, are applauded for taking account of local priorities and contexts. However, there are some concerns about the consistency and transparency of the process, and reports have failed to attract public interest. In future, the Best Value audit process will need to pay more attention to the importance of partnership working between councils and other local agencies.     

Japan’s New Special Zones for Regulatory Reform

Japan’s Special Zones for regulatory reform were established in 2003 as an endeavor to enhance nationwide regulatory reforms based on local government initiatives. These Special Zones are not like the free trade zones inviting foreign capital that have been taken on as national projects in Ireland or China. In fact, this scheme acts to stimulate regulatory competition between municipalities to attract new business activities by both foreign and domestic firms in the local areas. This approach is a significant step towards mobilizing local government initiatives under a highly centralized administrative system in Japan, and marks a shift toward a more market-based economy.JEL Code: H77, K20     

New development: Commercialization of the English National Health Service: a necessity in times of financial austerity?

ABSTRACT

This article examines income received by National Health Service (NHS) providers from non-NHS sources. In 2015–2016, it amounted to 9.1% of their revenue. In the English NHS, there is an increasing reliance on non-NHS income to provide revenue for NHS organizations, due in part to government’s austere financial plans. This article is the first comprehensive analysis of these financial data for all English organizations. It provides new evidence in the ongoing debate about the nature and values of public service organisations and the role of commercial imperatives.     

Auditee Perceptions of External Evaluations of the Use of Resources by Local Authorities

The research reported in this paper takes up Michael Power's challenge that accounting researchers should pay more attention to the perceptions of auditees and how they respond to audit regimes. The setting of the study is the intense performance assessment regime imposed on local authorities in England from 2002 to 2009, one part of which – the Use of Resources (UoR) assessment – rated the financial management capability and performance of each English local authority. The perceptions of senior local authority finance officers within the Yorkshire and the Humber region are reported, using a written questionnaire and an interview to explore the reasoning behind the chosen responses. The results are more nuanced than suggested by either the official rhetoric justifying the UoR system or by those critics who view such systems as dysfunctional. Respondents portray themselves as intelligent actors, not as passive recipients. Most learned to use the UoR process to drive performance improvement, though there is some ambiguity as to whether the improvements were genuine or solely a product of the scoring system. Though adding to workload, UoR was regarded as one of the external pressures to be managed and its requirements largely represented professional views of best practice. Three of the types of control that characterise ‘regulation inside government’ (Hood et al., 1999) – oversight, competition and contrived randomness – are seen through the perceptions of the auditees. There is some evidence of the fourth style, mutuality – working through professional networks to help local authorities improve their actual and reported performance.     

Councillor ethics: a review of the Committee on Standards In Public Life’s ‘Local Government Ethical Standards’

ABSTRACT

The Committee on Standards in Public Life’s (CSPL) 2019 report Local Government Ethical Standards presents a detailed review of local government ethics in England, aiming to highlight both best practice and areas for improvement. In so doing, it makes 26 recommendations ranging in importance. Likely to be one of the most important, and most controversial, is a recommendation to allow local authorities to suspend democratically-elected councillors for up to six months. This paper presents a review of the report and its recommendations, with a particular emphasis on the ‘values-versus-compliance’ distinction in ethical regulation.     

Debate: Approaches to control—the poverty of ‘what's hot and what's not’

English sub-national governance is fragmented, embracing regions, city regions and local government. This complex pattern of sub-national provision has grown ever more varied, subject to ad hoc initiatives, with no overall rationale. There has been little political incentive to address the nature of English sub-national governance. This paper examines component elements of English governance and draws conclusions about prospects for change.     

Accountability for performance in English and Scottish fire and rescue services from 2010 to 2016

ABSTRACT

Using evidence from English and Scottish fire and rescue services from 2010 to 2016, this paper shows how divergent performance management regimes can affect public accountability. Performance management regimes enable agencies and the public to hold public sector organizations accountable by facilitating evaluation of their accomplishments. However, local as opposed to central, control over performance management can have quite different implications for public accountability.     

Environmental management accounting in local government: Functional and institutional imperatives

The challenge of using environmental management accounting (EMA) tools such as full‐cost accounting to improve waste and recycling management has been acknowledged for over a decade. However, research on assessing and understanding local government use of EMA, especially broader levels of EMA, is lacking. This study investigates the link between the nature and drivers of EMA practice for waste and recycling services based on a survey conducted with local governments in New South Wales, Australia. The study finds that although social and organisational factors are related to the uptake of EMA, local governments are subject to stronger functional demands than institutional pressures in their use of more expansive EMA such as indirect and external costs and impacts. This implies that the use of EMA in local government is viewed more as an adaptive activity to cope with functional challenges and achieve efficiency, than as an institutional imperative to achieve social acceptance.     

Management accounting innovations for rationalizing the cost of services: The reassessment of cash and accrual accounting

ABSTRACT

Management accounting can be a useful tool in austerity government because it produces information about the costs of public services and can be used for informed decision-making. Spanish local governments are required to submit data on the cost of their services to central government, which publishes this information online. The calculation of costs is based on budgetary cash accounting instead of accrual accounting; therefore cash accounting is being used for decision-making and accrual accounting has no role in this process. This paper critically analyses the innovation from three perspectives: the use assigned to the cost information in the legal framework; the opinion of academics and experts; and the perception of professionals about the usefulness of the information produced with the new system.     

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

This study examines the impact that political connections have on Mergers and Acquisitions (M&A) performance and the decisions of Chinese listed firms. We find that political connections destroy (create) value in SOEs (non‐SOEs). Our findings show that connected SOEs are more likely to acquire local targets, especially when the local unemployment rate is high and when the firms are controlled by the local government, and they are less likely to conduct vertical mergers. M&A decisions of connected non‐SOEs are less influenced by the government; instead, political connections in non‐SOEs help bidders to integrate vertically and obtain external financing support.     

Murphy’s Laws: A Key Explanatory Tool for Public Sector Disputes in the UK

This article reports on the use that the public makes of the budgetary and financial reporting produced by Spanish local authorities. The authors show financial reporting influences voting behaviour. Although citizens cannot decide how much tax they have to pay or the volume or quality of the services, they can control public management when it comes to election time. Accounting information can reflect the results of public policies and consequently serve as a vehicle for communicating the economic effects of political management. The authors make a strong case for more ‘popular’ financial reporting so that government accounts can be understood and properly used by non-specialists.     

A Conceptual Analysis of Price Setting in Australian Local Government

A complex set of issues underlies the pricing of the diverse range of goods and services from which Australian local governments derive a significant portion of their revenues. Although local governments have a not‐for‐profit orientation, they are expected to be financially viable and embrace a broad notion of accountability. They are also expected to influence the behaviour of constituents in accordance with policy decisions, but be equitable in doing so. These and related parameters are discussed and illustrated in order to reveal and elucidate the nature of pricing decisions in local government, and to differentiate the local government context from other price‐setting environments.     

How do medical managers strategize? A strategy-as-practice perspective

ABSTRACT

Strategic planning (SP) is a widely-used practice within public sector organizations. However, SP does not only take place in strategy workshops and senior management levels. This paper explores how medical managers of English hospitals ‘do’ SP in their clinical directorates. The authors investigate the practices, the usage of strategy tools and the implications of medical managers’ strategizing. The paper argues that what makes financial sense to medical managers strategizing in the local circumstances of their directorates does not always equate to value for patients, the hospital or for the public sector as a whole.     

FDI and Economic Development: Evidence from China’s Regional Growth

Abstract:

Using China’s provincial data for 1978–2011, we examine the channels through which foreign direct investment (FDI) affects China’s regional growth and inequality. We find that FDI facilitates growth by enhancing physical and human capital accumulation. FDI also has a negative effect on output growth by crowding out domestic investment, reducing local government revenue, and increasing the opportunity cost of technology innovations. The imbalance of FDI inflows among regions widens the interregional growth gap through its effect on physical capital accumulation and technology progress while it narrows the growth gap by affecting the level of higher education, industrial structure, government revenue, degree of openness, and trade surplus.     

On Spatial Public Finance Empirics

This paper focuses on the empirical specification of theoretical models of strategic interaction that give rise to a spatial pattern in local government expenditures and revenues. It shows that estimation of a reduced form inter-jurisdictional reaction function might not by itself allow to discriminate among competing strategic interaction theories. A review of the recent empirical literature suggests that exploring in more depth the specific empirical implications of alternative theoretical models, as well as fully exploiting the institutional features of multi-tiered government structures and local electoral systems, can help identify the structural model generating the observed spatial auto-correlation in policy variables.JEL Code: H71, H72, H77     

Optimal Design of Intergovernmental Grants Under Asymmetric Information

This paper develops a theoretical explanation why it may be optimal for higher-level governments to pay categorical block grants or closed-ended matching grants to local governments. We consider a federation with two types of local governments which differ in the cost of providing public goods. The federal government redistributes between jurisdictions, but cannot observe the type of a jurisdiction. In this asymmetric information setting, it is shown that the second-best optimum can be implemented with the help of categorical block grants and closed-ended matching grants, but not with unconditional block grants or open-ended matching grants. JEL Code: H77, D82     

Public Investment Criteria in Overlapping Generations Models of Open Economies

This paper derives criteria for worthwhile public investment in an overlapping generations model of an “almost small” open economy- an economy with access to external funding at a given interest rate, but with some influence over its temporal terms of trade. If the economy is dynamically efficient (i.e. the interest rate exceeds the growth rate), committed to free trade, public investment is debt financed and lump sum taxes are feasible, two results follow. First, the “social opportunity cost of public funds” will exceed the government's borrowing rate because of the adverse effect of government borrowing on the terms of trade. Second, the marginal rate of return on worthwhile public investment will be greater than the social opportunity cost of public funds if public and private investment are complements (substitutes) and the tax on capital is below (above) the rate that minimizes the steady state burden of servicing the debt. JEL Code: F21, H43     

New development: What is the meaning of philosophy for local government officers?

This article reflects on how the philosophical foundations of public administration and the practice of local government can be linked together. Informed by Ongaro, E. (2017. Philosophy and public administration: An introduction. Edward Elgar), the relationship between philosophy and public administration is considered, followed by a discussion of what this means for local government. Virtue ethics and utilitarianism are applied to two current examples of local government practice. The article ends by detailing key points for the future relationship between philosophy and local government.