The Labour MP John Garrett, writing in this newspaper, took the view that these analogues of commercial activity are putting at risk the entire ethos of the civil service. Dr Vernon Bogdanor, of Oxford University, argues that accountability is crucially lost when government services are privatised into agencies. He takes the view that when services step through the agency doorway, control by a parliament that can question ministers and call them to account disappears through the same portal. Both seem worried that the Civil Service is being politicised by this process. Loss of accountability, loss of control, loss of impartiality: these are serious charges to make. Are they justified?
It is one of the great fallacies of the public sector to suppose that public services can be controlled by people only through the political process. Although electors can, in theory, vote to influence the services for which their taxation pays, in practice their vote is often decided by more important national issues. This can leave services in a kind of limbo where the public has no effective control at all.
One of the discoveries of recent years is that control can be achieved by individual rather than collective action. The most effective control of all is to provide opportunities for people to make choices, choices that tell the producers of public services what their customers want to be delivered. When the choices themselves determine where public funds are to be allocated, the control is direct. Where choice cannot yet be introduced, the citizen will achieve some degree of control if the public sector producers are obliged to consult their customers about quality, and where there is some mechanism to secure redress when that quality is not attained.
The critics are right to point out that government is not a business. But it can learn a great deal from the way in which businesses treat their customers. For sound commercial reasons, most businesses take care to find out what their public wants. They try to attract customers by using efficient methods that give value for money, and they take particular care to handle them with sensitivity when things go wrong.
Government might have no commercial reasons for behaving like this, but it can choose to treat its citizens in a similar manner if it recognises it as a better may to behave. Part of the revolution in government has involved the introduction of techniques that incorporate the best practices of the private sector. The division into cost centres, the use of contractual relationships, the handing of managerial responsibility down the line and the introduction of performance-related pay, are as much a part of that revolution as are the requirements to consult customers, publish standards and offer redress.
One concern seems to be that these commercial practices might result in the loss of civil service jobs, even though most people would probably suppose that better services with fewer employees might be a good thing. Similarly, the thesis that accountability is lost when services are performed by civil service agencies is based on a fundamental misreading of the situation. The division that is thus created between the consumer and the contractor is not something narrowly commercial; it represents instead a practical approach, based on results, which sets out clearly what each side does and what their responsibilities are. This gives greater clarity and accountability on both sides.
There is also too much generalising about 'agencies'. We have nationalised industries, schools, NHS hospitals, local authorities and quangos in a vast brew of government, quasi-government and non-government organisations - they cannot all be lumped together for the purposes of accountability. 'Next Steps' agencies, as part of the Civil Service, are currently accountable to ministers. When services are provided by private sector organisations, they are provided under contract. Ministers retain accountability. The fact that a weapons system is provided by the private sector does not mean that ministers can escape accountability for it. All the responsibilities that the contractor takes on are defined in the contract.
The critics of the reforms seem to believe that better managed, high-quality public services cannot be achieved without doing violence to accountability, ethical standards, and even democracy itself. This is nonsense. Quality and accountability go hand in hand. Indeed the very exercise of consulting citizens and publishing standards reminds the providers of services that they have responsibility to their customers. Both Mr Garrett and Dr Bogdanor call for the constitutional status of civil servants to be clarified. They plead for the contractual relationship between ministers and civil servants to be spelt out. This might be sound practice, but it seems odd that they should plead for contractual relationships at the top, while arguing so emphatically against them elsewhere. Behind their calls seems to be a wish to reinvent collective decision-making. We are apparently to improve the quality of our public services by voting a lot more. I don't believe it.
I do believe that the important thing is whether public services are responsive to the producers or to the consumers. Services cannot be made to respond to the public by giving our citizens a democratic voice, and a distant and diffuse one at that, in their make-up. They can be made responsive only by giving the public choices, or by instituting mechanisms which build in publicly approved standards and redress when they are not attained.
Critics of the changes talk much about introducing the lowest level of government possible, by which they seem to mean local boards and committees. It never seems to dawn on them that the lowest level of government possible is that of the individual citizen. When they are empowered, as the revolution in government is empowering them, control is indeed at its lowest and most effective level.
The idea of the lowest level of government possible is one of the ideas the left has adopted from Reinventing Government by the American gurus Osborne and Gaebler. But government has been quietly reinventing itself for more than a decade. It has been remaking itself so that citizens will receive good value for the taxes they pay, and so that individual citizens can influence its output. This is real, and it works. It would be a poor exchange to trade it for the proliferation of elected boards and committees that are being offered in its place.
Dr Madsen Pirie is President of the Adam Smith Institute.
Hamish McRae is on holiday.