Public service reformed
The election of the fourth Labour government in 1984 ushered in a revolution in the public service. Influenced by the idea that free markets were preferable to government intervention, and determined to make departments more responsive to both citizens and ministers, the government set about overhauling the public service, especially departments involved in trading activities.
By the 1970s the public service had a reputation for being large and inefficient. This became the subject matter of a 1976 play, Glide time, by Roger Hall. The play spawned a popular television series, Gliding on, which screened from 1981 to 1985.
The first significant reform involved corporatising many of the government’s trading activities. The State-owned Enterprises Act 1986 turned a number of government departments – including those involved in mining, rail, shipping, banking, electricity, post and telecommunications – into state-owned enterprises. Many of these new organisations were later privatised.
State Sector Act 1988
The State Sector Act 1988 was another crucial piece of legislation. Since 1912 all public servants had been employed by the Public Service Commission, and then the State Services Commission, and government departments had been managed by permanent heads. In 1988 the permanent heads made way for chief executives employed on fixed-term contracts. These chief executives employed all the staff in their departments, and took on responsibility for their efficient and effective management. The 1988 act also removed the security of public service employment, abolished compulsory arbitration in the public sector, and introduced labour relations laws that had previously applied only in the private sector.
The way departments managed their finances was also radically changed. Previously, each department had been funded for the cost of its inputs, such as overheads and salaries. The Public Finance Act 1989 turned that arrangement on its head, focusing on outputs and outcomes. Departments were now funded on the basis of the cost of the goods and services they produced.
Shrinkage and growth
In 1984 the public service employed 66,160 people. By the end of the 1990s that number had fallen to 30,000. It grew again in the 2000s and stood at 57,149 in 2020.
Other reforms were also introduced. Some large departments were restructured and divided, with their different activities – such as providing policy advice, delivering services and monitoring the operations of other agencies – allocated to separate organisations. A lot of work previously done by the public service was devolved to outside organisations.
Merging functions and cuts
From the late 1990s the reform process changed course. In response to the 1996 Schick Report, which criticised some of the changes of the 1980s and early 1990s, attempts were made to coordinate the activities of departments, respond to the different social and economic needs of regions and achieve more effective results for citizens. After the global recession of the late 2000s, jobs and other costs were cut in most government departments.