The revolution that started in a library

NS Labour conference 2004 - How did a book with an impenetrable title, written by an obscure America

Why has Professor Mark Moore, a little-known American political scientist, become one of the most influential figures in Labour's third-term thinking? His concept of "public value", a yardstick for measuring public service reform, is the talk of Westminster. The BBC used it as the centrepiece of a recent pitch to renew its charter. The centre-left wonkerati are busy promoting it. And those around the Prime Minister think it can help further improve public services. How did this American notion, which gathered dust for a decade, resurface in Britain just in time for the next election?

Mark Moore seems bemused by all the fuss, not least because his book Creating Public Value: strategic management in government was a flop when it was first published in 1995. From his beach house on Cape Cod, Moore explains that the idea became "part of a wider debate [about public service reform] between officials and academics". But in the real world? "It wasn't that it ran out of steam," he admits. "It was more that it never really had any steam to begin with."

The idea began 20 years ago when Moore started work at Harvard University's school of government. He and his colleagues were not happy with their branch of academia, known as public administration. It treated public workers as robots, they thought. "It explained," says Moore, "how to implement policies, but never thought what those policies should be or what they should achieve." The solution was for "technically trained public employees" - or civil servants - to "challenge the ends of politics, not just the means". Public managers should be "explorers" commissioned by society to hunt out better, more imaginative ways of doing things. Sir Humphrey had to get entrepreneurial.

But this raised an immediate problem. Conventionally, politicians took decisions based on political beliefs. Public managers were impartial custodians of the state, doing what they were told. So how would they know what to do? Private sector managers slavishly seek shareholder value. What would be the public sector equivalent? Moore and his team spent a decade finding out.

They worked "from practice up, rather than theory down", tracking down hundreds of public sector success stories while borrowing liberally from US business-school theory. Their answer was that these freewheeling public servants should spend their lives creating "public value". Moore's favourite example involves a librarian. She works in a library for adults that is open only at certain times of the day. She realises that, with minimal extra funding, the library could open at different times to let in children before and after school. Instead of letting the thought pass, she develops a plan, convinces her political superiors, finds the money, promotes the plan to local newspapers and makes it happen. She delivers a new service that pleases the public, improves levels of education, and increases public faith in government. In short, she builds public value.

The story now jumps forward to 2001, when Moore received an unexpected phone call from John Bennington, director of the Institute of Governance and Public Management at Warwick University. Bennington had recently started running a new course on public administration. Scouting for relevant books, he found that "most texts weren't ringing any bells with our students". Then one day, by accident, he found Creating Public Value in the library. He was impressed. His students liked it, too.

Bennington saw an idea that "thought of public activities in terms of outcomes, but allowed public managers to think long- term". He arranged to visit Moore at Harvard, and then decided to get people in the UK interested. He ran a few conferences, one of which was attended by Geoff Mulgan, then head of the Prime Minister's think-tank. Mulgan commissioned a paper, and it was this paper that put public value in public view.

From there, things moved quickly. The Cabinet Office minister Douglas Alexander heralded it as "a different way of thinking and talking" about public service reform. The phrase began cropping up in voguish think-tank pamphlets, with Demos, the Institute for Public Policy Research and the Work Foundation all endorsing the concept. The Work Foundation, in turn, influenced the thinking leading up to the BBC's recent charter renewal report, Building Public Value. Now the Culture Secretary, Tessa Jowell, wants to use the idea of public value in other areas of the arts and broadcasting. And a host of other organisations - the Society of Local Authority Chief Executives and Senior Managers, the Welsh Assembly Government and the Police Service of Northern Ireland, for example - want to deliver more of it. In so far as any theory of public management can be, public value is all the rage.

Why? Because it popped up, quite by accident, when Labour was casting around for ideas about public services. The regime of targets and inspections had left the Prime Minister with scars on his back and most other people with a bad taste in their mouths. Billions of pounds were pouring into health and education. Yet results were patchy, and the public thought them patchier still. The government needed a new theory that could be sold to the public, one that justified existing public services, and that helped plan for future modernisation. The "public value" framework fitted all three requirements.

First, it puts a positive spin on state activity. The public sector has been demoralised by two decades of "new public management" theory, which argued that the state should step in only when markets failed, and then only if infused with a healthy dose of private sector razzle-dazzle. Public value, on the other hand, explains why citizens may support goods produced by public bodies largely because of their public nature. It also suggests that state activity produces unanticipated public goods beyond the "private value" enjoyed by the users. (Moore himself insists that his theory "attacks the idea of citizens as customers", something he thinks was "only partly understood by readers".) Citizens will want a decent experience, but will also support services such as the National Health Service that make Britain fairer. Public value, says the Work Foundation's Will Hutton, justifies investment in "public transport, public libraries, public postal systems and public lavatories, but not public schools".

Second, public value should help set priorities for future investment. A government trying to improve public services wants maximum bang for its billions. The Cabinet Office's report argues that public value is best understood in terms of good services, positive social outcomes and increased trust in government. New investment should fund projects that maximise these outcomes.

Finally, the theory can be used to sell reform to the public. The phrase "public value" sounds inherently approachable. Philip Collins, director of the Social Market Foun-dation, says: "Theories of public administration sound both Thatcherite and Gradgrindian. Yet a concept as pleasant-sounding as public value would always get fair hearing at a Labour Party meeting." And he is right. Public value: who could possibly be against it? As an objective for public service modernisation, it gives motherhood and apple pie a good run for their money.

Yet this is the nub of the problem with public value. Precisely because it sounds good, it is already in danger of becoming meaningless. Each vague iteration of the debate on this side of the Atlantic has been different from the last. Each has strayed a little further from Moore's original thesis. And every step drags public value away from being a theory of public management and towards a soft-soap rationale with little explanatory power.

The BBC's report is a particular offender. It claims that the BBC "exists solely to create public value". If this is true, is there anything to stop a multinational petrochemical company claiming that it, too, is "all about public value"? What is to stop any business or think-tank muddying the waters still further, justifying any old idea with vague, throwaway references to public value? What is to stop public value being used to justify the status quo in public services, even when they're doing a bad job? And how are politicians and civil servants supposed to predict which projects will create public value? The theory might spur librarians into action, but it lacks a reliable way of forecasting economic welfare, let alone something as fuzzy as trust. Public value, therefore, is both in fashion and in flux. It is a theory that justifies a broad range of public activity, but could also be used to justify business as usual. It could help civil servants plan their actions in order of priority, but as yet does not have a way of measuring them. And though it should help the government sell reforms to the public, it could become meaningless even before it has begun to do this.

Yet this is as close as new Labour has come to a theory of the state. The established "market failure" justification of government action is only a subtle variation on the neoclassical view that markets are always best and government always worst. Public value is less defeatist. Scrape away the window-dressing concept of "value" and it challenges the supremacy of economics as the only legitimate tool to calculate public welfare. It suggests that democracies, and their citizens, can make choices that do not need to be justified in a spreadsheet. This idea surely deserves a prominent place in Labour's third term.

James Crabtree is currently a Fulbright scholar at Harvard University's John F Kennedy School of Government

This article first appeared in the 27 September 2004 issue of the New Statesman, The real Tony Blair