Improving government effectiveness: lessons from Germany

Governments are increasingly recognising that they cannot regulate themselves out of the problems they currently face – and that they must learn to look outwards to improve their effectiveness, writes Tom Gash.

All countries face their own unique challenges but advanced democracies also have much in common: the global economic downturn, aging populations, increasingly expensive health and pension spending, and citizens who remain as hard to please as ever.

At an event last week in Bavaria, attended by representatives of Bavaria’s governing party, the Christian Social Union (CSU) and their guests, it also became clear that there is a growing consensus that governments face another common problem. They have relied for too long on traditional legislation and regulation to drive change. The consensus was that simply prescribing in law what citizens and companies can and can’t do will not solve the complex problems governments are facing, that governments cannot legislate their way to improved citizen health, wealth and wellbeing.

Oliver Letwin, Minister for Government Policy, and Dr Johannes Ludewig, Chair of the German semi-independent National Regulatory Control Council (NKR) which ensures the regulatory impact of Federal legislation is assessed and published, both argued that there was in fact both too much legislation and much of it was failing to achieve its intended effects. Letwin shared the experience of the UK’s ‘red tape challenge’ – now known as the ‘Cutting Red Tape’ programme, run by the Cabinet Office. Ludewig explained the methods of his NKR – while also pointing out that there were limits to what could be achieved by the Federal Government alone, estimating that 50% of the legislative burden on German companies was imposed from Brussels.

The attempts of Britain, Germany and indeed Netherlands – the country seen by most experts as enjoying the most robust arrangements for minimising the regulatory burden – to reduce regulatory sprawl and improve the quality of legislative decisions provide useful lessons. But there was as much or more excitement about the potential to use broader government tools to help tackle social issues and improve outcomes for citizens. I picked out a number of developments that are reasonably well known in the UK but from which both UK and international policymakers and practitioners can learn to improve government effectiveness.

  1. Behavioural economics: The Behavioural Insights Team (BIT), which span out of government in 2013 and is the subject of a new book by one of its founders and former IfG Director of Research, David Halpern, is being watched carefully by many countries abroad. Some are using its services, while others – including the New South Wales Government in Australia –are building their own skills in this area. BIT and others using similar principles have shown that using insights from social psychology – alongside an experimental approach – can help save money and improve outcomes. Well known successes include increasing the tax take through changing wording of reminder letters (work led by another IfG alumni Mike Hallsworth) and increasing pension take-up through auto-enrolment.
  2. Market design: There is an emerging field of study which is examining how algorithms can be used to match people better with services they need – particularly in cases where it is unfair or morally repugnant to let allow a free market to operate. Alvin Roth, the Harvard Professor and Nobel prize winner, writes about these ‘matching markets’ in his book Who Gets What and Why – in which he also explains how the approach can ensure that more kidneys reach compatible donors, and children find the right education.
  3. Big data: Large datasets can now be mined far more effectively, whether it is to analyse crime patterns to spot where police patrols might be useful or to understand crowd flows on public transport. The use of real-time information allows far more sophisticated deployment of public sector resources, better targeted at demand and need, and better tailored to individual preferences.
  4. Transparency: Transparency has the potential to enhance both the accountability and effectiveness of governments across the world – as shown in our latest Whitehall Monitor Annual Report. The UK government is considered a world-leader for its transparency – but there are still areas where progress has stalled, including in transparency over the costs and performance of privately provided public services.
  5. New management models: There is a growing realisation that new methods are best harnessed when supported by effective management. The Institute’s work on civil service reform highlights a range of success factors from past reforms in the UK – and the benefits of clear mechanisms for setting priorities and sticking to them, as is being attempted by governments new(ish) Implementation Taskforces and the Departmental Implementation Units currently cropping up across Whitehall. I looked overseas for a different model that clearly aligns government activities behind citizens’ concerns – in this case the example of the single non-emergency number system operating in New York City and elsewhere. This system supports a powerful, highly responsive, data-driven performance management regime. But like many performance management regimes it can risk a narrow and excessively short-term focus – so such tools must be combined with the mind-set of system stewardship that the Institute has long championed in its policymaking work.
  6. Investment in new capability: It is striking that all of these developments are supported by technological change and research insights developed outside government. But to embed new approaches in government, there appear to be benefits to incubating new capacity, either in specialist departmental teams or at the centre of government. The UK has invested in such teams in all the areas where the UK is seen as a global leader.

Christian Bason, former head of Mindlab, an innovation centre within the Danish government, presented his work examining the processes that allow governments to understand what citizens want and need – and to pick which of the above solutions, if any, are appropriate in a specific case.

His insights were hugely valuable, though he was too polite to point out the elephant in the room. The CSU’s ‘Think In’, as this annual multi-day event is known, is a commendable tradition – one that allows debate and new thinking. On this occasion, Angela Merkel spoke to delegates in an attempt to manage growing tensions between her Christian Democrats and the CSU over Germany’s response to the ‘refugee crisis’. But the event remains a traditional one, with speakers presenting and limited time for discussion. The design approaches Bason rightly advocates would have led to a very different event, with CSU parliamentarians working on and debating real problems, playing with new concepts in real-time and co-producing solutions with citizens, civil servants and frontline workers.

All governments are clearly some way from achieving perfection – both in terms of their use of regulation and in harnessing the full power of its alternatives. However, it is increasingly clear that there is a global conversation on effective government, one in which it is worth taking an active part.

Tom Gash is a senior fellow at the Institute for Government think tank. He is also an independent adviser to governments in the UK and internationally. You can follow him on Twitter @Tom_Gash

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