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  1. 1. Experiencing institutionalization: the development of new budgets in the UK devolved bodies Mahmoud Ezzamel Cardiff University, Cardiff, Wales, UK Noel Hyndman Queen’s University, Belfast, Northern Ireland A˚ ge Johnsen Oslo University College, Oslo, Norway Irvine Lapsley The University of Edinburgh, Edinburgh, Scotland, and June Pallot University of Canterbury, Christchurch, New Zealand Abstract Purpose – This paper aims to examine an early stage of the institutionalization of accounting practices in devolved UK governments, concentrating on: the construction by devolved bodies of a “rational” set of planning and budgeting documents; the extent of homogeneity/heterogeneity in organizational response to seemingly similar institutional pressures; and politicians’ cognition of accounting numbers. Design/methodology/approach – The paper uses neo-institutional theory to examine the planning and budgeting documents of the devolved bodies and material gathered from semi-structured interviews. Findings – The findings point to a process of nested translations, from mission through aims and objectives to targets, with accounting numbers present only in the last stage whereby time-bounded targets are formulated and used to assess achievements. Because of the negotiations around the diverging interests of actors, the translation process is neither linear nor stable. Originality/value – The paper contributes to the literature by: examining the emergence and use of new accounting and budgeting systems in political organizations; understanding the experience of institutionalization of accounting practices; and exploring the impact of accounting reform on political deliberation and joined-up government. Keywords Government, Accounting, Budgetary control, Organizations, Business planning, United Kingdom Paper type Research paper The current issue and full text archive of this journal is available at www.emeraldinsight.com/0951-3574.htm This paper is part of the “Devolution, Parliamentalism and Democratic Accountability: A Comparative Study” project in the ESRC research program on “Devolution and Constitutional Change”. We acknowledge the ESRC and the Institute of Management Accountants (CIMA) for financial support. We also acknowledge the assistance of Gary Martin and Simona Scarparo. Earlier drafts of this paper were presented at the European Accounting Association Congress, Prague, May 2004, and the EIASM Public Sector Workshop, Oslo, October 2004. We are grateful to two anonymous reviewers for their constructive comments. Professor June Pallot passed away on Friday 5 November 2004. New budgets in UK devolved bodies 11 Received 1 December 2004 Revised 27 September 2005 Accepted 22 March 2006 Accounting, Auditing & Accountability Journal Vol. 20 No. 1, 2007 pp. 11-40 q Emerald Group Publishing Limited 0951-3574 DOI 10.1108/09513570710731191
  2. 2. Although the process of devolution in the UK has a long history of at least 120 years (Bogdanor, 1999), it was not until the election of the Labour Government of 1997 that a major devolution program was enacted as part of its political reform agenda. Following referendums in 1997 (Scotland, Wales) and 1998 (Northern Ireland), support for devolution was expressed by the electorate, to a stronger degree in Scotland and Northern Ireland and a much weaker degree in Wales. Scotland was granted a Parliament with tax raising powers and Northern Ireland and Wales were granted Assemblies with no such tax raising powers, and all began to function in 1999. This recent experience of devolution in the UK is part of an international trend that varies in the extent of devolution, for example from the highly consensual model of Norway at one extreme to the much more centralized model of New Zealand at the other extreme (Ezzamel et al., 2004); hence, the implications of these developments go far beyond the UK. The focus of this study is upon devolved governments within the UK, specifically in Northern Ireland, Scotland and Wales. The devolution process has proponents who advocate devolution because of the benefits of redrawing political territories (taking political processes closer to local communities, increased transparency and accountability for activities to local electorates) – a renewal of democracy (Jeffery, 2006). Opponents of devolution see this development as a weakening of the political union between England, Northern Ireland, Scotland and Wales, with no obvious benefit for the economy or public services. There are numerous strands to the above scenarios. In this paper we focus on whether a renewal of democracy (in the shape of more responsive political bodies to local needs, greater transparency of the funding and management of public services) is an outcome of the process of devolution, by examining the development and use of budgets in the three devolved UK bodies. One of the key changes that occurred as a result of political devolution in the UK was that national governments became responsible for designing their planning activities in the areas for which they held power, in the main health, education, housing, local government and the economy. Each local government receives an annual allocation of funds from the Chancellor, using the Barnet Formula (largely based on headcount), which is then allocated by devolved administrations to their particular priorities. Hence, devolution has led to a new discontinuity in which each National Government now engages in a full budget cycle involving the preparation and monitoring of its own budgets and supportive documentations. This development creates an opportunity to examine budget construction and the planning and budgetary process as a novel experience in national government. We develop our research questions more fully following our theoretical framing. For now, suffice it to say that our concern is to understand how new accounting and budgeting practices emerge and unfold in organizations. Our focus is of a micro nature; this is intended as a contribution to the accounting literature that adopts institutional sociology as a theoretical framework where researchers have bemoaned the lack of sufficient studies of micro-organizational practices (Hirsh and Lounsbury, 1997; Hirsh, 1997). Our study is also a study of accounting and budgeting practices in newly created organizations, thereby offering the potential to contribute to our understanding of how novel practices may begin to sediment and become institutionalized. As green-field sites, understanding the construction and functioning of accounting and budgeting systems in these newly devolved institutions offers a contrast with studies of AAAJ 20,1 12
  3. 3. organizational change in older organizations that have been the subject of previous institutionalization processes. Each of the new devolved institutions includes accountability among its key founding principles, and has similar arrangements aimed at its enactment. They all have an executive (or cabinet), made up of ministers of the ruling party (or parties), responsible for drawing up a programme for government and a related budget. The full Parliament/Assemblies exercise their role of scrutiny of the executive through the debating, in plenary sessions, of the legislative programme. Committees have powers to scrutinize the work of the executive. In Northern Ireland and Scotland, the finance committee is responsible for addressing overall budget priorities and financial scrutiny. It is required to gather and consider the views of the subject committees and individual members of the parliament, and to scrutinise the expenditure proposals of the executive. The results of the finance committee’s analysis inform the plenary debate on the budget in the parliament. The executive should then take the outcome of the plenary debate into consideration in their financial plans. In contrast to Northern Ireland and Scotland, Wales does not have a finance committee. The budget proposals are scrutinized by the individual subject committees, which are invited to provide their views on their spending priorities during the budget planning round, and to examine and comment on the draft budget. In addition, individual members of the devolved institutions can hold the executive to account through oral and written parliamentary questions, and can ask for information in order to proceed with their enquiry. The next section provides a brief overview of the relevant literature on planning and budgeting in the public sector as a basis for the empirical work that is presented in this paper. This is followed by a review of the thematic issues that influence each of the devolved bodies’ overall planning documents (often referred to as programme for government documents), and the extent of linkages between the mission and aims of each body, between aims and objectives, and between aims, objectives and targets with specific reference to the education and health plans. The paper then examines the links between each institution’s aims, objectives and spending plans, as expressed through the relevant budget documents and by our informants. The discussion and conclusions sections draw out the main implications of the paper and summarize the key findings. Our findings point to a process of nested translations, from vision through aims and objectives to targets, with accounting numbers absent in all but the last of these stages (where time-bounded and specific targets begin to be formulated and against which achievements are compared). We argue that this process of translation is neither linear nor stable; as negotiating the diverging interests of human agency are brought to bear on the outcome of translation. We note the existence of certain key thematic similarities but also differences in the planning and budgeting process of the three devolved bodies, pointing simultaneously to the presence of both elements of isomorphism as well as heterogeneity in the budgetary process. Finally, across all three devolved bodies, most politicians encountered serious problems understanding budget contents, and tended to seek help by relying on others with financial expertise who effectively became the gatekeepers to generating budget interpretations that most likely would have impacted political debate. New budgets in UK devolved bodies 13
  4. 4. Theoretical framing, research questions and data In order to address the above research issues, we have drawn upon neo-institutional sociology as a theoretical framework. Our interest in neo-institutional theory is motivated by its focus upon the construction and functioning of knowledge and rule systems (such as budgets) in organizations. As Scott (1995, p. 136) has noted: “All organizations are institutionalized organizations”. Organizations are socially constituted and are subject to regulative pressures from constituencies such as government and the public. They are also “the subject of institutionalized processes that define what forms they can assume and how they may operate legitimately” (Scott, 1995, p. 136). Institutions are conventions that exhibit rule-like characteristics that operate between and within organization (DiMaggio and Powell, 1991). Organizational structures are assumed to embody the myths of institutional environments more than the demands of their activities. As Meyer and Rowan (1977, pp. 343-344) have argued, such myths are “highly institutionalized, rationalized and impersonal prescriptions” that specify in a rule-like manner avenues for pursuing social purposes that are subsequently constructed rationally as technical purposes. Organizations operate within organizational fields that reflect similar characteristics such as product/service line or size, but also competitors, suppliers, distributors and owners (Fligstein, 1993). Organizational action is constrained to a greater or lesser extent by the actions of other organizations in the field, including the state through its regulative power. As Fligstein (1993, p. 6) has observed, organizational fields are “the basic mechanisms of control of the external environment available to managers and entrepreneurs”. Much of the extant literature on institutional theory has tended to focus more upon practices that have already become institutionalized; that is upon conformity, or isomorphism, to institutionalized myths and beliefs. Conformity with such myths/beliefs is assumed to bring the organization resources that are necessary to its survival and legitimacy. Hence, the main focus has been on explaining observed structural similarities between organizations, and upon revealing which mode of isomorphic behaviour was pursued: coercive, normative and mimetic (DiMaggio and Powell, 1983; Scott, 1995). Whilst earlier formulations of institutional sociology incorporated some limiting assumptions, these have been subsequently questioned and addressed: the presumed decoupling of organizational external claims of pursuing rational practices, in order to gain legitimacy, from internal operating systems (Mezias, 1990); failure to account for power (Covaleski et al., 1993; Fligstein, 1993); and the unwarranted assumption that human agency is passive (Scott, 1991, 1995). These corrections have improved considerably the attractiveness of institutional sociology. It is now recognized that declared intentions and actual practices are not always decoupled; that power relations are endemic in organizations; that agency is frequently proactive and that in the face of pressure for conformity, organizations are capable of pursuing different responses to similar institutional isomorphic pressures. Yet there remains a major concern that previous research has given little attention to understanding processes of organizational change as much of the previous work has focused upon practices that had already become institutionalized. The theory tells little of how new practices unfold, how they gradually become institutionalized, and how, if at all, they displace previous practices. This concern has been raised by most recently by researchers who AAAJ 20,1 14
  5. 5. pointed to the lack of attention given to organizational micro-practices (Hirsch and Lounsbury, 1997; Hirsch, 1997; Dacin et al., 2002; Greenwood et al., 2002). Accounting and budgeting systems in organizations are institutionalized practices. Accounting and budgeting information are frequently susceptible to differing interpretations depending upon the cognitions and interests of organizational participants. Accounting and budgeting practices can be viewed as myths that underpin, sustain, and even form belief systems concerning ideals such as rationality, efficiency, effectiveness, and value for money. Meyer (1983, p. 235) has noted “Accounting structures are myths. . . they describe the organization as bounded and unified, as rational in technology, as well controlled and as attaining clear purposes”. Conformity to certain accounting and budgeting practices can endow an organization with external legitimacy by creating an impression that the organization is well managed. The myth of rationality has a powerful appeal particularly to government bodies (Meyer, 1986). Indeed, rationality has been one of the key guiding principles stated in UK government publications that relate to planning and control (e.g. HM Government, 1982; HM Treasury, 1992; HM Government, 1999), and this is also reflected in the traditional literature on accounting and budgeting in government; an argument consistent with the quest for legitimacy under institutional theory. Ansoff (1979) has suggested that in pursuing their objectives, organizations need to follow a rational management approach in order to cope with environmental uncertainty. Further, it has been suggested that there is a need for specific and quantifiable objectives to guide action in the public sector towards ultimate goals (Drucker, 1980; Anthony and Young, 1999). Johnsen (1999) also stressed the usefulness of ambiguity and decoupling associated with rational management models when implementing and using contestable management control models such as performance measures. Further, Czarniawska-Jorges and Jacobsson (1989) have argued that public sector budgets are “rituals of reason”, and hence have a key role to play in constructing reason and order in organizations. We will therefore examine the planning and budgeting documentations produced by the devolved bodies as statements of their declared, if not necessarily always practised, rational pronouncements. Accounting as a technology of calculation converts qualities, such as social welfare, into quantities in terms of specific targets and performance indicators. This conversion of qualities into quantities renders them visible. Such visibility is a double edge sword; for while it plays into the hands of those wishing to claim credit for performance, such as politicians, as they construct numbers that show them in favourable light; yet it also renders such numbers susceptible to verification by those who can generate alternative numbers or place different interpretations on the same numbers. Further, what accounting and budgeting systems fail to quantify can be made less visible, or even invisible, thereby escaping serious accountability (Morgan and Willmott, 1993). Given this theoretical framing, we articulate our research questions as follows. First, we are concerned to examine the translation process through which vision and mission statements issued by the UK devolved bodies are ultimately translated into budgetary targets. Such a process of translation is intriguing, in that as translations cascade through different layers there is scope for agency and interest to impact on what is being translated (Latour, 1987). It is therefore relevant to examine the extent to which budget targets and vision statements issued by each devolved body are aligned with New budgets in UK devolved bodies 15
  6. 6. each other. Failure to achieve such alignment, if it becomes the subject of scrutiny in the external environment, could threaten the legitimacy of devolved bodies. Second, the UK devolved bodies share some similarities but also exhibit many differences. We wish to examine the extent to which thematic differences or similarities occurred in the construction of budgets. At the heart of this concern is the presence of political and institutional norms that impact on the budgetary process. Thus, within the context of our theoretical framing, the question is: to what extent has the expected pressure for conformity in the face of similar institutional isomorphic pressures resulted in similar responses. Third, we seek to explore the cognition of politicians concerning the degree of their understanding of budgets and the impact of such an understanding on political deliberations that take place in the relevant parliament/assembly and on political accountability. This should offer insights concerning the extent to which differences in actor cognition and interest, as well as their position within the networks of power, impact upon the process of institutionalizing new accounting and budgeting practices. Data collection The data we mobilize to address the research questions comprise two sources: the planning and budgeting documents for each of the devolved bodies and semi-structured interviews. We treat planning and budgeting documents as important for a number of reasons. First, they are formal translations of declared institutional aspirations, and as such their examination may reveal the political ambitions of the devolved bodies. Second, it is possible to discern from them the extent to which the targets and performance measures translated from vision statements map onto these statements. Third, in devolved assemblies/parliaments these documents are likely to be drawn upon extensively by politicians and lobby groups of different persuasions to deliberate and conduct debate on policy and to exercise public accountability. Differences in interests and cognition may lead to differing understandings of such documents. Fourth, the targets and performance measures contained in such documents tend to be the yardsticks against which both the aspirations of each devolved body and its success in delivering promises may be considered by the electorate, or when targets are missed highlighted by opposition parties in political debate. Further, 58 interviews were conducted (18 in Northern Ireland, 22 in Scotland, 18 in Wales) with members of the Executive (cabinet ministers and civil servants, 17), members of Assembly/Parliament (28) and others (audit institutions, quangos, etc., 13). The interviews were conducted over a period of 24 months beginning in October 2002. Each interview lasted between one and one and a half hours, and all interviews were tape-recorded and transcribed. The interviewees were asked about: the budget and planning documents, the quality of and frequency of the information received; the extent to which politicians experienced information overload; the extent to which budgets were understood by politicians, and the degree to which accountability was exercised. The planning and budgeting documents and the interview transcripts were then analyzed in relation to the key research issues identified earlier. In order to focus our analysis, we concentrate on education and health as two areas that attracted much of the attention of the three devolved bodies. To preserve anonymity, we refer to our informants as PNI, PS, PW, and NPNI, NPS, NPW when referring to quotes from politicians (P) and non-politicians (NP) from Northern Ireland (NI), Scotland (S) or Wales (W). AAAJ 20,1 16
  7. 7. Programme for government documents This section examines plans for education and health in each of the devolved bodies’ overall planning documents. These plans and their detailed breakdown (see below) are determined by the executive and civil servants in each devolved body. First, we attempt to identify the degree of alignment between the individual visions (missions), aims and objectives of each devolved body for education and health. Second, some examples of education and health objectives are matched with targets deemed important in the pursuit of achieving these objectives. Because of space limitations, we restrict our analysis of these documents to the first year of government in each devolved institution. Our argument is that the quest for gaining external legitimacy may be a driving force for each devolved institution to demonstrate an element of internal consistency that links visions (missions) to aims to objectives to targets. We call this series of alignments “nested translations” owing to the seemingly hierarchical and logical nature of attempting to establish such an orderly link. We use the term “translations” to emphasize the understanding that any such linking process inadvertently involves a cognitive exercise by those involved in forging the link. Northern Ireland The Northern Ireland Executive – Programme for Government is presented as one that promotes open and accountable government. Given the communal conflict that prevailed in the recent history of Northern Ireland, the stated mission is to secure a peaceful, cohesive, inclusive, prosperous, stable, just, society, learned and healthy founded on the achievement of reconciliation, tolerance, mutual trust, and the protection of human rights, and promoting partnership, equality and mutual respect (Foreword, Northern Ireland Executive, 2001a). Education and health: The above mission is translated into aims for the Executive: At the outset of both Investing in Education and Skills and Working for a Healthier People (Northern Ireland Executive, 2001), the topics are briefly introduced before stating what the priorities for the Executive are. Attention is drawn to the central role of education and training, “not only for their social impact, but also as major engines of our economy” (Northern Ireland Executive, 2001, p. 14) by developing skill/knowledge and gaining employment. The mission empahsizes: “the strong links between healthy citizens, healthy communities and a healthy economy within our society” (Northern Ireland Executive, 2001, p. 31), with the aim of reducing health inequalities, promoting public safety and healthy living. In education, it is stated that while 57 percent of year 12 pupils achieved 5 þ GCSEs (General Certificate of Secondary Education) A* - C in 1999/2000, and this proportion has been rising over time, it needs to rise still further, particularly for socially disadvantaged pupils where only 31 percent achieved 5 þ GCSE at A*-C. Similarly, while the proportion of pupils who do not achieve any GCSEs has dropped to 3.6 percent in 1999/2000, with the aim to reduce it further, particularly among the less well off groups for whom the figure was 11 percent (Northern Ireland Executive, 2001, p. 42). It is also indicated that surveys showed “19 percent of the existing workforce with few or no formal qualifications, and 24 percent of adult population perform at the lowest levels of literacy, with commitment to taking action to tackle these problems”. In the case of health, similar targets were stated, e.g. by 2003 to achieve a 20 percent reduction on the 1996 level in the number of high and medium severity water pollution incidents, and to New budgets in UK devolved bodies 17
  8. 8. meet and maintain requirements for EU recognition of Northern Ireland’s low incident of BSE. It is clear from the above, therefore, that numbers begin to dominate as translations of mission, aims and objectives into seemingly precise targets. The style of presentation combines both narrative and descriptive prose allied with time-bounded, specific targets[1]. For example, the Investing for Health Strategy Paper set a number of high level targets for health improvement, showing awareness that health is influenced by a wide range of social, economic, and environmental factors and policies. The targets might include improving life expectancy for all while reducing the gap between the most deprived and the Northern Ireland average; promoting mental health and emotional well-being; reducing injuries and deaths from accidents; promoting healthy diet and physical activity; and reducing the levels of respiratory and heart disease exacerbated by air pollution. The strategy to be implemented in each health area is intended to address the health and well-being issues in the area (Northern Ireland Executive, 2001, p. 33); how issues such as healthy life style in schools can be harnessed to improve health (Northern Ireland Executive, 2001, p. 34); and time-bounded, specific courses of action that will assist in achieving the objectives needed to be reached under the priority, for example the health impact assessment introduced in April 2002. This varied presentation approach allows for greater opportunity for demonstrating the anticipated effects of cross-cutting policy implementation. The above analysis shows the outcome of a process of nested translation, whereby mission is translated into aims, objectives, and quantitative targets against which achievements are compared. We are inclined to assume that the linkages entailed in this nested translation are intended to convey a rational, carefully planned political agenda for the people of NI. Scotland The plans for the Scottish Executive are contained in, “Working together for Scotland – A Programme for Government” (Scottish Executive, 2001a) with the vision “making a difference for the people of Scotland”[2]. The document is intended to account of what the politicians have delivered against targets, showing commitment to improving the lives of the Scottish people through delivery of social justice, creation of opportunities, careful targeting of resources, meeting needs, and delivering better services. These plans are intended to be achieved through the cooperation of the Executive with other social partners in a “working together” mode. Education and health: The education mission, “working together to give our children the best start in life” (Scottish Executive, 2001a, section 2.4), was to be accomplished by: ensuring that all children have access to early learning and quality care; promoting social justice; modernizing schools; raising standards and achieving excellence; strengthening leadership in schools and rewarding professionalism in teaching. Under the aim of ensuring that all children have access to early learning and quality care, one objective is: “Having delivered a nursery place for every four-year-old, we will ensure a nursery place for every three-year-old whose parent wants it by 2002” (Scottish Executive, 2001a, section 3.4). This objective is then linked to an allied status report: “Achieved for four-year-olds (and) on track for three-year-olds: over 40,500 (68 percent) in pre-school education in July 2000” (Scottish Executive, 2001a, section 3.4, and Table 1). For early support and improving schools, the following achievements AAAJ 20,1 18
  9. 9. were listed: increased spend on “Sure Start Scotland” with resources for 2001-2002 reaching £19 million, reduced class sizes in primary one and two to 30 or less, provided modern computers in schools, one for every nine secondary and 28 primary pupils and provided two special increases in funding, totaling £48.9 million, specifically for books, equipment and repairs in schools. Targets include reducing class sizes in primary three to 30 or less, and increasing the number of modern computers to one for every five secondary and every 7.5 primary pupils by 2002. The focus is therefore on the maximization of all children’s potential, with an emphasis on achievement, high standards and teaching-focused approaches. To achieve the health mission, “working together to build a healthy, caring Scotland” (Scottish Executive, 2001a, section 2.6), key aims are stipulated to monitor, protect and improve people’s health, implement policies that address inequalities in health, prevent disease and prolong life and deliver modern, person-centred, primary and community care services. This is premised on providing a modern, high quality, responsive and technology-driven NHS, working in partnership with patients to provide services designed from the patient’s perspective. Examples of the achievements include, funding 110 more doctors and 210 more nurses and introducing a fairer way of sharing NHS funds to address what are perceived to be the needs of deprived and rural areas. Targets include building eight new hospitals on schedule, reducing patients wait for inpatient treatment from 12 to 9 months, launching NHS24 to give round the clock access to health advice and services, and improving the way vulnerable people are cared for through the new Commission for the Regulation of Care. Thus, the need to improve health and community care services are highlighted, and their operation is assumed to be secured through partnership between health professionals and the community, and greater investment and actioning of NHS reform by increasing accountability and reducing bureaucracy. In the above, a hierarchical nesting of translations is evident: achievements are reported by way of a broad mission statement, supported by a number of aims, with a set of objectives listed under each aim, and permeated by financial and non-financial metrics. For each objective, a note on its status with regard to implementation is given. Each operational aspect deemed necessary for achieving the strategies is laid out in terms of achievements and time-bounded targets: . what the Executive has achieved in specific terms in each operational area; and . what the Executive intends to do in the future to progress plans. Wales In the Plan for Wales 2001 (Welsh Executive, 2001a) the mission is offering a clearer sense of direction for a modern Wales – its economy, its environment, its society, and a commitment to improving public services in schools and hospitals. The programme of reform intended to achieve this is based on universal and comprehensive provision of services, community involvement, and support for those most in need (Welsh Executive, 2001a, section 1.1). Education and health: Separate strategic plans for education and health have been developed: The Learning Country (Welsh Executive, 2001b), and Improving Health in Wales – A Plan for the NHS (Welsh Executive, 2001c). With regard to education the aim is: “to deliver better outcomes in schools, colleges, universities and work-based training” (Welsh Executive, 2001b, p. 5). Moving on from the general to the specific, the New budgets in UK devolved bodies 19
  10. 10. documents stipulate that the Executive’s commitments are to be supported by a series of objectives. For example, the commitment to giving children a flying start has the objective of ensuring “Early Years” education for all three-year-olds whose parents want it. The commitment of having excellent schools and the highest expectations for children is linked to the objective of increasing the funding for school buildings (£100 million a year for the next three years) to ensure progress to the 2010 target of all buildings being in good physical condition. Proceeding from commitments and objectives, greater specificity is introduced into the planning process when time-bound, specific targets are announced. The specific targets to be achieved by 2003/2004 were, no infant or junior classes have over 30 pupils; 90 percent of classes to be of at least satisfactory standard and 50 percent to be good or very good; and that the number of 15 year olds leaving full-time education without a recognized qualification to be cut by 25 percent from 1999 levels. In addition, it is anticipated that by 2010: over 75 percent of pupils finish compulsory education attaining at least five GCSE A*-C or equivalent, with all remaining in education or going on to training opportunities in employment, and none leaving unqualified; that no school is assessed as failing; none has less than 35 percent of pupils achieving five GCSE A*-C or equivalent; that all junior class sizes are below 25; 80 percent of pupils achieve at the expected level at the end of Key Stage 4 (for children in years 10 and 11) in all subjects of the curriculum; and that at least 25 percent of 16–19 year olds attain the Welsh Baccalaureate. With regard to health similar nesting translations emerge. The aspiration is for reduction in variation in life expectancy between rich and poor, better health for all, where the elderly can live in their own homes, and equal opportunities for all children (Welsh Executive, 2001b, p. 8). In health targets to be achieved by 2003/2004 include: increase the number of doctors in training by 65 percent and the number of nurses in training by 35 percent; ensure 90 percent of NHS estate complies with statutory health and safety requirements, including fire safety; reduce overall waiting times, move closer to levels that compare to the best; and achieve the maximum waiting times for inpatient treatment for the priority areas of cardiac surgery (12 months), cataract surgery (four months) and orthopedics (18 months). With respect to 2010, targets include: increase life expectancy and reduce death-rates from major and long-term illness, especially in most deprived communities; bring five-year survival-rates for serious cardiac disease and cancers far closer to the best in Europe; and bring infant mortality-rates far closer to the best in Europe, with the largest reduction in most deprived communities. As in the cases of NI and Scotland, the outcome of a process of hierarchical nested translation emerges: from mission to aims to objectives to targets against which achievements are compared. Analysis There are common thematic factors in the executive programs of all three devolved bodies. The visions all promise grand aspirations stated in terms of either providing a peaceful, cohesive and tolerant society (Northern Ireland), or making a difference to the electorate (Scotland), or providing a clearer sense of direction to the nation (Wales). Such visions are understandably grandiose and broad, as politicians attempt to mark their ambitions and woo the electorate. Ambiguity that arises out of such vision AAAJ 20,1 20
  11. 11. statements can be useful in building consensus and lubricating the functioning of coalition politics (Downs, 1957; Baier et al., 1963). A process of nested translation seems to be at work in all three cases, proceeding from mission through aims, objectives, and targets, to achievements and back to vision. The level of detail and specificity gradually increases with the move from vision onwards, and gradually accounting and, as we argue later, budgeting numbers begin to intervene, in the form of quantifiable, financial and non-financial, performance measures and achievements. A demonstrably clear link of such nesting translation can be argued to endow the process of government with visibility and external legitimacy. Such a hierarchical nesting translation can convey an illusion of rationality and purposeful behaviour on the part of devolved bodies, which in turn could enhance their legitimacy and underpin their survival, as neo-institutional theory suggests (Meyer and Rowan, 1977; Scott, 1995). The intervention of numbers is not totally overwhelming; they are present in many, but by no means all, cases. Thus, other targets are expressed in terms of unstated, but presumably known, European benchmarks such as “meet and maintain requirements for EU recognition of Northern Ireland’s low incidence of BSE”, or in even aspirational terms such as providing an NHS service “attuned to the needs of the people” (Wales). Political targets, therefore, are not seen to be the preserve of either financial or non-financial numbers; rather they are utterances of both the precise and the aspirational. However, it is clear from the above that numeric targets are an integral part of political programmes. In Wales, there is stronger evidence of quantification compared to the other two bodies, an issue that is addressed later in our interviews. The ambiguity of mission statements and the apparent precision of targets and achievements could be a double-edged sword. Ambiguity makes it possible for the executive of a political body to forge a link between some specific target or achievement and the broad mission. By the same token, detailed targets and achievements could be made to appear, say by opposition parties or lobby groups, to be insufficient to meet the mission, since the numeric nature of targets and achievements can immediately invite comparisons with the past and the aspirations for the future. Further, working back from targets and achievements towards objectives, aims and mission may prove problematical. Indeed, despite the key differences in the stated mission statements of the devolved bodies, it would be difficult to discern these differences purely from an examination of targets and achievements. This use of numbers in the programmes of the devolved bodies can be explained in terms of the prevalence of a “measurement culture” and a mode of “managing by the numbers” (Ezzamel et al., 1990), whereby trust is placed in numbers in the pursuit of objectivity (Porter, 1995) and external legitimacy. Numeric targets embody all what numbers imply. As Porter (1995, p. ix) has noted, numbers “summarize a multitude of complex events and transactions.” Further, any “quantification is a technology of distance” (Porter, 1995, p. ix), whereby numbers are capable of being used to manage at a distance (Robson, 1992; Ezzamel, 2002). As quantifications, targets and performance measures have the aura of a number system that is highly structured, rule-bound, and uniform (McLeish, 1991; Ifrah, 1998). Yet, it is important to recognize that many of the qualities of numbers’ systems, such as the targets in the devolved programmes, could be more apparent than real. As Porter (1995, p. 5) notes: “Mapping mathematics onto the world is always difficult and New budgets in UK devolved bodies 21
  12. 12. problematical. Critics of quantification in the natural sciences as well as in social and humanistic fields have often felt that reliance on numbers simply evades the deep and important issues.” Similarly, Boyle (2000), a populist writer, titled his book: The Tyranny of Num8ers: Why Counting Can’t Make Us Happy, with the number “8” displacing the letter “b” to signify the intrusion of numbers into every aspect of contemporary life. As the targets of the devolved bodies combine the precise, numeric and the aspirational, it may be that there is a feeling that such a combination will both guard against the “tyranny of numbers” by showing relatively less reliance upon them and ensuring that the “deep and important issues” are not evaded. The underlying belief that numbers can be the ultimate translations of missions, aims, and objectives seems to be based more on faith than on knowledge of an inherent representational ability of numbers. A consideration of this process of translation continues below, where we reflect on the instability of translation and the possible use of budgets as myths of rationality and rituals of reason. Budgetary practices: education and health In this section we examine in some detail budget practices for education and health in the three devolved bodies. We draw upon both formal budget documents and interviews to examine how aims were translated into key objectives and then into spending plans as contained in the budget, and we also examine budget format (narrative vs. numbers), quality of information provided, information overload, and cognition of budget numbers by politicians and its impact on political deliberations. Formal budget documents Using formal planning and budget documents we attempt to construct a map of aims, priorities and spending plans for education and health. It was possible to do that for each of Northern Ireland and Scotland, but not for Wales due to the inability to make connections with the data available (see later). For illustrative purposes, and in the interest of brevity, we only show the figures for Northern Ireland; this causes no loss of information for although there are notable differences in the mission statements, aims and objectives, of the devolved bodies, the connections we emphasize for Northern Ireland are very similar to those of Scotland. Northern Ireland: In examining the three devolved budgets, we note many similarities but also some differences, particularly in the case of Wales. In the main, budget documents have tended to provide an overview of the main areas and drivers of spending and what the spending will achieve (see Figures 1 and 2). In Northern Ireland, the aim of education (see Figure 1) is to provide for the highest possible standards and equal access of education and development to all young people (Northern Ireland Executive, 2001, p. 30, Figure 1), and in health “to improve the health and well-being of the people of Northern Ireland” (Northern Ireland Executive, 2001, p. 42; Figure 2). This is followed by a number of central objectives concerning education and health, before reviewing any figures. For example, under each objective heading listed in the preamble, each spending category that supports the achievement of that objective is stated; then, for 2001-2002 and 2002-2003, amounts of expenditure are presented, both with regard to resource spending and capital spending (Figures 1 and 2). These amounts are then eventually built up into overall Departmental Expenditure Limits AAAJ 20,1 22
  13. 13. (DELs). Year on year percentage changes in allocations are also shown. Each department’s budget is then concluded by explanatory narrative; for example: [. . .] total expenditure by the Department of Health, Social Services and Public Safety will rise by 9.7 percent to £2,527.7 million in 2002-2003. However, it is recognised that this includes a transfer of £19 million of social security expenditure from AME [Annually Managed Expenditure] to DEL which provides no new spending power to the department. The plans will enable the department to maintain existing services and to make a meaningful response to the rising costs of modern medicine. The plans, which take account of the Chancellor’s pre-budget statement, will also enable some key service enhancements. Overall, the resources will be allocated across a broad range of services to have maximum impact on the health and well being of the community (Northern Ireland Executive, 2001, p. 44). Scotland: In Scotland, the amounts spent on education and health in the previous year are disclosed and matched in the budget with some of the activities the money helped fund (e.g. reduction in Primary 1-2 class sizes to 30 or below in education or 955,000 operations in health). This is followed by the amounts earmarked for the coming year, again matched with the activities they are planned to fund, e.g. providing pre-school education places for 100 percent of three-year-olds. The introductory section presents the planned spend in each function on education and health, along with some of the Figure 1. Map of aim, objectives and spending plans relating to education: Northern Ireland Executive New budgets in UK devolved bodies 23
  14. 14. planned funding activities, e.g. increasing spending in the modernization of school buildings and equipment and improving services for cancer, heart disease and mental illness. After the introductory sections the overall aims for education and health are stated. The overall budget allocations for education are split from the one line of the introduction to two lines, showing how money is allocated between schools and spending on children and young people. Responsibilities for school funding arrangements are explained in terms of the role of each funding source (the Scottish Executive, central government and local councils), with a detailed exposition of the functions of each education body (Scottish Executive, 2001b). This exercise is also carried out for spending on children and young people. After explaining the role of the Executive in allocating specific grants, the Executive lays forth what they intend doing with the money, in respect of the various categories covered by the education budget. This includes a mixture of target-based objectives, along with more generic, strategic outlooks. The budget closes with a statement of principal objectives, along with dates by which they are due to be achieved. The budget attempts to show how health is being improved and the objectives of the strategic plan to which the Executive is operating, along with a description of how Figure 2. Map of aim, objectives and spending plans relating to health: Northern Ireland Executive AAAJ 20,1 24
  15. 15. resources are utilized to meet these objectives. The budget breaks down health spending across major categories showing health spending on a per capita basis across different ages, thereby demonstrating the critical influence age has on demand for healthcare services. Projections of the future effects of demographics on health spending are presented. The budget specifies what the health budget money will buy, how the healthcare infrastructure operates in practice, how the healthcare agenda in Scotland will be advanced and how future funding of the system is likely to be increased. The document concludes with a statement of principal objectives and dates by which they are due to be achieved which differ, as in the case of education, from the key priorities. Overall, the budget is a mix of the numeric and narrative, but with the narrative being dominant. Wales: Detailed information on education and health is provided in tabular format in relation to Original Plan (previous year), Original Baseline (current year), Total Changes (current year), New Plans (next year), Original Baseline (next year), Total Changes (next year), and Indicative Plans for each of the next two years. Items accounted for include the amount being funded, both for specific projects (where one figure or expenditure group item is stated) and for particular institutions’ total running costs where line items are provided, for example the running costs for all health authorities/trusts (where revenue expenditures in budgets, revenue receipts in budgets, capital and provisions are stated). Provisions to cover the cost of most items of depreciation and cost of capital charges are classified as Annually Managed Expenditure (AME) and ring fenced by the central UK Government Treasury for such purposes. The budget is presented in a heavily quantitative format, set out in a spreadsheet with no explanatory narrative sections. In contrast to the budgets of Northern Ireland and Scotland, this makes it difficult to see how it relates to the various plans and objectives of the Executive, as laid out in the Plan for Wales (Welsh Executive, 2001a). We are unable to comment on the extent to which this bias towards greater quantification in Wales is a product of a particular type of expertise in civil service. Alternatively, this may have been caused by the need for time to negotiate and settle policies in the coalition Executive of Labour and Liberals. However, we have asked our informants for some explanation of this phenomenon. One senior civil servant directly involved in budget preparation justified the absence of narrative in the budget by noting his preference for numbers because he perceived numbers to instill a sense of certainty not possible with narrative: At the end of the day my job is to make sure that this all adds up, and the problem with narrative is that it is subject to interpretation. It is the old story, if you get ten lawyers they can interpret the narrative in ten different ways and that is no good to me. Numbers have the virtue that you can’t argue against them. People need that certainty for forward planning and the Permanent Secretary as the accounting officer needs that certainty because he is responsible for the Assembly remaining within its budget year on year. So he is not going to be interested in beautifully constructed but ultimately flaky narrative (NPW). In this sense, narrative is construed as an unwanted noise that breeds uncertainty and ambiguity, in contrast to numbers that are trusted for their presumed precision and certainty. In the political climate of a newly devolved Assembly, much uncertainty prevails, and “managing by the numbers” (Ezzamel et al., 1990) may be seen by some as a welcome relief and a means of uncertainty reduction/absorption (Galbraith, 1972). New budgets in UK devolved bodies 25
  16. 16. Such an explanation is also consistent with a neo-institutional theory understanding, whereby budget numbers are seen as manifestations of calculative rationality aimed at gaining external legitimacy (Meyer, 1986). However, alternative explanations of the lack of narrative in the Welsh budgets emerged, with another informant offering time-pressure as an explanation: One of the difficulties we would have is: we are developing the narrative now, we are beginning to use those strategic statements within the government at the moment. The real test for that, in any budgetary process, comes down to the wire and there is a lot of intense negotiation about the figures over months, and then weeks, and then days, as you get to the end. And all the minds are focused on the data, informed by the narrative earlier. Whether we would have the time in any real budgetary process to reconnect the data to the narrative, that would be a challenge and certainly we don’t do that at the moment (NPW). This justification only serves to emphasize the importance of numbers in the Welsh budgetary process; when time pressure becomes acute, what seems to get sacrificed is the narrative as the supplement that is seemingly of marginal importance. As the minds become “focused on the data” the narrative is pushed to the side in the quest for concluding negotiations and producing an agreed budget “on time”. It is interesting, however, why this supposed time pressure did not arise in the cases of Northern Ireland and Scotland. Given the novelty of the budgetary cycle across all three devolved institutions, it may be that those in charge of preparing budgets exhibited fundamentally different mindsets concerning preference for numbers versus narrative; such an explanation would be contrary to the traditional expectation of neo-institutional theory of isomorphic conformity. In this case we would be witnessing some heterogeneity in institutional response to similar pressures. This is an issue that could be explored more in future research. The somewhat utilitarian and stark presentational style of the Welsh budget is counteracted by the publication of “Partnership Agreement” produced by the coalition Executive made up of Labour (the party that in the first Assembly elections held the highest number of seats but without sufficient majority to rule on its own) and the Liberal Democrats (who joined in the political coalition to govern Wales). This document, is the result of political compromise in that the policies in the Labour election manifesto were revised to incorporate some of the policies to which the Liberal Democrats were committed, and was used in the Executive’s budget planning round, thus permitting more meaningful interpretation of the budget figures. The document: [. . .] is a narrative. . . it is one of the key reference points in the budget turn around process because it is commitment by Ministers, we have to ensure that resources have been allocated to deliver the promises they made in the Partnership Agreement (NPW). This document charts initiatives the Welsh Executive is responsible for under departmental remits, and whether or not they have been actioned and funded. It is split up along departmental lines and looks specifically at initiatives/targets promised, what was promised in terms of plans anticipated, whether the initiative has been actioned and whether or not funding was provided. An example from the education and lifelong learning section is: “We will fully fund training grants for new primary school teachers by increasing the total training budget to £8 million in 2001-2002 and £12 million in 2002-03” (Welsh Executive, 2001d, p. 1) – this initiative is shown as being actioned and it is stated that provision is made for it in the baselines from 2001-2002. Hence, in order AAAJ 20,1 26
  17. 17. to gain a most basic understanding of the budget, the Partnership Agreement must also be read. However, even a careful reading of both documents is unhelpful in attempting to draw out linkages between objectives/priorities and spending plans. For instance, in the example just cited, monies associated with the initiative to fund training grants may be included in two different expenditure groups in the final budget, e.g. within “Initial Teacher Training Bursaries” or “Teacher Development and Support”. Without clearer lines of demarcation, it is difficult to draw out any meaningful linkages between planning and spending from the budget documents as they are presently constituted. This lack of linkage between the two documents creates a space in which politicians could pursue specific activities in the name of a given overriding policy. This lack of clarity is in contrast to the thesis that forging clearer links in the various government documents is a means of securing external legitimacy. Explaining such an observation may require appeals to other explanations other than those provided by neo-institutional theory. Whether the emergence of this space was the result of a deliberate choice by the Executive or an unanticipated consequence of political negotiation and compromise is unclear to us. While this possibility would be of interest to examine, the nature of our study did not afford us the opportunity to explore this issue in any detail. Evident in the above is the intervention of accounting numbers as the translation of political missions, aims and objectives into seemingly precise targets against which actual achievements are measured. The underlying assumption is that this process of translation is a means of producing a linear mapping of numbers onto missions and objectives. Clearly, a linear translation is still likely to influence action as well as claims to action. However, we suggest that what is missing in claims of linear translations is recognition of at least two possibilities that are likely to render the translation process more complex and its outcome more unstable. First, a linear, faithful translation would require accounting to possess a technology of quantification that can faithfully convert political aspirations, missions and qualities into numbers. While it has frequently been claimed that accounting has played similar roles in a variety of organizational settings over time, the limitations of accounting in securing an unambiguous and precise outcome have been widely discussed in the literature. Second, even if accounting technology was capable of such a feat, the role of human agency cannot be ignored. The budgetary process is frequently the locus of negotiations of both organizational and personal interests as actors struggle to attend to potentially conflicting priorities. As different actors seek to negotiate their interests through the translation process, outcomes different to those originally anticipated are likely to emerge (Latour, 1987). Moreover, in the political domain, politicians utter promises and make announcements that, at least on occasion, may not necessarily map onto previous plans and hence result in unanticipated outcomes: You have to understand the way the political mind works, in that what they see themselves doing is making a personal commitment to something. So they come and they are making a speech to some important body and they want to express their commitment to reforms, education let’s say, and they and their advisors have put together some form of words which are intended to express their wish to see Welsh schools achieving more and more, but it ends up coming out as “by 2006 all Welsh schools will achieve a minimum of so and so” (NPW). New budgets in UK devolved bodies 27
  18. 18. Information overload, budget cognition, and political deliberation Neo-institutional theory identifies cognition as a key concept in explaining organizational behaviour. Cognition is impacted by several factors, including the background/training of an individual, the amount of information received, personal interests, and ability to comprehend certain types of information received. Interest in accessing/using information is also frequently intertwined with the ability to comprehend and process information. In this section, we focus on information overload and interest in/ability to understand budget information. Information overload: Politicians complained that they often received too much information and that providers of information tend to use a scattergun approach, disseminating everything to everyone regardless of individual interests. A difference between politicians and non-politicians on this issue focused on the reason why so much information was being produced; politicians tending to see the responsibility lying at the door of those distributing the information, while non-politicians viewed politicians’ compulsion with having everything that is available (regardless of their ability to use the information) as problematical: I think the amount is extraordinary and I think there is no way that any living person could cope with the amount of stuff that comes through (PNI). As part of the annual budget process, I think that the Executive at the moment is producing about 12 different documents over the year. Some of them are the size of a telephone directory. It is very difficult to know what to do with it. And the Parliament has been overwhelmed by financial information (NPS). There is a huge amount of information that comes our way, huge quantities of documentation and that kind of thing that comes to the committee. Well, you spend a lot of hours reading. And you, of course, look at sometimes the executive summary and look at the main recommendations (PW). Such complaints of information overload were typical in the three devolved bodies. Perception of overload may have been exacerbated by the difficulty most politicians have experienced in understanding financial information (see below). It may also be a means of responding to criticisms that politicians have failed to act upon detailed information made available to them, the excuse being that too much information militates against the ability to consider all options given time constraints. In addition, it was stated that achieving equilibrium between the amount and level of detail of information flowing between departments and members proved to be challenging. However, gradually confidence seems to be growing with interviewees suggesting that more appropriate, tailored information was being made available. Department officials and civil servants are seen as crucial in reducing information load and guiding politicians: The thing about the committees is that they are not really adequately resourced in terms of staff . . . . But again this is (information overload) when I think the servicing of the committee should help and say, “these are the issues, these are the things we think you should question the minister on, that you should question the witnesses on, the issues you should pick out to pursue” (PW). The question of whether or not sufficient information is provided to politicians has two dimensions. The first relates to the problem of information overload discussed above: if AAAJ 20,1 28
  19. 19. politicians are already overwhelmed with information, how could they cope with more? One non-politician from Scotland commented: “the capacity of Parliament and the committees to use the information is really very limited. They are demanding more, but we don’t really see them making much use of it.” The second dimension relates to the difficulty of reconciling members’ demands for information and departments’ ability to provide relevant information. One informant illustrated this difficulty, while also hinting at the emphasis on process: The difficulty is if the balance is wrong. I feel for the department on this to a degree and protocols are being developed on this all the time. But they have responded to the demands of committees and they’re not sure some times what they should be providing or shouldn’t be providing and then they’re castigated for not providing documents they would have thought they wouldn’t have had to provide. So there is a focus on process on the part of members that riles departments and they aren’t resourced to deal with it (NPNI). In order to cope with the amount of information available, some participants expressed the view that a discernment relating to the relevance of the information to their roles was crucial. Effective mechanisms that ensured filtering and focusing on important issues were identified as being needed. Interviewees were keen to stress, however, that the subject of information provision was one of learning and education. At the heart of this process, the relationship between politicians and departmental officials was identified as being important: We’re getting information, but at times it’s not the right information, it’s not detailed enough, or perhaps it’s too detailed. And it is a learning process at the moment, as to what information do we need as an Assembly, within the committee structure, to do our job effectively (NPNI). Budget cognition. Only a small number of politicians were either interested in or could read and digest the budget; these tended to have either accounting/finance background or extensive previous experience in the public sector. The vast majority of politicians interviewed said that the budget was something of a mystery, and this situation was not helped in the case of Wales because of the lack of budget narrative. Politicians who considered themselves lacking in financial expertise tended to take a defensive posture by attributing the ability to understand budgets to the domain of the “genius”, or those with “a mathematical mind”, while presenting themselves as being better able to deal with visual representations: There are members of the Parliament who are interested in financial issues – may be 10 percent. In fairness, most members are bored rigid by financial budgeting issues (PS). To be quite frank I think for most of us it [the budget] is probably above our heads because I am not a statistician and I am not a mathematical genius. And I think in many respects I am a visual person, charts, simple visual instruments. I can cope with those far better than looking at spreadsheets (PW). Similarly, another politician from the Welsh Assembly said: “I am pretty in-numerate, so I find the scrutiny of columns of statistics impossible.” Such cognition problems have consequences, which could culminate in less than effective scrutiny and monitoring of budgets. One politician, noting this difficulty, questioned whether or not the Executive desired to be open: New budgets in UK devolved bodies 29
  20. 20. The financial grasp and the minutiae of the budget largely passes over the head of the elected members. It’s not to say we’re all stupid, it’s just to say that the accounting procedures and the presentational aspects of it, the fine working of it, is not easily understood by the politicians. Now, is that deliberate or is every statement of that nature based like that? I haven’t made up my mind on that. One thinks that some may be blinded by science, but rather than admit to ignorance, they say wonderful, we’ll vote for that (PNI). Such repeated emphasis by politicians upon their perceived lack of interest in, or ability to comprehend, financial information is striking. Inability to understand financial information may in itself encourage politicians to treat financial information as less relevant to their deliberations. Those who desired to mobilize financial information in their debate, and at the same time lacked the ability to understand such information, tended to seek help either from their researchers or more likely from other knowledgeable members of their party: I don’t really mind who I go to, I will weigh up in my own mind how much credibility I would give to other people’s comments. But I am sure that other members also go out and try to find other views (PW). Much of the performance information in each devolved body is contained in the budget and the budget reports. While there appeared to be some disagreement among participants regarding their perception of the levels of performance information that are produced, the vast majority were of the opinion that there was limited systematic dissemination of what was available. In addition, the flow and amount of performance information were considered far from satisfactory: [. . .] we only receive information on performance in briefings, when we actually search it out. . . Now, hitherto, I would have to say that it’s been a bit short. Quite what the reluctance is; is it that it’s not available because the programme is relatively new or is it because they think that the programme is addressing the problem but they’re not quite sure, and they don’t want to expose the fact that they’re pouring large sums of money into it without it having proved itself? (PNI). When it comes to finance and political debates, there is never enough information in detail on how public money is allocated . . . It is very difficult, really, to get to the guts of many questions even with approval from the Treasury (PS). [. . .] a lot of it [accounting information] is probably designed to keep us in the dark. There are all sorts of bold part figures, that is the right expression, circulating about, but you don’t really know what has been spent on what (PS). With respect to performance information, there has been a focus on looking at inputs and activity levels, rather than this loop being completed by reviewing the associated issues concerned with outcomes and customer services, but that this was changing because public bodies are: Fabulous at firing arrows at walls, drawing targets around them and then saying it was a brilliant shot. The situation has now moved on to, there’s the target, now fire the arrow at it (NPNI). Given politicians’ limited cognition of numbers, scrutiny (and accountability) is likely to be diluted as it appears that little use is made of accounting information in political deliberations. Politicians were perceived by non-politicians as being more concerned AAAJ 20,1 30
  21. 21. with how much money was being spent rather than with what it might achieve, and that bids by non-ministerial politicians contained very little consideration of planning and performance issues. For example, one minister suggested that there was enough time to scrutinize but politicians were often more concerned with increasing departmental allocations than in looking at what particular levels of spending would achieve, a far cry from claims of rationality and efficiency that devolved bodies may want to signal externally to enhance their legitimacy; this seems supportive of the notion of decoupling suggested by neo-institutional theory (Meyer and Rowan, 1977; DiMaggio and Powell, 1991): Is there sufficient total consideration to all that we’re doing? No . . . Everybody goes into their own itsy, bitsy bit; there’s a lot of the bid chasing and there’s a lot of duplicity . . . It goes to committees and they go through the budget recommendations but, so far, in the main, what committees have done is to come up with views on budgets that have mainly been saying we want more money, we want the department we’re scrutinizing to get more money, it needs more money for this, that and the other . . . So, they have been coming back with criticisms on the inadequacies of allocations, rather than coming back with questions or challenges about the strategic merits of the spending plans (PNI). Others also felt that the process of scrutinizing the budget could miss the point of ensuring the delivery of public service as attention is focused on other priorities, or simply members become obsessed with chasing the numbers: What is it that people are coming to the table (to scrutinize the budget) to do? Are they seeking to improve a service? Are they seeking to change priorities? Or are they simply looking at numbers and saying, “well, if the numbers are alright, it must be OK”, and it is really delivery of public service that we are here to deal with (PS). Most devolved politicians had an extended experience in the public sector, as professionals; e.g. medics, previous members of Parliament at Westminster, or councilors, and some had previous extensive training in the accountancy profession. However, the vast majority of politicians in the devolved institutions were very inexperienced in financial matters, and this has been cited as an explanation for the apparent limited use of financial information to inform political debate: We have some inexperienced members here at the moment because we are developing a political culture. Financial information is in many cases central to political decision making, because it is about the amount of resources you apply and the value that you get from those resources . . . A lot of people here in the Assembly still don’t understand how important it can be to ask questions, even written questions, just to elicit that information about the levels of actual commitments and so on (PW). A number of interviewees noted the newness of the devolution experience as contributing to the limited exercise of accountability and expressed an expectation that things would evolve and improve through time. Evidence regarding how the budgeting process had changed since its inception was proffered to support this, including: putting in place changed structures to ensure more robust future scrutiny; and addressing difficulties (e.g. a fairly tight timescale) identified by earlier pre-budget reports. The main themes of the above discussion are: significant information overload that at the limit results in some politicians ignoring the contents of most reports and only reading the summary and recommendations; lack of interest by most politicians in New budgets in UK devolved bodies 31
  22. 22. financial numbers, and serious difficulty faced by them in reading and interpreting the numbers. From a neo-institutional theory perspective, these observations have a number of implications. The desire to demonstrate rationality to external constituencies in the quest for legitimacy places pressure on the devolved bodies to demonstrate that their members both understand and make appropriate use of accounting and budget information. If a decoupling of external signaling and actual use is possible, as per the traditional thesis of neo-institutional theory (e.g. Meyer and Rowan, 1977; Scott, 1995), then the above evidence would bear witness to this decoupling being a common theme across all devolved bodies. However, this interpretation assumes intention: actors can pursue rational behaviour but they choose not to in pursuit of their interests. This models subjectivity as a proactive, rather than a passive construct (Covaleski et al., 1993; Scott, 1991, 1995). Parts of the evidence cited above are certainly supportive of such a possibility; we have encountered claims by both politicians and civil servants that some politicians are simply not interested in reading and using numbers. Thus, with their rule-like characteristics, budgets are presented by devolved bodies as ideals of rationality, but beneath that veneer budgets are no more than a myth in the process of being institutionalized. Given the prevalence of the use of budgets in both the private and public sectors, creating a myth of compliance with such rational systems can endow devolved bodies with legitimacy. Yet, we have argued earlier that while such an explanation has much appeal, we must resist the temptation to take it for given as a deterministic explanation. The notion of complete decoupling between the declared and the practiced is problematical, to say the least. Our empirical evidence throws some useful light on this issue. This evidence suggests that a (small) number of politicians, because of their previous backgrounds, not only have the necessary expertise to comprehend budgets but also make use of budget figures in their political debate. At least for this (small) group, decoupling does not hold. Further, our evidence suggests that at least some politicians who lack expertise in financial matters seek the support of advisors, civil servants or colleagues to gain some understanding of numbers. In this case, at the very least, there is an attempt to engage with the budget, thereby rendering the notion of complete decoupling questionable. This latter possibility also admits another contingency to the analysis; in so far as the advice given to the non-financially expert is likely to be coloured by the cognitions and interests of those who are providing help with the interpretation. Discussion and conclusions In this paper, we have examined the planning and budgeting documents of the three UK devolved national governments and supplemented these texts with semi-structured interviews. We have drawn upon neo-institutional theory to guide our collection and analysis of the data. Based on our theoretical framing, we have identified three key issues that form the basis of discussion in this section: nesting translations; homogeneities/heterogeneities in responding to institutional pressures, and number cognition and political deliberations. Nesting translations We have argued that, under neo-institutional theory, devolved bodies could enhance their external legitimacy by demonstrating that a clear and logical set of linkages AAAJ 20,1 32
  23. 23. underpin all their planning and budgeting documents. We called this “nesting translations”. Although we did not examine the process of nested translations, we are able to comment on its outcome by examining publicly available documents affords us the possibility to. From such an examination, it was evident that there was a “drilling down” of translations. Our use of the term “nested” signals the interconnected nature of the various stages of translations, as each level is meant to follow from the one above it and lead to the one immediately following it. However, our analysis suggests that this nesting process is non-linear. The planning process was originated in broad, strategic and visionary statements of declared intent on the part of the devolved administrations. Even as broad, visionary statements, such pronouncements differed considerably in their degree of specificity across the three devolved bodies. In Scotland, we encountered the broadest of all three missions “making a difference for the people of Scotland”. In Wales, a somewhat more detailed mission is stated, one that emphasizes a modern society, including the economy, environment, with commitment to public services, in particular schools and hospitals. Finally, Northern Ireland has the longest mission statement, with explicit emphasis upon peace, cohesion, inclusiveness, reconciliation and tolerance. Identifying what these broad missions mean is strongly dependent on the process of translation. It would appear that these mission statements in their diversity are born out of the specific historical settings of each devolved body. The most noticeable linking of mission to history is in the case of Northern Ireland, where the desire to remove the damaging effects of decades of violence between Catholics and Protestants is so prominent. In Scotland, the pressure was on the Executive to demonstrate that devolution will deliver better services and care. In Wales, there was at least the perception that public services, in particular health and education, were not as well supported as in the rest of the UK. Thus, the mission statement of each devolved body was, at least in part, influenced by its specific socio-political setting, which immediately gives rise to a measure of heterogeneity in the response of the devolved bodies to the (similar) institutional pressures that came with the move towards devolution. Such slogan-like statements were then translated into a succession of stages involving: aims, objectives and targets. We noted how political missions began to assume more specific, though still relatively broad, meanings when they were first translated into aims for broad policy areas/themes such as education and health. Thus, for example, “working together to give the children the best chance in life” was seen by the Scottish Executive as a translation of education policy that is consistent with the mission of making a difference for the people of Scotland. Similarly, “developing the learning country” was considered consistent with the aspiration to provide direction for a modern Wales with well-supported public services. Second level translations from aims to objectives still remained broad; in the case of education in Northern Ireland for example, this entailed providing training and skills to secure gainful employment. At best, such broad visionary material can produce some differentiating characteristics between the Executive and opposition but not enough to ensure a sensible measure of accountability. In these two levels of translations, numbers are absent as the missions, aims and objectives are all stated exclusively as narratives. More detailed translations are required in order for more precise differentiations to be derived and through which the cabinet could enunciate its responsibilities towards the electorate. Such detailed translations could be taken as a means of rendering accountability both possible and transparent as a means of securing external legitimacy. New budgets in UK devolved bodies 33
  24. 24. Translating and operationalizing objectives further involved the formulation of time-bounded and specific targets where specific numbers begin to mediate as the expression of political commitments in what is emerging as a “management by numbers” culture (Ezzamel et al., 1990). Given the prevalence of such a management by numbers culture within the institutional field, the emphasis on numbers could be taken as a means of the devolved bodies demonstrating their compliance with that culture (isomorphic pressure). This focus on numbers was evident in each body; in some instances, reference was made to past achievements and how these fitted in with the overall plan (in Scotland and Northern Ireland, though more so in Scotland), whilst others focused solely on future intentions and plans (Wales). This situation in Wales may be due to the Scottish and Northern Ireland documents being relatively more comprehensive, as Wales developed separate planning documents for separate policy issues. Targets, particularly those stated in numerical terms, seemingly became more precise translations of the broad, less differentiating, mission, aims and objectives as more precisely delineated measures of accountability to which the Executive could be held. In this sense, the targets stated in the budget documents of each devolved body provided a visible link back to objectives, aims and ultimately mission. It is these precise targets that are likely to act as the yardstick against which actual achievements and political aspirations could be contrasted and compared. This chain of seemingly logical, precise translation, which we gleaned from our analysis of the planning and budgeting documents, from missions ultimately into numbers, both creates and reinforces a myth of rational governance, where trust is placed into governance by quantification. The budget in each devolved institution therefore can be seen to function as a “ritual” of reason, seeking to legitimize the manner by which the devolved bodies conduct themselves (Czarniawska-Jorges and Jacobsson, 1989). Homogeneities and heterogeneities The three devolved bodies shared some commonalities in their planning and budgeting documents. First, a top-to-bottom management architecture (Meekings, 1995) was evident in all bodies with one caveat; in Scotland, the formulation of the mission statements was a more elongated process, and the Scottish programme for government had much broader aims than in the other two institutions[3]. In Scotland, there appeared to be a greater preponderance placed on defining, in Drucker’s (1980, p. 104) terminology, “a lofty organizational objective”. Second, a systematic review architecture (Meekings, 1995) was common across the devolved bodies, with the periodic reporting of achievements being commonplace. Third, an integrated planning and budgeting process (Meekings, 1995) was in place, though to a lesser extent in Wales compared to Scotland and Northern Ireland. In considering the link and coupling between planning documents and the budgetary documents, tight arrangements were evidenced in both Scotland and Northern Ireland. In Wales, this process was much less explicit and the reader needs to expend much more effort if the interrelationships between all areas of planning and funding are to be made. This may be a consequence of the existence of substantial alternative planning documents as alluded to above. Thus, while we are witnessing strong tendencies towards isomorphic compliance, there are still some elements of heterogeneity between the three devolved bodies (Townley, 2002). AAAJ 20,1 34
  25. 25. Further, there were quite apparent thematic emphases noted across the documents of the three devolved bodies. Though the policy areas chosen for consideration (education and health) were given wide coverage by all, in Wales they were particularly held up as the beacons that would provide the guiding light for the functioning and success of the Welsh Assembly. In Scotland, the achievement of social justice was highlighted as the driving force in spurring on the endeavours of the Executive. In Northern Ireland much was made of the exhaustive consultative and inclusion processes that were worked through at each stage of the planning project, possibly as a consequence of the overt conflict situation that preceded the introduction of the devolved body there and which contributed to an environment that suffered from what some (e.g. Carmichael and Knox, 2003) have referred to as the “democratic deficit”. Another striking element of the Northern Ireland documents is the focus on completing the reporting loop, in achieving the objectives of the Executive. Its departments have adopted not only Public Service Agreements (PSAs), but also Service Delivery Agreements (SDAs), in line with current practice at Whitehall. Finally, with regard to the overall style of the documents, they all share an aspirational and invocatory style, with their eager and earnest urgings to improve the lot of the populace of their respective citizens; indeed, some (Wilson and Wilford, 2001) have had a less benign view of what some might see as utopian intentions- when speaking of Northern Ireland’s first programme for government, they state that it was the “political equivalent of Motherhood and Apple Pie”. It is evident from this discussion that there are elements of convergence, or isomorphism, most likely of the normative type (Meyer and Rowan, 1977; DiMaggio and Powell, 1991; Scott, 1995). There is also evidence of heterogeneity and diversity (Townley, 2002) possibly because of the differences in the contexts of the three devolved bodies. The extent to which greater isomorphism may occur in the future is likely to depend on the extent to which elements of mimetic isomorphism begin to creep in as those involved in the budgetary process across the three devolved bodies begin to take more note of each other’s practices, or alleged best practices emerging from elsewhere. Number cognition and political deliberations Cognition, how actors process and make sense of the information they receive, is a key issue in explaining organizational action under neo-institutional theory. As symbols, accounting and budgeting numbers shape the meanings actors attribute to activities and objects, and hence cognition of numbers will influence the way actors make sense of their working world (Berger and Luckmann, 1967; Berger and Kellner, 1981). Numbers could result in developing a “way of doing things” that becomes institutionalized within a particular organization as the rule-like means of addressing a particular issue, say value for money accountability. A common theme shared across the three devolved bodies is the limited degree of understanding of accounting and budget numbers by most politicians. Within each party, only a few could digest the numbers and had confidence in interpreting and using them. The myriad of numbers in budgets overwhelmed all but a few members in each party, even in Northern Ireland and Scotland where narrative was conjoined with numbers. From a neo-institutional theory perspective, this observation gives rise to a number of implications. New budgets in UK devolved bodies 35
  26. 26. First, those key individuals with financial expertise became the gatekeepers to accounting and budgeting knowledge (Ezzamel and Bourn, 1990), as other members of their parties had to draw on these experts to understand the numbers. These numerate members became, intentionally or unintentionally, obligatory passage points (Latour, 1987) who had to be consulted by other members in the quest of attempting to comprehend accounting and budgetary numbers. This is likely to have created a new dynamic of power relations within each political party; one that favoured those with accounting expertise. Secondly, within each devolved institution the few politicians with financial expertise are likely to have had a large impact on political deliberations. These experts are expected to lead any financially inspired debate in plenary and committee discussions, and they also had a major impact on shaping the debate conducted by the less financially knowledgeable, since the latter’s cognitive understanding of numbers has been substantially informed by such knowledgeable members. To the extent that financial numbers might elicit different interpretations from those reading them, it is those interpretations of the within-party experts that are likely to dominate the political debate. Third, the majority of politicians, who had modest financial expertise, tended to justify their difficulty in understanding numbers by claiming other cognitive advantages, such as better ability to understand diagrams and charts, and/or by simply submitting to the myth that being numerate means being a mathematical genius. In this way, their inability to understand numbers was conveyed as something that they do not need to feel ashamed of, since only super-humans are capable of comprehending numbers; as one politician said “It is not to say we’re all stupid”. Such justification of lack of ability to comprehend financial details stands in some contrast to the position of members of the Assembly who were recognized as centres of financial expertise, those who could not only interpret, but also question, and argue with, numbers by challenging the basis of their construction. The interaction of power/knowledge could be seen most clearly in this contrast; power and knowledge feeding off each other as knowledgeable agents can manipulate power relations better to their advantage which then helps to render their claims to knowledge more credible. Fourth, and this is a qualification on the above points, the availability of financial knowledge centres (experts) within each political party did not always lead to widespread financially-inspired debate. Even those who called upon the experts within their parties to help them comprehend budget numbers did not always deploy this knowledge in debate. As some more experienced members noted, the extent and level of debate was frequently disappointing. Perhaps those members who were less adept at understanding numbers were inhibited to use the understanding they gained from their more experienced colleagues explicitly in the debate, preferring to “wait and see” how the debate developed, making use of their limited financial understanding only if they had to. This finding has parallels both in the UK and in other contexts. Likierman and Vass (1984) reported that few Members of Parliament at Westminster could comprehend accounting information. Olson and Sahlin-Andersson (1998) noted how, despite attempts to embrace business-like accounting processes, Swedish politicians rarely used accounting information in their deliberations. Even though the political debate may seem wanting, judging by how the individual representatives act, the overall political system may be relatively well informed when the division of labour AAAJ 20,1 36
  27. 27. between experts and non-experts, between parliamentary committees, between parties, and between lobbyists and media is taken into account (Downs, 1957). Our study is of devolved bodies in transition and of accounting and budgeting practices in the process of being institutionalized. This is a particularly crucial stage within the neo-institutional theory framework; it is during such episodes that organizations, such as the devolved bodies, seek to pursue whatever institutionalizing processes that subsequently define what forms they can follow and how they can secure legitimacy (Scott, 1995). With their rule-like characteristics, accounting and budgeting can be highly ritualized and institutionalized practices; hence, the importance accorded them by all three devolved bodies (Meyer and Rowan, 1977). However, our findings may be limited by the transitional nature of our period of investigation. For example, politicians’ cognition of accounting calculations and other numbers may significantly improve over time, and so may the quality and frequency of provision of information. Our findings are therefore necessarily preliminary, and more research is required to both refine our findings and extend enquiry to cover issues other than those examined here. However, we believe that this paper has shed further light on some of the tensions in a number of key themes in neo-institutional theory: the extent to which organizational efforts to demonstrate rationality in its programmes of management is constrained by the ability to produce a translation that maps onto these programmes; the dynamics of possibilities of heterogeneities in organizational responses to similar institutional pressures; and the impact knowledgeable experts in mediating the cognitions, and hence the actions, of the less expert. Notes 1. We are unable to comment upon any attempts to categorize performance measures or explore their character because of the absence of public documentation on debate prior to the construction of budgets. 2. The time lag between the opening of the parliament in 1999 and the publication date of this document in 2001 may suggest programs for government are less essential for the functioning of such political bodies than assumed as more informal means of governance may have been pursued. Another possible explanation is the presence of a coalition government in which negotiations and co-ordination may have required time. This, however, has to remain as a speculation as we do not have the material that would allow a careful examination of this possibility. 3. However, somewhat perversely, what would be regarded as “objectives” within the rational planning model were actually referred to as “aims” in the Scottish document. References Ansoff, I. (1979), Strategic Management, Macmillan, London. Anthony, R.N. and Young, D.W. (1999), Management Control in Non-profit Organisations, 6th ed., Irwin, Boston, MA. Baier, V.E., March, J.G. and Satren, H. (1963), “Implementation and ambiguity”, Scandinavian Journal of Management Studies, Vol. 2 Nos 2-3, pp. 115-37. Berger, P.L. and Kellner, H. (1981), Sociology Interpreted: An Essay on Method and Vocation, Doubleday Anchor, Garden City, NY. Berger, P.L. and Luckmann, T. (1967), The Social Construction of Reality, Doubleday Anchor, New York, NY. New budgets in UK devolved bodies 37
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