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How has New Public management (NPM) affected the public services? To what extent has its impact been beneficial?

The development of ‘new public management’ (hereafter NPM) over the past 20 years is one of the most striking international trends in public administration. It is important to mention that the rise of NPM is linked with other four megatrends in that period, namely: -Attempts to slow down government growth and spending (Dunsire and Hood 1989 cited in Hood 1991, p.3); -The move towards privatisation and quasi-privatisation (Dunleavy 1989, p.242); -The development of automation and IT (Hood 1991, p.3);

-The development of international agenda, focusing on general discussions of public management, policy design and so on (Hood 1991, p.3). The key principle of NPM is that the work of government should be organised in the way market institutions function: be competitive, earn more rather than simply spend, be decentralised, focus on outcomes rather than process and rules, enable ‘customers to make choices’ (Osborne and Gaebler, 1993, p.284). The main objective of this essay is to discuss how the public services were affected by New Public Management and analyze to what extent its impact has been beneficial. First of all, this essay will briefly look at how the new model of public sector management differentiates against the traditional notion of bureaucracy by exploring the key motivations for emergence of New Public Management, and evaluating the main features of market-based form of public management. Then it will go on to examine how key principles of NPM have been applied to the structure and the way services are managed on the examples of Education, NHS and Social Care. Next aim of my essay is to critically assess the notion that the market-based and competitive model of public services management will be successfully implemented in “every institution in today’s world from public to private” (Osborne and Gaebler, 1993, p.21), and argue that the stance toward NPM development in public services will not be fulfilled completely by government because of some negative aspects such as the high transaction cost, the limitations of government by contract, quasi-markets and so on. The essay will conclude that although the introduction of market-based principles into the public services is aimed at making its’ provision more efficient and productive in operational terms, there are a number of negative effects in the development of NPM as well. Over the past 20 years government has introduced a number of changes into the public sector’s management, with the purpose of responding to such challenges as globalisation, technological change and international competitiveness (Flynn, N. 2007, p.27-44). This period of changes is characterised by the emergence of an innovative form of management of public sector, shifting from the traditional public administration to the competitive and market-based management (Dixon et al 1998, p.170). As the traditional administration is defined as a system under the strict control of the hierarchical model of bureaucracy, recruited by neutral and permanent officials, only administrating policies determined by the political will of government, it has been blamed for: -Hierarchy and Bureaucracy, operating severely, inefficiently; -Poor service delivery;

-Direct political control and so on (Hughes 2003, p.17-19). Also the impulsion for the reform of public service provision was growing from customer demand for flexible and adaptable institutions delivering high-quality services (Du Gay 1993, p.643-8). Therefore by the beginning of the 1990s a flexible, market-based form of public sector management, including contracting out, decentralisation, the focus on choice and outcomes, had appeared in most advanced countries like USA, New Zealand, Australia, UK (Flynn 2002, p.109). The introduction of NPM was seen as ‘…an attempt to reform the public sector...
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