Complexity

The unintended consequence of delegation away from large multi-purpose ministerial departments to generally single-purpose arm’s-length agencies and the increasing involvement of private actors can often be a decline in strategic capacity, especially where institutions enjoy a legally entrenched autonomy.

However, as the OECD’s 2002 analysis of ‘distributed public governance’ in nine countries discovered, the trend towards delegation was not matched with any systematic reflection or analysis on the consequences of this process for control and co-ordination. As Head of the British Civil Service in 1999 Sir Richard Wilson pondered on exactly this point and concluded, ‘I would not claim that the manner in which we implemented all these reforms over the years was a model to emulate. There was not enough overall vision or strategic planning.’ The growth in the number of linkages, and potentially the number of constriction points, is particularly problem­atic in policy sectors that demand an integrated approach or do not lend themselves to traditionally recognized functional distinctions.

As a result elected politicians must devise ways to steer increasingly complex networks whilst upholding the operational independence of the organizations concerned. Contemporary projects concerning ‘joined-up’ or ‘holistic’ governance represent an attempt to devise new mechanisms or tools to steer dense organizational webs. Wright and Hayward (2000) analysed how the core executives of France, Germany, The Netherlands, Italy, Austria and Spain have sought to increase their steering capacity. Their conclusion noted (2000: 31):

there was a persistent and increasing need to co-ordinate - not only in the six countries we investigated. It is a characteristic of advanced indus­trial societies. Core executives everywhere are locked into a plurality of inter-dependent forms of co-ordinative exchange, mixing both processes of unilateral adjustment and interactive modalities of co-ordination, of hierarchy and network.

A range of procedural and institutional reforms can be implemented with the aim of increasing strategic capacity and integration (shared budgets, merged structures, joint interface arrangements, cross-departmental public service agreements, etc.). Paradoxically, a tool frequently used to increase the steering capacity of the centre is to create a new independent regulatory agency to oversee a complex network of actors in a specific policy sector where problems have demonstrated the need for greater integration. In Britain this has been clearly seen in relation to food safety, media regula­tion and the railway system. The Food Standards Agency, Office of the Communications Regulator and the Strategic Railway Authority are all para-statal bodies created under the Labour government since 1997 to assume responsibility for specific policy sectors in which fragmentation is thought to have led to a range of concerns.

The issue of steering increasingly complex webs or networks of organiza­tions, which often operate at and across different levels of government and governance, is a central challenge for politicians. In essence, state structures appear to be evolving in a manner that Rosenau (2004) has termed ‘fragmegration’. This relates to the creation of an increasingly fragmented state structure (i.e. more single-purpose delegated agencies, 3Ps, etc.) while at the same time attempting to foster greater integration (via notions of ‘joined-up’ and ‘holistic’ government) within the overall system. Increased complexity, however, is not just a challenge in terms of steering and co­ordination but it may also be problematic in terms of flexibility.

This flexibility dimension is particularly pronounced in relation to 3Ps, as many contracts are for between 15 and 30 years, sometimes longer, and this raises questions about the constrictions contractual obligations may place on either future governments that do not share the previous government’s policy goals, or simply if circumstances change. The existence of a legally binding contract means that when a 3P contract needs to be renegotiated by a department of state the private sector contractor is in a very powerful position - achieving policy change may well involve lengthy and costly contract renegotiation. There is also the fact that many forms of 3Ps mean that new governments will inherit significant financial obligations. This raises the possibility that the policy flexibility of future governments vis-à-vis state structures may well be substantially constrained by the need to service significant contractual repayments entered into by previous governments. This issue is likely to become increasingly important as the proportion of total investment made up by 3Ps escalates - ‘more and more of the budget will be committed, leaving less and less to the discretion of the public agen­cies and reducing flexibility’ (Pollock etal.

The flexibility and complexity dimensions relate to what appears to be the underlining theme of this chapter - state capacity. The shifting bounda­ries of the state are leading not just to institutional fragmentation in terms of structures but also in terms of knowledge. The delegation of tasks to para-statals or P3s is designed to deliver increased institutional capacity and yet this process risks undermining the intellectual capacity of the state in terms of its institutional history and epistemic potential as the delegation of tasks risks ‘de-skilling’ the state in certain areas and fields, thereby creating information asymmetries that weaken its bargaining position and reducing its holistic knowledge base. The issue of intellectual capacity and know­ledge is not only an issue for core departments but also for external actors who may wish to hold delegated bodies and partnerships to account. The delegation of tasks to para-statals and P3s establishes a complex network of inter-dependency; when problems occur within this network or tensions occur regarding expected standards or operating norms achieving account­ability and responsibility for these issues can be problematic, this will be the topic of the next sub-section.