Agencification revisited: trends in consolidation of central government administration in Europe

Abstract

Agencification was one of the main pillars of the New Public Management reforms in Europe in the 1980s and 1990s. The strong increase in the number of agencies and the extension of their autonomy (especially with regard to independent regulatory agencies) significantly changed the organizational architecture of governments. However, the review of organizational reforms implemented over the past two decades in European administrative systems demonstrates a trend towards the rationalization and consolidation of the agency landscape. This article provides insight into major forms and patterns of consolidation, including comprehensive, cross-sectoral agency rationalization initiatives and more selective reforms regarding specific policy areas or types of government functions. It also explores the background of the consolidation reforms, confirming that economic pressures affecting governments in the era of austerity played a crucial role in redefining the position of agencies in governments’ organizational set-up.

Points for practitioners

Agencies remain the main vehicle for policy implementation across Europe but the trend towards de-agencification emerged in the decade of the 2010s, represented by both comprehensive, cross-sectoral initiatives reducing the agency stock, and consolidations in specific policy areas or covering agencies of specific types. De-agencification was triggered by the 2008 global financial crisis that increased the pressure on the reduction of administrative expenditure. To a lesser extent, it was a reaction to the adverse effects of agencification, such as coordination and steering problems, or the ambiguous impact of agencification on the efficiency of the public administration.

Keywords

agencification consolidation public management

Introduction

The consolidation versus specialization debate is one of the long-standing topics in the history of administrative thought (Pollitt and Bouckaert, 2004). In the last decades of the 20th century, the pendulum swung towards specialization. Agencification, resulting in dismantling large, multifunctional bodies of public administration, became one of the key words describing the transformation of the organizational set-up of public administration from the 1980s (Overman and van Thiel, 2016), and one of the most frequently adopted and far-reaching elements of the New Public Management (NPM) agenda (Moynihan, 2006). It reflected one of the core NPM strategies, that is, what Hood (1991: 5) described as a ‘shift to disaggregation of units in the public sector’. It also enabled the dissemination of other NPM-inspired organizational reforms, for example, enhancing managerial autonomy and introducing performance contracts as a main tool for steering the government’s administration (Ongaro et al., 2012).

However, organizational reforms introduced in many European countries over the past 10–15 years may demonstrate the emergence of an opposite trend, namely, the consolidation of the agency landscape by abolishing or merging government bodies. While claims about ‘de-agencification’ rarely appear in the literature (see MacCarthaigh, 2014; Randma-Liiv et al., 2011), the scale and direction of organizational reforms in recent periods definitely provokes questions about the potential revision of the previously enthusiastic approach towards agencification. This article, based on a review of the literature and government documents, aims at identifying the key trends and patterns in agencies’ consolidation, as well as exploring the rationale and nature of this process. In the first part of the study, a summary of the agencification process in Europe is provided. Subsequently, the consolidation reforms are grouped into two major categories: comprehensive consolidation initiatives and more selective reforms that focus on specific policy areas or types of government function.

Agencification and the shift towards autonomous government

While detailed understanding of the nature and scope of this process differs among scholars, the broad definition of agencification is rather clear. Agencification, in general terms, is a form of vertical specialization of government bureaucracies by transferring some of their functions to agencies, that is, special types of public bodies, formally organizationally separated from departments (ministries), while remaining part of government apparatus, staffed with public sector workers and financed primarily by the state budget (Egeberg and Trondal, 2009). Compared to state-owned companies, governmental foundations or trusts, they remain public law bodies (Lægreid et al., 2011). Agencification often takes the form of hiving off ministerial units, releasing them from ministerial hierarchy (Van Thiel and Yesilkagit, 2011). Extracting functions from ministries and transferring them to newly created agencies follows a clear pattern: ministries remain responsible for the formulation of policies, while agencies become a major force in implementing them (Van Thiel and Yesilkagit, 2011). In that sense, agencification is just ‘old wine in new bottles’, that is, a new vehicle for delivering the old concept of a division between policy and operations (Polidano, 1999). It is as old as the famous essay of Woodrow Wilson from 1887, promoting a clear distinction between setting policies and ‘detailed and systematic execution of law’, that is, administration (Wilson, 1887: 212). Decoupling both spheres is also possible within a single organizational structure (e.g. ministry) through a clear division of tasks and powers, or mechanisms of internal delegation. Agencification appears to be a step forward in ensuring more rigorous and visible separation of policymaking and policy implementation. In practice, however, this assumption may fail if the autonomy of the agency is too narrow and, regardless of organizational separation, it remains micromanaged by the parent ministry.

Agencification might also be depicted as another form of decentralization, that is, deconcentration or delegation, according to the typology of decentralization developed by Rondinelli, Nellis and Cheema (1983). Compared to devolution (to sub-national autonomous governments) and privatization, however, it represents a rather ‘soft’ form of decentralization as government functions are not transferred outside the government bureaucracy, but entrusted to arm’s-length bodies of the government.

Non-ministerial executive bodies (agencies) already existed in the institutional architecture of many European countries before the era of NPM. In Sweden or Norway, agencies began to emerge from the 1850s onward (Christensen and Lægreid, 2006). However, the real ‘agency fever’ (Pollitt et al., 2001) began to spread globally from the mid-1980s. The UK’s Next Steps Initiative, launched in 1988, represents this landmark shift towards massive agencification. Within a decade, over 130 new agencies were created (Hyndman and Eden, 2002). The apogee of agencification was the period 1990–1991, when the population of agencies increased by nearly 50 new institutions (Elston, 2013). In order to visualize the scale of this reshuffle, it is enough to say that the Next Steps Initiative resulted in three-quarters of the civil servants being transferred to agencies (Kickert, 2001). Other countries followed the British model, though in a less spectacular manner. In the Netherlands, transferring ministerial tasks to a specific form of legally autonomous organization called a ZBO (‘independent administrative body’) began in 1989 (Kickert, 2010). The French experience with agencification dates back to 1990, when the ‘responsibility centres’ were created as bodies enjoying some degree of financial and managerial autonomy, tasked with delivering specific services to the public or other administrative bodies (Lafarge, 2012). In Italy, the reform inspired by the UK’s Next Steps Initiative was introduced in 1999. It included, in particular, the setting up of four new fiscal agencies in the policy domain of the finance ministry (Barbieri et al., 2013). Agencification also became an important element on the agendas of international organizations (the World Bank, Organisation for Economic Co-operation and Development (OECD) and European Union (EU)) in supporting the transition in developing economies and post-socialist countries of Central and Eastern Europe (Sosay and Zenginobuz, 2005). Data collected by Van Thiel and the Comparative Research into Current Trends in Public Sector Organization (CRIPO) Team for 21 countries clearly demonstrate the acceleration in agencification from the 1980s, with a rapid increase over the decade of the 1990s (Van Thiel, 2012).

Agencification has been manifested not only by the increasing net number of agencies, but also through extending the scope of their managerial autonomy. De Somer (2012) describes this process as the emergence of autonomous government, characterized by delegating government tasks to bodies enjoying a certain (considerable) degree of autonomy in relation to political superiors. The concept of autonomous government corresponded with other institutional and political dynamics of the late 20th century, that is, regulatory expansion (Bianculli et al., 2013). The transformation of the state administration’s mission from the direct delivery of a wide array of services towards regulating the liberalized and largely privatized markets required a new institutional and organizational set-up. The regulatory state (Majone, 1997) relies on so-called independent regulatory authorities (IRAs), including primarily competition protection authorities, utility regulators and financial regulators (Thatcher, 2005). The extensive autonomy of IRAs was explained as a necessary measure to ensure the credibility of regulatory activities and to enhance their quality thanks to entrusting decision-making powers to experts insulated from direct political influence (Maggetti, 2012; Majone, 1997). IRAs were intended to become an aristocracy of government agencies, nominally remaining within the executive branch of the state but enjoying extensive autonomy from the government.

Comprehensive consolidation

While the UK’s ‘Next Steps Initiative’ served as a hallmark of agencification, it is also the UK (and Ireland) where the reverse trend emerged in its most radical form. UK and Ireland represent the most extensive approach to the reorganization of central government characterized by comprehensive, multi-sectoral initiatives for the rationalization of the number of government bodies. One-off massive reorganization projects were implemented in both countries in the critical period of global economic crisis (2010–2015 in the UK and 2011–2013 in Ireland), and the context of austerity is important for understanding the rationale of both initiatives (MacCarthaigh and Hardiman, 2017). Key documents setting the principles, objectives and targets of reorganization indicate financial savings as one of the priorities. Furthermore, the reports summarizing the outcomes of the processes put emphasis on the savings generated (Cabinet Office, 2011, 2015; Department of Public Expenditure and Reform, 2014). Both initiatives led to the considerable redesign of the organizational architecture of the government administration. In the UK, the functions and governance structures of over 900 bodies were reviewed, which resulted in abolishing 190 bodies and merging around 170 bodies into fewer than 70. Reported savings reached £3 billion. In Ireland, the overall number of government bodies was reduced by almost 200 (Department of Public Expenditure and Reform, 2014).

While the quantitative outputs of the organizational reforms in the UK and Ireland are most tangible, the documents accompanying the reorganization and trajectories of organizational changes also reveal the new conceptual approach to the organizational architecture of the government. First of all, the concept of agencies as the universal organizational solution for all policy implementation functions was revisited. The UK’s Public Bodies Reform Programme (PBRP) targeted non-departmental public bodies (NDPBs), a primary type of government agency in the UK, operating through an arm’s-length relationship with the parent ministry. The PBRP introduced the concept of a mandatory delivery options test, where NDPBs were classified as ‘a last resort, when consideration of all other delivery mechanisms have been exhausted’ (Cabinet Office, 2012: 4). Among other delivery options, the government documents listed devolution to local government, transferring to the private or voluntary sector, bringing delivery in-house (to the parent department), or creating an executive agency. Furthermore, NDPBs may continue to exist or be set up if at least one of the following requirements is met: (1) it performs a technical function that needs external expertise to be delivered; (2) its activities need to be, and be seen to be, delivered with absolute political impartiality; or (3) it needs to act independently of ministers to establish facts and/or figures with integrity (Cabinet Office, 2011).

Second, the concept of specialization as a rationale for agencification was significantly revised. The major form of reorganization was the merging of existing bodies, which naturally decreased the level of specialization of individual organizations and created more multifunctional agencies. This trend was clearly manifested in the Irish Agency Rationalization Programme, where specific patterns of amalgamation could be distinguished. For instance, in many cases, the multitude of agencies operating in relevant sectors was merged into single bodies covering all executive functions with regard to each sector. This model was implemented in, for example, higher education, labour, railway transport and housing.

Third, the approach towards the role of the ministry (department) has evolved. The UK’s Next Steps report emphasized the need to transfer the executive (policy implementation) functions of the government to agencies operating under a policy and management framework set by the department. The PBRP appears to modify this model by indicating department or executive agency within the department as a delivery option for the executive functions of government. The Irish Agency Rationalization Programme went even further by establishing a principle stating that the creation of a separate agency is only justified when performing particular functions requires specialist skills and independence (Department of Public Expenditure and Reform, 2014). This demonstrates a shift in the logic underpinning the institutional architecture of the government. The ministry (department) becomes the primary delivery option for all government functions, while externalization (transferring to agencies or other external bodies) requires meeting special conditions.

It should also be noted that the one-off reorganization was accompanied in both countries by developing new oversight and review arrangements for existing bodies. As regards oversight tools, new mechanisms of financial control (e.g. requirements on disclosing contracts and salaries) were introduced in the UK. In Ireland, the service-level agreements setting outcomes and outputs for agencies were implemented as an instrument fostering departmental control over the performance of subordinated bodies (Dommett et al., 2016). Both governments also emphasized the need for regular review of the agencies in a structured manner. For this purpose, comprehensive review mechanisms have been developed. The UK’s model of triennial reviews requires all NDPBs to go through the evaluation process every three years. The review begins by challenging the continuing need for the individual NDPB. Once this need is proven, the review seeks some organizational improvements providing potential efficiency gains. For instance, the arrangements regarding human resources (HR) management, property management or procurement are analysed in order to identify sources of potential savings (Cabinet Office, 2014). The philosophy of triennial reviews clearly manifests the intention of a further reduction in the number of NDPBs as the rationale for the further functioning of each body will have to be regularly analysed and proven. The periodic critical reviews introduced in Ireland rely on a similar approach. Every five years, all non-commercial state bodies are required to go through an assessment process, which includes reviewing the organizational capacity and performance of agencies, as well as challenging the current delivery model and considering the case for rationalization and consolidation (Department of Public Expenditure and Reform, 2016).

The UK and Irish initiatives remain the only large-scale, comprehensive rationalization programmes embracing the whole government administration, based on a clearly defined policy agenda that resulted in a considerable reduction of the agency stock. However, the available research demonstrates that cross-sectoral de-agencification initiatives were also launched in other countries, though in less consistent manner and with mixed effects. For instance, in Lithuania, rationalization efforts were undertaken three times during the period 1999–2010, upon the initiative of the so-called ‘Sunset’ Commission, that is, a government advisory body tasked with the elaboration of proposals for the optimization of the organizational structures of the government. While the first two attempts to reduce agency stock (1999–2000 and 2006–2008) generally failed, the 2009–2010 wave of restructuring following the economic turmoil delivered some noticeable results, particularly in terms of reducing the number of territorial branches of central bodies (Nakrošis and Martinaitis, 2011). A similar pattern (the consolidation of territorial government administration) characterized the post-crisis de-agencification process in Hungary (Gellén, 2012). This case provides another hint that the economic crisis might be the most effective stimulator for rationalization programmes.

Selective consolidation

In most of the countries, the shift towards consolidation is demonstrated by a series of selective consolidations rather than comprehensive, multi-sectoral rationalization programmes. The review of European practice provides insight into major patterns of reorganization, that is, the areas and types of bodies where the trend towards consolidation is particularly well represented. This part explores four types of reorganization, among which one refers to consolidation within individual policy areas, and the remaining three have a more horizontal (cross-sectoral) nature.

Consolidation within a policy area (sectoral consolidation)

In some areas of government intervention, there is a clear trend towards extending the scope of the functions performed by key agencies. In the area of welfare administration, consolidation of employment services with social assistance appears to be the most prominent example. In Norway, the employment administration was merged with the national insurance administration into a single employment and welfare administration (NAV) in 2006. This reform was preceded by the establishment of a single ministry responsible for policies on social services, social security and the labour market. The merger of agencies managing employment services and the national insurance system was presented by the government as a tool to improve coordination and strategic planning, as well as to reduce costs thanks to economies of scale. The establishment of NAV at the central level was accompanied by the setting up of one-stop-shops for welfare and employment services in each municipality, according to the agreement with the Norwegian association of municipalities (Christensen et al., 2007, 2014; Munday, 2007). In 2012, Ireland followed Norway’s path by merging social welfare services and employment services within a single administrative structure (Intreo), operating under the supervision of the Department of Social Protection. Intreo took over the functions of two bodies: the employment agency (FÁS) and Community Welfare Service (CWS). It operates through a network of local offices that provide one-stop access to employment and welfare services (Department of Public Expenditure and Reform, 2017; O’Connell, 2016; OECD, 2016a).

In the area of revenue administration, the OECD underlines the tendency towards expanding the portfolio of tax administration bodies. This process primarily takes the form of integrating customs administration and tax administration. The main rationale for this process (besides savings generation) is synergies with customs operations that are responsible for the collection of VAT on imports (OECD, 2015). In 2009, consolidated tax and customs administration operated in only one-third of OECD countries, while in 2015, it was already the case in two-thirds of the countries (OECD, 2009, 2017). Other roles performed by tax administrations in some countries include property valuation (for the purposes of property tax), the oversight of gambling or lotteries, distributing some welfare benefits, and the collection of child support (OECD, 2017). In the majority of OECD countries, the collection of social security contributions remains the task of separate agencies but the trend towards integrating this function into tax administration is also present (OECD, 2017; The World Bank, 2010).

Merging competition authorities with sectoral regulators (horizontal consolidation)

Recent years have also brought a series of consolidation initiatives in the area of autonomous government. The most extensive transformation was conducted in the Netherlands and Spain, where the competition protection authorities were merged with a group of sectoral regulators. According to Ottow (2015), these initiatives mark a global shift from single-function regulatory bodies towards multifunctional agencies, with antitrust and regulatory functions housed under a single roof. This tendency was preceded or accompanied by mergers of sectoral regulators, with German Bundesnetzagentur being one of the most prominent examples of a multi-sectoral regulator, having jurisdiction over the electricity, telecommunications, gas, post and railway sectors (OECD, 2016b). This model was also implemented in Latvia, where the Public Utilities Commission established in 2001 became the multifunctional regulatory body dealing with the energy, telecommunications, post and railway markets (Latvian Development Agency, 2005). Several countries consolidated sectoral regulators on a smaller scale, especially by merging authorities supervising the post and telecommunications markets. For example, in 2011, the UK’s Office of Communications (Ofcom) (regulator for the TV, radio and telecommunications sectors) took over responsibility for the oversight of postal services from Postcomm (Jaag, 2014). Since Slovakia followed the same pattern, in the EU, the model of a single-function postal market regulatory agency disappeared completely.

The Netherlands Authority for Consumers and Markets also began its operations in 2013, replacing three previously existing regulatory bodies: the Netherlands Consumer Authority (CA), the Netherlands Independent Post and Telecommunication Authority (OPTA) and the Netherlands Competition Authority (NMa) (Schafers and Houdijk, 2012; Yesilkagit, 2014). Compared to the Spanish case, the major difference is that consumer protection matters are also included into the portfolio of the new authority. In Spain, these issues remain in the domains of a separate institution: the Spanish Agency for Consumer Affairs, Food Safety and Nutrition. The Dutch approach reflects another trend in institutional redesign of regulatory boards, that is, combining competition protection with consumers’ matters. Similar reforms were also implemented in the UK, Finland and Ireland (Department of Public Expenditure and Reform, 2014; Ottow, 2015). Consolidation of the Dutch regulators was presented as a measure to save costs and provide synergies in regulatory activities. It was also expected that the newly created super-authority would be capable of anticipating market developments in a more integrated manner, using consolidated knowledge and expertise (Cseres, 2013).

In Spain, the National Authority for Markets and Competition (CNMC) was established in 2013 through the amalgamation of five previously existing regulatory authorities: the National Competition Commission, which operated as a competition protection body, and sectoral regulators covering telecommunications, the audiovisual market, energy, railways and airports, and postal services. This massive consolidation was justified not only by potential economies of scale, but also as a tool to improve legal certainty and confidence among market operators. Merging all regulatory authorities under one roof was expected to eliminate the problem of duplicating the regulatory activities or issuing contradictory decisions by various specialized authorities (CNMC, 2015; Gorriz, 2014; Xifre, 2014).

Amalgamation of inspectorates (horizontal consolidation)

Another group of government bodies for which consolidation reforms have been promoted is inspectorates. Inspectorates have a long tradition in administrative systems as key instruments of regulatory control, established to monitor the state of affairs in relevant areas of economic and social life, and to repress infrequent or undesired events (Blanc, 2012; Hawkins, 2002). The trend towards the consolidation of inspectorates is often justified as a measure to reduce the administrative burden on businesses and improve the business environment (Monk, 2012; OECD, 2014). Consolidation is expected to decrease the number of inspections and facilitate the elaboration of common standards for inspections, which reduces risk and costs for businesses. It might be accompanied with other measures serving the same goals, for example, reforming inspection processes and procedures, or establishing limitations on the number or duration of inspection visits (Cordova-Novion and Sahovic, 2010).

Institutional reforms of inspectorates follow two major patterns: (1) sectoral consolidation, that is, merging inspections operating in relevant sectors according to the ‘one risk – one inspectorate’ model (dominant approach); and (2) multi-sectoral consolidation, that is, setting up a single inspection body integrating the functions of all or the vast majority of existing inspectorates. The ‘one risk – one inspectorate’ approach implies the amalgamation of a multitude of specialized inspectorates responsible for supervision over narrowly defined areas of economic activities or public services into single inspectorates dealing with whole sectors. Sectors are identified according to the goods and interests that the state is obliged to protect via inspections. According to the OECD (2014), the exhaustive list of sectoral inspectorates may include bodies responsible for nine areas: food safety; non-food product safety and consumer protection; technical and infrastructure/construction safety; public health, medicines and healthcare; occupational safety and health; environmental protection; state revenue; transportation safety; and banking, insurance and financial services supervision.

The ‘one risk – one inspectorate approach’ has been reflected in the reforms introduced by some countries. In the UK, the 2005 Hampton Review recommended the merger of 31 existing specialized inspectorates and regulatory bodies into seven bodies responsible for the following areas: health and safety; food standards; environment; consumer and trading standards; rural and countryside matters; animal health; and agriculture (Hampton, 2005). The recommendations of the Hampton Review have gradually been implemented (Bundred and Grace, 2008; HM Treasury, 2006; OECD, 2010b). In the Netherlands, the restructuring of inspectorates also followed the concept of thematic consolidation, resulting in reduction of the number of state inspectorates from 26 to 10 bodies structured around the following areas: environment and transport; communications; mining, labour and social affairs; food and non-food products; security and justice; child welfare; education; heritage; and public health (Blanc, 2012; Ministry of Interior and Kingdom Relations, 2016; OECD, 2010a).

In some areas of public policy, the trend towards the thematic consolidation of inspectorates is particularly strong. This refers especially to the area of food safety, where the shift towards new institutional arrangements began in Europe as a result of the BSE (Mad Cow Disease) crisis in the late 1990s (Ugland and Veggeland, 2006). It demonstrated the ineffectiveness of the existing food inspection system and enhanced organizational reforms to improve coordination with the food safety system through the consolidation of inspectorates. Such reforms were implemented in, for example, Germany, Ireland, the Netherlands, the UK and Spain, where the new food safety authorities emerged from the amalgamation of bodies performing supervision over sub-sectors of the food industry and those handling veterinary and/or phytosanitary inspections (Garcia and Jukes, 2004; Hadjigeorgiou et al., 2013; US Government Accountability Office, 2005).

Multi-sectoral consolidation in Europe remains an exception. Croatia introduced this model as the first country in Europe in 1997, when 12 specialized inspectorates (for labour and workers’ safety and protection, trade and market surveillance, power, and mining and equipment) were transformed into a single State Inspectorate. It should be noted that the reform did not cover the food safety inspectorate, which kept its status as a standalone organization (Blanc, 2012; Cordova-Novion and Sahovic, 2010). The Croatian model served as a reform pattern in the Western Balkans. In 2004, Bosnia and Herzegovina set up State Inspectorates operating at the level of entities (Federation of BiH and Republika Srpska). The inspectorates have a broader mandate than the Croatian institution as they cover all non-fiscal inspection functions (including food safety) (Blanc and Ottimofiore, 2015). In 2012, Montenegro created the Administration for Inspection Affairs. It integrated under one roof specialized inspections operating in the following areas: mining, geology, electronic communications, postal services, labour, tourism, construction, environment, public procurement and games of chance. Currently, Bosnia and Herzegovina and Montenegro remain the only representatives of multi-sectoral consolidation in Europe as Croatia abolished the State Inspectorate in 2014 and reinstated the model of specialized inspectorates (Law on Amendments to the Law of 4 December 2013 on Organization and Activities of the Ministries and Central Bodies of the State Administration, Official Gazette No. 148/2013).

Shared support services arrangements (horizontal consolidation)

Setting up institutional arrangements for the integrated delivery of support (back-office) services is a specific form of consolidation, where the net number of agencies does not change, but the group of specific functions previously performed by the internal units of those agencies is now delivered by a specialized agency serving multiple agencies. Integration of support functions usually includes financial management, procurement or information technology (IT) infrastructure. Developing shared support services arrangements is another form of consolidation driven by expected financial gains, though service quality improvement is also one of the motives for introducing this model (Janssen and Joha, 2006; Paagman et al., 2015). There is no uniform institutional arrangement for shared support services. However, a review of European practice reveals that the creation of single multifunctional agencies delivering back-office services to a multitude of agencies from various sectors has become the dominant trend.

The model of shared support provision via a specialized shared services centre has been introduced over the past ten years in, for example, Estonia, Ireland, Portugal and Sweden. In Estonia, efforts aiming at the integration of support services delivery in the Estonian administration began in 2009 with the decision of the government to consolidate financial and payroll accounting services, as well as personnel records. The consolidation process relied on the development of common accounting software. Prior to this decision, government institutions in Estonia used 14 different accounting software solutions and 11 different HR accounting software solutions (Raudla and Tammel, 2015). The second phase began in 2013 with the creation of the State Shared Services Centre (SSSC). The establishment of this institution was a voluntary initiative of four ministries. The SSSC provides the following support services to the relevant ministries and bodies subordinated to those ministries: financial accounting; HR accounting and payroll; state general accounting; the development of state financial standards, implementation and advice; the management of state claims; the development and administration of a common accounting and payroll information system; and public procurement (Leppoja, 2016).

In the case of Ireland, the introduction of shared back-office services for government bodies was an integral part of the public sector reform agenda, together with the Agency Rationalization Programme. In 2014, the National Shared Services Office (NSSO) was established, initially as an internal unit of the Department of Public Expenditure and Reform. According to the 2017 NSSO Act, the NSSO operates as a standalone agency reporting to the Minister for Public Expenditure and Reform. The NSSO Act lists services that could be delegated to the NSSO and public bodies that could be the customers of this institution. The catalogue of tasks that could be delegated to the NSSO focuses on HRM and financial management matters, including management of data relating to the recruitment, absence, leave and performance of staff, as well as maintaining payroll and other financial operations (see the NSSO Act; see also Deloitte, 2015).

Portugal has developed one of the most extensive models for shared support services provision in Europe. The introduction of shared services for government institutions was envisaged by the Public Administration Restructuring Programme adopted in 2005 by the Portuguese government. In order to implement this objective, a public company (GeRAP) was created in 2007, with the aim to provide shared services to the central Portuguese public administration (Domingues and Gomes, 2011). In 2012, GeRAP was replaced by the Shared Services Entity of the Public Administration (ESPAP). ESPAP is a semi-autonomous government agency reporting to the Ministry of Finance. It provides services to government institutions according to individual contracts concluded with them. Every contract specifies the responsibilities of ESPAP and the relevant customer (ministry, agency) with regard to the provision of each service. ESPAP currently offers services in six areas: financial management, human resources, public procurement, state fleet management, ICT and project management (Quesado, 2015).

Sweden made a significant step forward in developing shared services for the government by establishing the National Government Service Centre (NGSC) in 2012. This body provides government agencies with a wide array of shared services, including finance and accounting, payroll management, and e-commerce. Initially, transferring those functions to the NGSC was voluntary (OECD, 2013). However, in 2015, unsatisfied with the number of agencies involved in the shared services scheme, the government decided to make the delegation of payroll-related functions compulsory (Swedish National Audit Office, 2016). In Table 1, the various patterns of sectoral consolidation discussed earlier are summarized, demonstrating that this process may be based on different overarching goals and follow different institutional trajectories.

Table 1.

Trajectories of the sectoral consolidation of agencies in Europe.

Type of consolidation	Rationale, goals, principles	Examples
Merger of executive agencies within single policy area (e.g. merging tax and customs administration or employment and welfare administration)	Generating cost savings, improving coordination and ensuring more integrated provision of public services to users (e.g. in one-stop-shop formula)	Ireland, Norway, Poland
Creation of ‘super-regulators’	Reducing administrative expenditure and improving coordination and effectiveness of regulatory activities, especially towards businesses operating in various markets	Germany, Latvia, Netherlands, Spain
Amalgamation of inspectorates	Adjusting organizational landscape inspectorates to ‘one risk – one inspectorate’ principle in order to improve coordination and increase the efficiency of inspections	Croatia, Germany, Ireland, Montenegro, the Netherlands, Spain
Setting up shared services centres	Enhancing the delivery of back-office services for the government by integrating their provision under the single roof of an agency serving other agencies	Estonia, Ireland, Portugal, Sweden

Conclusions

Agencies are an inevitable element of the institutional landscape of governments in Europe. Agencies remain the primary option for organizing the delivery of government functions. Potential alternatives, either departmentalization (absorbing agencies’ functions by ministries) or the delegation of functions to local governments or the private sector on a larger scale, will not marginalize the position of agencies in the foreseeable future. However, there is strong evidence for a considerable shift towards the consolidation of agencies in recent years. The background to this process is rather easy to investigate. Policy documents accompanying reorganizations confirm that economic pressure in the era of austerity is the main motive for cuts in the stock of agencies. The benefits of economies of scale resulting from consolidation are low-hanging fruit as the abolition or amalgamation of agencies enables short-term savings on staff or facilities. What remains more challenging is to improve the quality of services provided in the new, consolidated institutional arrangements. The agencification trend relied on expectations about benefits of specialization, particularly clearer accountability lines and a more specialist, technocratic approach. The consolidation discourse represented in the official documents or statements does not enter into dialogue with these ‘old’ arguments, focusing instead on potential synergies and extended opportunities for sharing information and expertise. Furthermore, the reorganizations usually lack strong evidence of the dysfunctionality of the existing, more dispersed, institutional arrangements. This may suggest that the effectiveness and quality of performing government functions played only a secondary role as a ground for restructuring agencies.

This also leads to the conclusion that instead of a shift towards ‘de-agencification’, the tendencies described in this study could rather be depicted as the spontaneous adjustment of the landscape of agencies, strongly affected by external economic factors. Consolidation became a crucial element of the public sector management strategy for responding to the global financial crisis, expected to deliver rapid and tangible results in terms of reducing public spending, and manifesting the idea that governments should not overlook their own apparatuses while undertaking austerity measures. This leads us to the question of whether the current pandemic will trigger another wave of consolidations across European administrations. Considering the different nature of the current crisis, this issue appears to be trickier. Its effective mitigation requires the extraordinary mobilization of administrative resources and the constantly smooth operation of the administrative apparatus, which should rather inhibit large-scale organizational reforms.

In addition to pragmatic motives behind rationalization programmes, we also need to underline that they represent just another shift in the historic cycle of institutional changes. After decades of ‘specialization hegemony’ associated with NPM, the opposite trend naturally attracts greater attention as a countervailing force (Christensen et al., 2008). The pendulum of institutional reforms appears to swing in regular intervals, even without strong, evidence-based justification for the currently fashionable trend. The rationalization mode might be just another episode in this historic cycle.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Dawid Sześciło

Dawid Sześciło is Professor at the Public Administration Research Unit, Faculty of Law and Administration, University of Warsaw, Poland. His main research fields are organization of public administration, public agencies, local government and public service delivery.

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