related documents
RR72 - Internal Charging in the Public Sector - Accounting for Illusions
ACCA Research Report No. 72
The issues of quality of service, value for money (VFM) and accountability of public services have received much attention during the past two decades, with a significant increase in attention to the role of ‘management’ within public sector organisations. A particular phrase, New Public Management (Hood, 1991) (NPM), has gained currency for encompassing a wide variety of approaches that have been imported from the private sector, each intended to enhance the quality of resource allocation and management within the public sector. Within this plethora of managerial approaches, the introduction of internal markets attracted much media attention: particularly the NHS Internal Market, which came into effect in 1991. However, this was a sector-wide internal charging system. The focus of the present research was the internal charging systems employed within hospitals, local authorities and central government departments and agencies to support organisational control and development.
This report neither denies the very real financial constraints experienced by many of the organisations studied during the research, nor does it minimise or underplay their significance. Hospital patients undoubtedly suffer as a result of ward closures, postponed operations or extended waiting lists. Similarly, the services provided by many organisations from the central and local government sectors have been affected by reducing units of resource,1 and these appear to have affected the quality of some of these services as experienced by the general public. Within this study some exceptions did exist with regard to the resourcing issue, but generally the problems of the cash-limited world of the public sector organisation appeared to be significant. These constraints are a function of externally determined cash limits. The cash limits, to a large extent, define the financial perimeter of an organisation’s actions. How these externally determined funds are then distributed within the public sector organisation is a managerial decision and it is in this respect that internal charging systems have a potential role to play. In theory, if the internal charges/prices represent the opportunity cost of all resources used, the internal prices and the resulting financial performances of the various managerial units provide important indicators of effective/ineffective resource use. As a result, judgements might be made about the key individual(s) within these accountable units. The extent to which the organisation appears to be delivering value for money should be more measurable.
In theory, internal charging systems have the potential to help management re-draw the organisation’s financial perimeter. By distributing funds within the organisation in a way that is informed by the signals of an internal charging system, resources might be/could be switched from less effective to more effective users of a key limiting factor, i.e. finance. Having said this, an immediate and important caveat is required. There is no presumption that internal charges, even if they were to reflect opportunity costs, could hope to capture all that is salient for managerial decision making. As stated above, however, robustly determined charges could play an important informing role in such decisions. It is even possible that by re-directing resources into those areas that appear to offer better value for money, the total area within the organisational perimeter might be increased, i.e. additional resources might be attracted to the organisation.
In developing its proposal, the research team concluded that it would be unrealistic to attempt to cover the full range of organisations designated ‘public sector organisations’. As a consequence, three key sectors were identified, namely NHS Hospital Trusts, local authorities and central government departments and agencies. Five organisations from each sector were studied. The empirical element of the research was carried out over a 15 month period between May 1998 and July 1999. Vertical and horizontal cross-sections were taken from each organisation’s management structure and used to cross-check the accounts provided by members of the different management groups. In all, 81 interviewees took part in the study, a number of them being interviewed on more than one occasion. Interviews were of a semi-structured nature and were held with heads of finance and accounting departments, business managers, project managers, head teachers, IT specialists, clinicians and representatives of other professional groupings. In addition, a focus group meeting was held with accountants and business managers from the health care sector. These interviews were supported by archival material, both publicly available material and internal documentation and memoranda. From this mix of organisational perspectives, understandings were developed to provide a series of images of the roles of accounting information and of differing notions of ‘managing’ within the organisations studied.
To respect the anonymity of the 15 organisations that each allowed the research team the freedom to talk with a range of employees, their identities have been limited to the following shorthand. The five hospitals are referred to simply as H1, H2,…H5. In a similar vein, the five central government departments or agencies are referred to as CG1, CG2, …. CG5. Finally, the five local authorities are named LA1, LA2, … LA5. The choice of the organisations studied was not random. Organisations were approached because they were known to possess particular characteristics that were relevant to the study.
In all but one organisation, it was either known, or believed, that an internal charging system was in operation at the time of the research, or had been in operation until quite recently, or that there was the financial infrastructure to operate an internal charging system (although the existence of an internal charging system had yet to be confirmed at the commencement of the study). One organisation was selected because, although it enjoyed a reputation for financial stringency, it was known to have eschewed employing an internal charging system. The decision to reject such an approach was of interest to the research team, not least because this organisation was a hospital and, at the time of the research, the NHS-wide internal market had only very recently been withdrawn. Thus, the financial infrastructure necessary to supply the information for a local internal charging system should have been in place because of the need for the hospital to furnish similar information to the NHS internal market.
The 15 organisations studied were ultimately categorised into four groups, as shown in table 1.
The ‘Outliers’ group, as the term implies, was difficult to fit within the general scheme of the findings. This group of two is explained in the main report, but in this overview attention is focused upon the three main categories.
The three main categories are linked by the notion of illusion, although the nature of the illusion is different in each case. The use of the term ‘illusion’ refers to the research team’s experience that the initial presentation of the robustness and effectiveness of each of the respective internal charging systems (and hence the public face of the internal charging systems) was subsequently shown to be only a pale reflection of the real situation. The respective systems had roles to perform that, in their contexts, were no less important to the participants than the initial explanations offered to the research team. The term ‘illusion’ is important because the actual roles of the internal charging systems explained in this report are subversions of the professed original intent. The charging systems, and the associated accounting information, acted as façades to mask actual managerial practices.
The most populated category is the ‘Quarantined group’. As with the other two ‘illusion’ groups, there is a range of correspondence between the organisations within each category and the category’s description, i.e. the six organisations included in this group display differing levels of intensity of ‘quarantining’. CG1, for example, was the least significant example of a quarantined area being created within the organisation, although the notion of quarantine is still appropriate for CG1. CG3, on the other hand, displayed the most significant correspondence with the notion of quarantine.
The quarantined group
The Quarantined group were organisations where particular parts were separated out from the larger, ‘main’ organisation and ring-fenced within an internal charging system. Within these internal charging systems, the departments and functions concerned ‘traded’ with purchasing units belonging to the main organisation (and beyond in some cases). The feature that distinguished the six organisations included in this group was that within each of these internal charging systems there were examples of departments or functions that were exposed to external competition, or there was evidence that services that had once been part of the internal charging systems had since been privatised. Thus, for those services that remained part of the internal charging systems, there appeared to be a real risk that they could be severed from the main organisation if the need arose. This need occurred when the main organisation had to provide evidence that it was adopting business-like practices and driving economies through the organisation. Evidence could be shown of hard decisions being taken, of the main organisation facing up to external competition, of the drive to achieve improved levels of cost economy and efficiency by opening up the main organisation to private sector practices. The Quarantined group provided evidence of these intentions. However, the extent to which business-like practices were being adopted across all activities of the main organisation remained hidden.
The notion of ‘quarantine’ relates to an area into which elements or objects are placed, separating them from the main body or population. The main population needs to be protected from contamination by the quarantined elements. The common feature of the quarantined departments and services was that they had been deemed amenable to market-type forms of control. They had been recognised as having direct external competitors and their work was of an operational, rather than policy, nature. Those elements placed within the areas of quarantine became available for sacrifice in the event that external audiences demanded evidence that apparent economic rationality was dictating the sourcing of service provision. By offering up such a sacrifice/providing such evidence, it was intended that the main population would be protected from equivalent attack. In the context of this study, the ‘main population’ was the principal activities of each parent organisation studied, while the potential aggressors were the political forces that demanded evidence of business-like practices being adopted. Within Dunleavy’s (1991) analytical framework of core, bureau, programme and super-programme budgets, the areas of quarantine identified in this research study would involve those parts of an organisation’s bureau budget that it was prepared, if all else failed, to offer-up as a sacrifice. In so doing, it would protect most of its bureau budget, and certainly all its core budget, from attack.
Within the internal charging systems (the areas of quarantine), some of the services were open to external competition, thus enabling them to ready themselves for possible exposure in any intended competitive tendering exercise. Evidence of this can be seen in each of the six organisations within the Quarantined category. However, there were also examples of services within the respective charging systems that were not intended to be exposed to external competition. In these cases (e.g. the legal services and translation services of CG3, and the legal services of LA3), local rules were instituted to protect these particular services. On occasions, services were withdrawn from quarantine, the period of quarantine having served its purpose (which varied on a case-by-case basis). Examples of this phenomenon were the educational advisory services and the secretariat (central typing resource) of LA2. In both these cases the services had experienced a considerable reduction in the use made of them by their internal ‘customers’. Unlike other services that had experienced a similar decline in demand (and were subsequently privatised), however, the educational advisory services and secretariat of LA2 enjoyed the internal loyalty of, or affiliation to, influential decision makers. To protect them from further diminution in their size or the threat of outsourcing, they were both taken out of their internal charging system and placed in what was commonly referred to as the authority’s democratic core, i.e. those services that are essential for a local authority to carry out its statutory duties. Interestingly, the proportion of an authority’s central services that were identified as part of its democratic core varied significantly, suggesting that this label might be a convenient heading under which to protect vulnerable but favoured services.
Thus, vulnerable but favoured services could be left inside an internal charging system, but protected by local rules or understandings that they were not for outsourcing (e.g. the legal service departments of all six organisations and the translation service of CG3). Alternatively, they could be removed from the internal charging system and placed into the ring-fenced area that was protected from competitive forces, such as the democratic core at LA2. The important point is that the internal charging systems were the parent organisations’ evidence to their external publics that economic rationality was driving organisational co-ordination and service delivery. That this approach applied to only a small part of the organisation was not publicised. For example, CG3 was described by a Treasury official as the central government department with probably the most advanced internal charging system, but it applied this system to only 5% of the parent department’s operations.
An intriguing feature of CG3’s internal charging system was that surpluses generated by those departments within this system (and thus obtained from their internal clients) were invariably redistributed back (in-year) among the internal clients to avoid any budget overruns by the latter’s. This practice was difficult to understand or justify if the internal charging system was intended to affect the behaviour of user departments.
What is very important to appreciate is that within all the organisations that had effectively isolated a group of departments or services by virtue of the internal charging regimes, the rest of the organisation appeared relatively untouched by stricter financial controls. Once budgets had been set, frontline services, policy areas, medical departments, etc. basically spent up to their budget limits. The existence of annuality, which was still prevalent among a number of the organisations, particularly the central government departments (notwithstanding the outcome of the Comprehensive Spending Review), only encouraged such an approach.
The one-way and two-way illusion groups
The internal charging systems of those organisations included in these two categories still performed illusory roles, but there was not the same sense of an area of quarantine being created into which departments or services would be placed because of the threat of outsourcing, CCT or market testing. The role of the internal charging systems in these two categories was to create illusions either for external audiences solely (the One-way illusion group), or for both external and internal audiences (the Two-way illusion group).
The One way illusion group included three hospitals, H1, H2 and H3, and one local authority, LA5. In the One-way illusion group, the illusion was directed at, and confined to, external audiences. Two of the organisations, H2 and H3, can be said to have travelled through relatively calm financial waters during the ten years prior to the study. The same cannot be said about LA5 and H1, although the apparent lack of stringent internal financial controls within H1 and LA5 might suggest that their respective financial positions were not as traumatic as some of the other organisations featured in this study.
H1 had been a pilot site for management budgeting in the mid-1980s, when an internal charging system was developed that made clinician groups profit centres. The intention was to use the identification of ineffective resource use (as revealed by the accounting information) to encourage peer pressure within the clinicians’ group to bring about resource redistribution. By 1991, however, the internal charging system had fallen into disrepute because of inaccuracies (which appeared technically but not politically resolvable) and it ceased to be used for internal management purposes. Yet the system was retained to supply information to the NHS-wide internal market for the 1991–1997 period. With the exception of adjustments for inflation, no attempt was made during this period to enhance the reliability of the accounting information on specialty costs at H1.
The same situation was evident at H2 and H3. Neither employed an internal charging system to facilitate and support management control, as the accounting systems had not been designed to provide that level of rigour. The view of the finance staff was that any attempt to introduce an internal charging system would founder because the clinicians would quite easily be able to undermine the information’s robustness and reliability. Furthermore, no additional resources were earmarked for the finance function to enhance the quality of the detailed accounting information. Yet, at the time of the research, these same two hospitals were only a couple of months out of the NHS-wide internal market and had been able to supply detailed cost information on a wide variety of medical treatment areas and interventions for the previous six years.
The reliability of information on the cost of treatment areas and specialties was further questioned by an accountant at H4 (one of the Two-way illusion group hospitals). She raised her concerns over the financial returns that were made by her hospital to the Department of Health, showing the detailed financial analysis of differing specialties. The exercise, she believed, should have taken the equivalent of six to eight weeks, but she was given the task of gathering the information and completing the submission only two weeks before it was due with the Department of Health. She was extremely concerned at the way her professional position had been compromised and about the inaccuracies that the final submission would inevitably contain. Talking to colleagues from other hospitals, she realised that hers was not an isolated case. Numbers were given to the nearest pound and could have been given to the nearest penny, had this been required, but this accuracy was more apparent than real. Accounting information, used in the NHS-wide internal market, created the illusion of financial knowledge, but only for external publics.
The situation at the organisations in the Two-way illusion group was more complex than that found in the One-way illusion group, because in these cases the internal charging systems were performing complex roles for both internal and external audiences. H4 is the strongest example of a Two-way illusion within this group (which comprised H4, LA1 and CG2) and we will consider it here.
H4 had an official clinical badge of excellence and as a teaching hospital had internationally recognised clinician stars. It was claimed, however, that the hospital was located within a health region that was historically underfunded on a per capita basis. In addition to the alleged national funding inequities, H4 argued that it was also underfunded within the health authority. With approximately 70% (and increasing) of its clinical cases arriving via Accident and Emergency and up to a further 20% being classed as ‘urgent’, i.e. next day admissions following GP referrals, clinical planning was deemed by staff to be fraught and chaotic. Significant budget deficits had been experienced over the previous four years. While each of these years had been described as a ‘crunch’ year in financial terms, accommodations with the Regional Office had so far been found.
The image initially presented to the research team was of a robust management accounting system as reflected in the application of an internal charging system, budget transfers in management reports to recognise variations in clinical activity, and monthly budget meetings. As the research progressed at H4, however, the role of accounting technologies became more akin to a façade, a smokescreen to conceal managerial impotence. In view of the economic constraints that had been applied quite severely at H4 in the previous three years, i.e. the closure of wards; the refusal to take other than non-emergency patients for a three month period; general freezes on appointments; and refusals to sanction requests for capital expenditure (with the consequent implications for clinical developments) this might suggest that ‘managerial impotence’ was an unfair assessment. However, the closure of wards, the freezing of appointments, etc. were all examples of the application of cash limits, those crude financial guillotines. Managerial action was needed to determine where resource use was inefficient within the hospital and where resources might be released and transferred to the most needy departments. In theory, the internal charging system could have facilitated such an approach, but it was never used in this way.
The external cash limits had been triggered because management had failed to hold spending within the budgetary limits. The internal financial controls did not appear to be a powerful or effective source of managerial control. The apparent lack of significant sanctions against ‘deviant’ clinical directorates meant that only the crudest of control sanctions (i.e. externally imposed, hospital-wide cash limits) were ultimately employed. The management accounting information at H4 had the potential to highlight areas of relatively adverse budgetary performance, but this potential was not developed. There appeared to be roles for accounting information at H4, but they were not the obvious or traditional ones.
While accounting information appeared to play a less than prominent role in informing internal managerial action, it was more visible when it came to dealing with external publics. H4 argued that it was significantly underfunded. If this argument was to receive support from the Department of Health and/or the Regional Office, accounting numbers would be needed to provide the ‘proof’. It was not so much a question of whether H4 was or was not underfunded (however this was to be measured): the challenge was to provide ‘evidence’ that would convince the critical decision makers to supply additional funding to H4. While the struggle within the hospital continued between the forces of economic rationality and the power of the senior clinicians (on behalf of their patients and their own self-interests), the battle was also being waged on an external front where accounting information was being employed to defend the actions of the senior clinicians and to try and secure additional funding.
The notion of illusion is not simply about deluding others. It can be necessary to allow otherwise irreconcilable forces to be accommodated. Like their counterparts at the other research sites of this study, the clinicians at H4 could be portrayed as analogous to Laughlin’s ‘buffers’ or ‘absorbers’, which he argued were beginning to appear in certain parts of the public sector (Laughlin, 1996:240). A ‘buffer mechanism’ is one that absorbs the worst effects of the ‘corrosive effects of an accounting mentality’ (Laughlin, 1991). Laughlin, drawing upon the work of Gorz (1989), describes absorption mechanisms as protecting the ‘sacred’ (e.g. the well-being of the patient) against the worst excesses of the ‘secular’ (economic reason). With regard to the latter, accounting can be said to be its voice and messenger.
The portrayal of senior clinicians as buffers against the corrosive effects of the accounting mentality may or may not be a romanticised depiction of their obduracy in the face of quite significant financial problems, but resistance to the advancement of economic reason dominated H4. Whether this resistance was exclusively explained by the protection of the sacred against the secular is a moot point. The status and power that makes senior clinicians impervious to accounting scrutiny is the same power that has commodified patients, prevented access to medical histories and led to repeated concealment of malpractice and incompetence.
If accounting information and its practitioners are portrayed as malevolent, while clinicians are depicted as all that is good in humanity, there is the danger that a more ambiguous scenario is being concealed. Hospitals represent arenas of both potential and actual moral conflict. The resource-constrained world of health care confronts and challenges the clinical (and social) desire to ease individual suffering. It is a denial of personal responsibility to suggest that only those making the decisions to close wards, freeze NHS appointments, deny medical treatments to suffering patients, etc., are the culpable ones. Those charged with ‘managing’ in hospitals are faced with the task of satisfying unbounded demands for enhanced and broader levels of health care, but within socially defined and bounded financial resources.
A picture thus emerges of an organisation (a hospital) involved in literally life-changing and life-saving activities coping with significant turbulence caused by factors such as demographics and technological advances in drugs and clinical practices, while wrestling with externally imposed financial strictures and the demands of New Public Management. The challenge might be analogous to squaring a circle, but nobody must formally admit that the circle cannot be squared and evidence must be available that managerial activity is focused on the squaring of the circle. That the circle is never actually squared is not the issue. Talk and decisions in the form of budget meetings, identification of cost variances, action points arising from the budget meetings, commitments to establishing internal market working parties, implementation of internal markets/internal charging systems, the engaging of external consultants to advise on new managerial procedures, all provide the illusion of action. However, as Brunsson (1986 and 1989), observes,
This study of organisations that were not subject to external competition reveals accounting information being employed in opportunistic ways, to suit both internal political realities and to try and affect external perceptions of the organisations. Accounting information as an internal control system had largely been neutered in the organisations studied, but this in turn was a reflection of the relative impotence of the managerial function within these organisations. The original intention and assumption might have been that cash limiting public sector organisations and then progressively reducing the unit of resource provided would force internal resource allocation to be critically appraised. With Taylorist notions of managing, allied to internal charging systems, significant public sector power bases would be challenged, undermined and ultimately brought into line. This research indicates that in the organisations studied, there was very limited evidence that significant advances had been made in this direction. Laughlin’s ‘organisational buffers’ were in evidence, absorbing the worst effects of the shocks presented by NPM-type approaches. Looking at the resistance presented by these buffers (such as doctors and powerful civil servants) exclusively through rose-tinted spectacles is unhelpful. The overt resistance of doctors, or the more diffuse, delaying and suffocating practices of the civil service also mask the potential for privilege, exploitation and waste. Public sector organisations represented hostile environments for the introduction of internal charging systems. Powerful interest groups had much to lose if the incoming accounting-based internal charging systems revealed significant disparities between VFM-based resource distribution analysis and the actual distribution of resources. If NPM-type approaches represented the unacceptable face of managerialism that was going to wrest control away from professional groups, accounting and the associated internal charging systems were their messenger and information source. Internal charging systems had thus to be neutralised, colonised, or marginalised. The evidence of this research is that within 12 of the 15 organisations studied, the significance of the internal charging systems had been largely neutralised, marginalised or turned to the advantage of powerful professional groups. In a resource-constrained world, accounting should hold out prospects for improved clarity of vision of internal operations. Tensions will undoubtedly continue to arise, whenever existing power bases are challenged by an approach that refuses to accept existing resource allocation practices as a given. However, if management is seen as distinct from, possibly in opposition to, the operational professionals of organisations, and accounting is seen as management’s searchlight and adjudicator, the future of accounting in organisations such as those studied is likely to be little different to the situation descibed in this report. While public services and the public sector organisations that deliver these are portrayed as examplesof the worst practices in customer service and bureaucratic inertia, and while the private sector is simplistically portrayed as without blemish and able to assume responsibility for public services (with little recognition of the objectives and rationale for the existence of public services), then little progress will be made on a number of fronts.
Metcalfe (1993), argues that limits were being reached for the useful application of business management practices in government but that we had hardly scratched the surface of public management proper. The latter, he argues, needs to be recognised as the main area for creative developments in the theory and practice of management. ‘Governments, by accident or design, have far more difficult management problems than any business would attempt to tackle’ (p.173). Metcalfe is principally concerned with the public sector at a macro/government level, but he is certainly arguing that management in the public sector has to be integrated into, and absorb, the political nature of public sector bodies. ‘It is a matter of personal preference whether one regards this as politicising management or managing politics’ (p.174).
A major issue is the silo effect2 of government administration, i.e. organisationally defined boundaries creating limited horizons in tackling the wicked issues3 of the day. In this respect, internal charging systems accentuate the narrowness of organisational boundaries. Rather than facilitate and encourage a broader, more far-sighted approach to managing (in the jargon, adopting a joined-up approach), internal charging systems emphasise the importance of achieving local (financial) objectives. Lovell and Hand (1999) illustrate these problems with a case example taken from the Prison Service. The private sector orientated accounting model fails to facilitate a joined-up approach to performance measurement. Metcalfe addresses a related point when he observes,
2. ‘Silo effect' is a term used to describe the limited horizons sometimes evident in problem definition, decision making and policy formulation within government that is attributed to the domination of departmental perspectives and considerations when difficult social issues are being addressed. It was the existence of the 'silo effect' that led to the development in the 1990s to what is referred to as 'joined-up government' initiatives.
3. A term coined in the 1990s to refer to the really difficult social issues that seem, not merely to persist, but to grow in intensity and significance, despite attempts by various administrations to mitigate their worst effects, e.g. youth crime, inner city deprivation, drug abuse.
Lovell, Rowe, Harradine, Rees-Jones and Ball, 2001
Executive summary
1. Introduction
This document provides an overview of a research report, commissioned and published by ACCA, into internal charging practices in the public sector. While a considerable literature exists on internal markets and quasi-markets, the role of accounting systems, particularly the employment of intra-organisational charging systems to facilitate resource allocation and organisational control, has received much less attention.The issues of quality of service, value for money (VFM) and accountability of public services have received much attention during the past two decades, with a significant increase in attention to the role of ‘management’ within public sector organisations. A particular phrase, New Public Management (Hood, 1991) (NPM), has gained currency for encompassing a wide variety of approaches that have been imported from the private sector, each intended to enhance the quality of resource allocation and management within the public sector. Within this plethora of managerial approaches, the introduction of internal markets attracted much media attention: particularly the NHS Internal Market, which came into effect in 1991. However, this was a sector-wide internal charging system. The focus of the present research was the internal charging systems employed within hospitals, local authorities and central government departments and agencies to support organisational control and development.
This report neither denies the very real financial constraints experienced by many of the organisations studied during the research, nor does it minimise or underplay their significance. Hospital patients undoubtedly suffer as a result of ward closures, postponed operations or extended waiting lists. Similarly, the services provided by many organisations from the central and local government sectors have been affected by reducing units of resource,1 and these appear to have affected the quality of some of these services as experienced by the general public. Within this study some exceptions did exist with regard to the resourcing issue, but generally the problems of the cash-limited world of the public sector organisation appeared to be significant. These constraints are a function of externally determined cash limits. The cash limits, to a large extent, define the financial perimeter of an organisation’s actions. How these externally determined funds are then distributed within the public sector organisation is a managerial decision and it is in this respect that internal charging systems have a potential role to play. In theory, if the internal charges/prices represent the opportunity cost of all resources used, the internal prices and the resulting financial performances of the various managerial units provide important indicators of effective/ineffective resource use. As a result, judgements might be made about the key individual(s) within these accountable units. The extent to which the organisation appears to be delivering value for money should be more measurable.
In theory, internal charging systems have the potential to help management re-draw the organisation’s financial perimeter. By distributing funds within the organisation in a way that is informed by the signals of an internal charging system, resources might be/could be switched from less effective to more effective users of a key limiting factor, i.e. finance. Having said this, an immediate and important caveat is required. There is no presumption that internal charges, even if they were to reflect opportunity costs, could hope to capture all that is salient for managerial decision making. As stated above, however, robustly determined charges could play an important informing role in such decisions. It is even possible that by re-directing resources into those areas that appear to offer better value for money, the total area within the organisational perimeter might be increased, i.e. additional resources might be attracted to the organisation.
2. The research objectives and research design
ACCA was interested in a number of issues, namely: areas in which internal charging systems were used; the basis, frequency and extent of charging; the role of IT in the development of charging systems; and the extent of any perceived cost and efficiency benefits arising from the charging systems.In developing its proposal, the research team concluded that it would be unrealistic to attempt to cover the full range of organisations designated ‘public sector organisations’. As a consequence, three key sectors were identified, namely NHS Hospital Trusts, local authorities and central government departments and agencies. Five organisations from each sector were studied. The empirical element of the research was carried out over a 15 month period between May 1998 and July 1999. Vertical and horizontal cross-sections were taken from each organisation’s management structure and used to cross-check the accounts provided by members of the different management groups. In all, 81 interviewees took part in the study, a number of them being interviewed on more than one occasion. Interviews were of a semi-structured nature and were held with heads of finance and accounting departments, business managers, project managers, head teachers, IT specialists, clinicians and representatives of other professional groupings. In addition, a focus group meeting was held with accountants and business managers from the health care sector. These interviews were supported by archival material, both publicly available material and internal documentation and memoranda. From this mix of organisational perspectives, understandings were developed to provide a series of images of the roles of accounting information and of differing notions of ‘managing’ within the organisations studied.
To respect the anonymity of the 15 organisations that each allowed the research team the freedom to talk with a range of employees, their identities have been limited to the following shorthand. The five hospitals are referred to simply as H1, H2,…H5. In a similar vein, the five central government departments or agencies are referred to as CG1, CG2, …. CG5. Finally, the five local authorities are named LA1, LA2, … LA5. The choice of the organisations studied was not random. Organisations were approached because they were known to possess particular characteristics that were relevant to the study.
In all but one organisation, it was either known, or believed, that an internal charging system was in operation at the time of the research, or had been in operation until quite recently, or that there was the financial infrastructure to operate an internal charging system (although the existence of an internal charging system had yet to be confirmed at the commencement of the study). One organisation was selected because, although it enjoyed a reputation for financial stringency, it was known to have eschewed employing an internal charging system. The decision to reject such an approach was of interest to the research team, not least because this organisation was a hospital and, at the time of the research, the NHS-wide internal market had only very recently been withdrawn. Thus, the financial infrastructure necessary to supply the information for a local internal charging system should have been in place because of the need for the hospital to furnish similar information to the NHS internal market.
3. Making sense of the evidence gathered
As the research progressed, the actual roles performed by the internal charging systems studied began to clarify and a degree of consistency began to emerge. With increasing regularity, the initial claims of robust internal charging systems, made by the senior finance managers of the organisations studied, were challenged by the evidence gathered from other managerial colleagues. When presented with the contradictory evidence, the senior finance staff gradually modified their initial stances, exemplified by the deputy treasurer of one local authority. When presented with a range of evidence that challenged his initial description of his organisation’s internal charging system as a robust management tool, observed, ‘some of this is smoke and mirrors, [pause] it’s all smoke and mirrors, [pause] part of it …’.The 15 organisations studied were ultimately categorised into four groups, as shown in table 1.
| Table 1: Classification of the organisations studied | |||
| The Quarantined group | Two-way Illusion | One-way Illusion | The Outliers |
| CG1, CG3, CG4, LA2, LA3, LA4 |
H4, CG2, LA1 | H1, H2, H3, LA5 | CG5, H5 |
The ‘Outliers’ group, as the term implies, was difficult to fit within the general scheme of the findings. This group of two is explained in the main report, but in this overview attention is focused upon the three main categories.
The three main categories are linked by the notion of illusion, although the nature of the illusion is different in each case. The use of the term ‘illusion’ refers to the research team’s experience that the initial presentation of the robustness and effectiveness of each of the respective internal charging systems (and hence the public face of the internal charging systems) was subsequently shown to be only a pale reflection of the real situation. The respective systems had roles to perform that, in their contexts, were no less important to the participants than the initial explanations offered to the research team. The term ‘illusion’ is important because the actual roles of the internal charging systems explained in this report are subversions of the professed original intent. The charging systems, and the associated accounting information, acted as façades to mask actual managerial practices.
The most populated category is the ‘Quarantined group’. As with the other two ‘illusion’ groups, there is a range of correspondence between the organisations within each category and the category’s description, i.e. the six organisations included in this group display differing levels of intensity of ‘quarantining’. CG1, for example, was the least significant example of a quarantined area being created within the organisation, although the notion of quarantine is still appropriate for CG1. CG3, on the other hand, displayed the most significant correspondence with the notion of quarantine.
The quarantined group
The Quarantined group were organisations where particular parts were separated out from the larger, ‘main’ organisation and ring-fenced within an internal charging system. Within these internal charging systems, the departments and functions concerned ‘traded’ with purchasing units belonging to the main organisation (and beyond in some cases). The feature that distinguished the six organisations included in this group was that within each of these internal charging systems there were examples of departments or functions that were exposed to external competition, or there was evidence that services that had once been part of the internal charging systems had since been privatised. Thus, for those services that remained part of the internal charging systems, there appeared to be a real risk that they could be severed from the main organisation if the need arose. This need occurred when the main organisation had to provide evidence that it was adopting business-like practices and driving economies through the organisation. Evidence could be shown of hard decisions being taken, of the main organisation facing up to external competition, of the drive to achieve improved levels of cost economy and efficiency by opening up the main organisation to private sector practices. The Quarantined group provided evidence of these intentions. However, the extent to which business-like practices were being adopted across all activities of the main organisation remained hidden.
The notion of ‘quarantine’ relates to an area into which elements or objects are placed, separating them from the main body or population. The main population needs to be protected from contamination by the quarantined elements. The common feature of the quarantined departments and services was that they had been deemed amenable to market-type forms of control. They had been recognised as having direct external competitors and their work was of an operational, rather than policy, nature. Those elements placed within the areas of quarantine became available for sacrifice in the event that external audiences demanded evidence that apparent economic rationality was dictating the sourcing of service provision. By offering up such a sacrifice/providing such evidence, it was intended that the main population would be protected from equivalent attack. In the context of this study, the ‘main population’ was the principal activities of each parent organisation studied, while the potential aggressors were the political forces that demanded evidence of business-like practices being adopted. Within Dunleavy’s (1991) analytical framework of core, bureau, programme and super-programme budgets, the areas of quarantine identified in this research study would involve those parts of an organisation’s bureau budget that it was prepared, if all else failed, to offer-up as a sacrifice. In so doing, it would protect most of its bureau budget, and certainly all its core budget, from attack.
Within the internal charging systems (the areas of quarantine), some of the services were open to external competition, thus enabling them to ready themselves for possible exposure in any intended competitive tendering exercise. Evidence of this can be seen in each of the six organisations within the Quarantined category. However, there were also examples of services within the respective charging systems that were not intended to be exposed to external competition. In these cases (e.g. the legal services and translation services of CG3, and the legal services of LA3), local rules were instituted to protect these particular services. On occasions, services were withdrawn from quarantine, the period of quarantine having served its purpose (which varied on a case-by-case basis). Examples of this phenomenon were the educational advisory services and the secretariat (central typing resource) of LA2. In both these cases the services had experienced a considerable reduction in the use made of them by their internal ‘customers’. Unlike other services that had experienced a similar decline in demand (and were subsequently privatised), however, the educational advisory services and secretariat of LA2 enjoyed the internal loyalty of, or affiliation to, influential decision makers. To protect them from further diminution in their size or the threat of outsourcing, they were both taken out of their internal charging system and placed in what was commonly referred to as the authority’s democratic core, i.e. those services that are essential for a local authority to carry out its statutory duties. Interestingly, the proportion of an authority’s central services that were identified as part of its democratic core varied significantly, suggesting that this label might be a convenient heading under which to protect vulnerable but favoured services.
Thus, vulnerable but favoured services could be left inside an internal charging system, but protected by local rules or understandings that they were not for outsourcing (e.g. the legal service departments of all six organisations and the translation service of CG3). Alternatively, they could be removed from the internal charging system and placed into the ring-fenced area that was protected from competitive forces, such as the democratic core at LA2. The important point is that the internal charging systems were the parent organisations’ evidence to their external publics that economic rationality was driving organisational co-ordination and service delivery. That this approach applied to only a small part of the organisation was not publicised. For example, CG3 was described by a Treasury official as the central government department with probably the most advanced internal charging system, but it applied this system to only 5% of the parent department’s operations.
An intriguing feature of CG3’s internal charging system was that surpluses generated by those departments within this system (and thus obtained from their internal clients) were invariably redistributed back (in-year) among the internal clients to avoid any budget overruns by the latter’s. This practice was difficult to understand or justify if the internal charging system was intended to affect the behaviour of user departments.
What is very important to appreciate is that within all the organisations that had effectively isolated a group of departments or services by virtue of the internal charging regimes, the rest of the organisation appeared relatively untouched by stricter financial controls. Once budgets had been set, frontline services, policy areas, medical departments, etc. basically spent up to their budget limits. The existence of annuality, which was still prevalent among a number of the organisations, particularly the central government departments (notwithstanding the outcome of the Comprehensive Spending Review), only encouraged such an approach.
The one-way and two-way illusion groups
The internal charging systems of those organisations included in these two categories still performed illusory roles, but there was not the same sense of an area of quarantine being created into which departments or services would be placed because of the threat of outsourcing, CCT or market testing. The role of the internal charging systems in these two categories was to create illusions either for external audiences solely (the One-way illusion group), or for both external and internal audiences (the Two-way illusion group).
The One way illusion group included three hospitals, H1, H2 and H3, and one local authority, LA5. In the One-way illusion group, the illusion was directed at, and confined to, external audiences. Two of the organisations, H2 and H3, can be said to have travelled through relatively calm financial waters during the ten years prior to the study. The same cannot be said about LA5 and H1, although the apparent lack of stringent internal financial controls within H1 and LA5 might suggest that their respective financial positions were not as traumatic as some of the other organisations featured in this study.
H1 had been a pilot site for management budgeting in the mid-1980s, when an internal charging system was developed that made clinician groups profit centres. The intention was to use the identification of ineffective resource use (as revealed by the accounting information) to encourage peer pressure within the clinicians’ group to bring about resource redistribution. By 1991, however, the internal charging system had fallen into disrepute because of inaccuracies (which appeared technically but not politically resolvable) and it ceased to be used for internal management purposes. Yet the system was retained to supply information to the NHS-wide internal market for the 1991–1997 period. With the exception of adjustments for inflation, no attempt was made during this period to enhance the reliability of the accounting information on specialty costs at H1.
The same situation was evident at H2 and H3. Neither employed an internal charging system to facilitate and support management control, as the accounting systems had not been designed to provide that level of rigour. The view of the finance staff was that any attempt to introduce an internal charging system would founder because the clinicians would quite easily be able to undermine the information’s robustness and reliability. Furthermore, no additional resources were earmarked for the finance function to enhance the quality of the detailed accounting information. Yet, at the time of the research, these same two hospitals were only a couple of months out of the NHS-wide internal market and had been able to supply detailed cost information on a wide variety of medical treatment areas and interventions for the previous six years.
The reliability of information on the cost of treatment areas and specialties was further questioned by an accountant at H4 (one of the Two-way illusion group hospitals). She raised her concerns over the financial returns that were made by her hospital to the Department of Health, showing the detailed financial analysis of differing specialties. The exercise, she believed, should have taken the equivalent of six to eight weeks, but she was given the task of gathering the information and completing the submission only two weeks before it was due with the Department of Health. She was extremely concerned at the way her professional position had been compromised and about the inaccuracies that the final submission would inevitably contain. Talking to colleagues from other hospitals, she realised that hers was not an isolated case. Numbers were given to the nearest pound and could have been given to the nearest penny, had this been required, but this accuracy was more apparent than real. Accounting information, used in the NHS-wide internal market, created the illusion of financial knowledge, but only for external publics.
The situation at the organisations in the Two-way illusion group was more complex than that found in the One-way illusion group, because in these cases the internal charging systems were performing complex roles for both internal and external audiences. H4 is the strongest example of a Two-way illusion within this group (which comprised H4, LA1 and CG2) and we will consider it here.
H4 had an official clinical badge of excellence and as a teaching hospital had internationally recognised clinician stars. It was claimed, however, that the hospital was located within a health region that was historically underfunded on a per capita basis. In addition to the alleged national funding inequities, H4 argued that it was also underfunded within the health authority. With approximately 70% (and increasing) of its clinical cases arriving via Accident and Emergency and up to a further 20% being classed as ‘urgent’, i.e. next day admissions following GP referrals, clinical planning was deemed by staff to be fraught and chaotic. Significant budget deficits had been experienced over the previous four years. While each of these years had been described as a ‘crunch’ year in financial terms, accommodations with the Regional Office had so far been found.
The image initially presented to the research team was of a robust management accounting system as reflected in the application of an internal charging system, budget transfers in management reports to recognise variations in clinical activity, and monthly budget meetings. As the research progressed at H4, however, the role of accounting technologies became more akin to a façade, a smokescreen to conceal managerial impotence. In view of the economic constraints that had been applied quite severely at H4 in the previous three years, i.e. the closure of wards; the refusal to take other than non-emergency patients for a three month period; general freezes on appointments; and refusals to sanction requests for capital expenditure (with the consequent implications for clinical developments) this might suggest that ‘managerial impotence’ was an unfair assessment. However, the closure of wards, the freezing of appointments, etc. were all examples of the application of cash limits, those crude financial guillotines. Managerial action was needed to determine where resource use was inefficient within the hospital and where resources might be released and transferred to the most needy departments. In theory, the internal charging system could have facilitated such an approach, but it was never used in this way.
The external cash limits had been triggered because management had failed to hold spending within the budgetary limits. The internal financial controls did not appear to be a powerful or effective source of managerial control. The apparent lack of significant sanctions against ‘deviant’ clinical directorates meant that only the crudest of control sanctions (i.e. externally imposed, hospital-wide cash limits) were ultimately employed. The management accounting information at H4 had the potential to highlight areas of relatively adverse budgetary performance, but this potential was not developed. There appeared to be roles for accounting information at H4, but they were not the obvious or traditional ones.
While accounting information appeared to play a less than prominent role in informing internal managerial action, it was more visible when it came to dealing with external publics. H4 argued that it was significantly underfunded. If this argument was to receive support from the Department of Health and/or the Regional Office, accounting numbers would be needed to provide the ‘proof’. It was not so much a question of whether H4 was or was not underfunded (however this was to be measured): the challenge was to provide ‘evidence’ that would convince the critical decision makers to supply additional funding to H4. While the struggle within the hospital continued between the forces of economic rationality and the power of the senior clinicians (on behalf of their patients and their own self-interests), the battle was also being waged on an external front where accounting information was being employed to defend the actions of the senior clinicians and to try and secure additional funding.
The notion of illusion is not simply about deluding others. It can be necessary to allow otherwise irreconcilable forces to be accommodated. Like their counterparts at the other research sites of this study, the clinicians at H4 could be portrayed as analogous to Laughlin’s ‘buffers’ or ‘absorbers’, which he argued were beginning to appear in certain parts of the public sector (Laughlin, 1996:240). A ‘buffer mechanism’ is one that absorbs the worst effects of the ‘corrosive effects of an accounting mentality’ (Laughlin, 1991). Laughlin, drawing upon the work of Gorz (1989), describes absorption mechanisms as protecting the ‘sacred’ (e.g. the well-being of the patient) against the worst excesses of the ‘secular’ (economic reason). With regard to the latter, accounting can be said to be its voice and messenger.
The portrayal of senior clinicians as buffers against the corrosive effects of the accounting mentality may or may not be a romanticised depiction of their obduracy in the face of quite significant financial problems, but resistance to the advancement of economic reason dominated H4. Whether this resistance was exclusively explained by the protection of the sacred against the secular is a moot point. The status and power that makes senior clinicians impervious to accounting scrutiny is the same power that has commodified patients, prevented access to medical histories and led to repeated concealment of malpractice and incompetence.
If accounting information and its practitioners are portrayed as malevolent, while clinicians are depicted as all that is good in humanity, there is the danger that a more ambiguous scenario is being concealed. Hospitals represent arenas of both potential and actual moral conflict. The resource-constrained world of health care confronts and challenges the clinical (and social) desire to ease individual suffering. It is a denial of personal responsibility to suggest that only those making the decisions to close wards, freeze NHS appointments, deny medical treatments to suffering patients, etc., are the culpable ones. Those charged with ‘managing’ in hospitals are faced with the task of satisfying unbounded demands for enhanced and broader levels of health care, but within socially defined and bounded financial resources.
A picture thus emerges of an organisation (a hospital) involved in literally life-changing and life-saving activities coping with significant turbulence caused by factors such as demographics and technological advances in drugs and clinical practices, while wrestling with externally imposed financial strictures and the demands of New Public Management. The challenge might be analogous to squaring a circle, but nobody must formally admit that the circle cannot be squared and evidence must be available that managerial activity is focused on the squaring of the circle. That the circle is never actually squared is not the issue. Talk and decisions in the form of budget meetings, identification of cost variances, action points arising from the budget meetings, commitments to establishing internal market working parties, implementation of internal markets/internal charging systems, the engaging of external consultants to advise on new managerial procedures, all provide the illusion of action. However, as Brunsson (1986 and 1989), observes,
‘the budget … offers a good opportunity to produce talk and
decisions along the lines that “everything will be better in the future”,
particularly if the past or the present leave little to boast about … it
(the budget) ... provides excellent opportunities for hypocrisy in the
form of discrepancies between present and past behaviour and promises for
the future’ (Brunsson, 1986).
Action thus becomes redefined. It is represented in talk and decisions. To take action by, for example, officially stating which patients are to become priority cases, i.e. which patients are to become de-prioritised, or to challenge the power and status of individual clinicians by downsizing their activities and specialties, would attract significant media attention. Such attention does not normally lead to chief executives being re-appointed when their contracts come up for renewal.
Charged with reconciling
potentially irreconcilable objectives, i.e. to respond to and satisfy
increasing expectations for public health care, while at the same time
achieving cost-efficiency targets in an organisational setting in which
powerful individuals and interest groups represent complex and ambiguous
forces of resistance, managers at hospitals are required to manage – but
manage what? In the extreme case of H4, ‘managing’ was related to the
management of inconsistencies and hypocrisy. Artefacts of managerial
control, such as accounting control systems, were in evidence, but their
roles varied between being predominantly used for satisfying external
needs for financial numbers, to being the mechanisms by which the illusion
of managing could be portrayed. The ‘talk’ at budget meetings about how to
address a budgetary deficit, the ‘decision’ to set-up an internal market
working party, and even the establishment of a small-scale internal
market, do not necessarily lead to the ‘action’ of reducing the budget
deficit. ‘Talk’ and ‘decisions’ become ‘managerial action’. In many cases
only the invoking of the crude guillotine of an external cash limit
imposed real action.
4. CONCLUSIONS
Some writers have argued that the assault upon the cost efficiency of the public sector since 1979 has been more associated with ideology than carefully considered policies, thinking and evidence. An editorial in The Political Quarterly (Crouch and Marquand, 1993) used images of war to convey a sense of the intensity of the wave of NPM sweeping the NHS in particular and the public sector in general.‘In the war the government is waging against control of the National Health Service by the medical profession, its front-line troops are managers with accountancy skills … the use of accountants is in fact concentrated on that set of questions which has become the political obsession of our day: what to do about the public sector’
The line of thinking that has underpinned much of the attention directed at achieving higher levels of efficiency and economy in the public sector over the past two decades has itself been based upon two fundamental assumptions. The first is that many areas of public administration could/should be transferred to private sector organisations and be subject to the power of economic logic. The second is that those areas that are deemed inappropriate for private sector control should be subject, as far as possible, to the dynamics of market conditions. It is with the second category that internal charging systems can be aligned, and where they possess the potential to play important roles in organisational management. This does beg the question, however, that if different views of public sector activity are countenanced, would internal charging systems in particular and accounting information in general, become ‘data non grata’?This study of organisations that were not subject to external competition reveals accounting information being employed in opportunistic ways, to suit both internal political realities and to try and affect external perceptions of the organisations. Accounting information as an internal control system had largely been neutered in the organisations studied, but this in turn was a reflection of the relative impotence of the managerial function within these organisations. The original intention and assumption might have been that cash limiting public sector organisations and then progressively reducing the unit of resource provided would force internal resource allocation to be critically appraised. With Taylorist notions of managing, allied to internal charging systems, significant public sector power bases would be challenged, undermined and ultimately brought into line. This research indicates that in the organisations studied, there was very limited evidence that significant advances had been made in this direction. Laughlin’s ‘organisational buffers’ were in evidence, absorbing the worst effects of the shocks presented by NPM-type approaches. Looking at the resistance presented by these buffers (such as doctors and powerful civil servants) exclusively through rose-tinted spectacles is unhelpful. The overt resistance of doctors, or the more diffuse, delaying and suffocating practices of the civil service also mask the potential for privilege, exploitation and waste. Public sector organisations represented hostile environments for the introduction of internal charging systems. Powerful interest groups had much to lose if the incoming accounting-based internal charging systems revealed significant disparities between VFM-based resource distribution analysis and the actual distribution of resources. If NPM-type approaches represented the unacceptable face of managerialism that was going to wrest control away from professional groups, accounting and the associated internal charging systems were their messenger and information source. Internal charging systems had thus to be neutralised, colonised, or marginalised. The evidence of this research is that within 12 of the 15 organisations studied, the significance of the internal charging systems had been largely neutralised, marginalised or turned to the advantage of powerful professional groups. In a resource-constrained world, accounting should hold out prospects for improved clarity of vision of internal operations. Tensions will undoubtedly continue to arise, whenever existing power bases are challenged by an approach that refuses to accept existing resource allocation practices as a given. However, if management is seen as distinct from, possibly in opposition to, the operational professionals of organisations, and accounting is seen as management’s searchlight and adjudicator, the future of accounting in organisations such as those studied is likely to be little different to the situation descibed in this report. While public services and the public sector organisations that deliver these are portrayed as examplesof the worst practices in customer service and bureaucratic inertia, and while the private sector is simplistically portrayed as without blemish and able to assume responsibility for public services (with little recognition of the objectives and rationale for the existence of public services), then little progress will be made on a number of fronts.
Metcalfe (1993), argues that limits were being reached for the useful application of business management practices in government but that we had hardly scratched the surface of public management proper. The latter, he argues, needs to be recognised as the main area for creative developments in the theory and practice of management. ‘Governments, by accident or design, have far more difficult management problems than any business would attempt to tackle’ (p.173). Metcalfe is principally concerned with the public sector at a macro/government level, but he is certainly arguing that management in the public sector has to be integrated into, and absorb, the political nature of public sector bodies. ‘It is a matter of personal preference whether one regards this as politicising management or managing politics’ (p.174).
A major issue is the silo effect2 of government administration, i.e. organisationally defined boundaries creating limited horizons in tackling the wicked issues3 of the day. In this respect, internal charging systems accentuate the narrowness of organisational boundaries. Rather than facilitate and encourage a broader, more far-sighted approach to managing (in the jargon, adopting a joined-up approach), internal charging systems emphasise the importance of achieving local (financial) objectives. Lovell and Hand (1999) illustrate these problems with a case example taken from the Prison Service. The private sector orientated accounting model fails to facilitate a joined-up approach to performance measurement. Metcalfe addresses a related point when he observes,
‘in many policy fields, the economy, the environment, education , health, welfare, transport, urban planning; the problems are outrunning the capacities of the organisations charged with dealing with them … just when it is vital that organisations work together, crisis conditions undermine the trust and mutual confidence on which co-ordinated action depends’ (Metcalfe 1993)
Managing in the public sector is complex, and the imposition of simplistic models of managing, allied to simplistic models of organisational co-ordination (e.g. internal charging systems), was always likely to be problematic. The quality of accounting information and the infrastructure available to improve accounting systems remain critical issues. Jones and Dewing (1996) remark upon both the significant power of clinicians (despite the findings of the Griffiths’ Report 13 years earlier) and weaknesses in NHS management accounting information systems. While the present report reaffirms the resilience of doctors and other powerful groups to assaults on their organisational positions, the researchers have provided evidence of other, possibly no less important, roles for accounting information in a sector of the economy racked by contradictions, hypocrisy and tensions. Accounting appears to be one of the principal organisational means through which the illusion that managerial and political circles can be squared is created.Notes
1. A unit of resource is the funding/money per patient, per student, per aged person, etc. The term 'reducing units of resource' thus relates to the diminishing amount of money being provided per student, per patient, per traveller, per disabled person, etc., where this is applicable.2. ‘Silo effect' is a term used to describe the limited horizons sometimes evident in problem definition, decision making and policy formulation within government that is attributed to the domination of departmental perspectives and considerations when difficult social issues are being addressed. It was the existence of the 'silo effect' that led to the development in the 1990s to what is referred to as 'joined-up government' initiatives.
3. A term coined in the 1990s to refer to the really difficult social issues that seem, not merely to persist, but to grow in intensity and significance, despite attempts by various administrations to mitigate their worst effects, e.g. youth crime, inner city deprivation, drug abuse.
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