Editorial: Embracing the positives

The future political, administrative and financial relationship with the European Union (EU) after the UK leaves continues to dominate informed debate. For some commentators, the future is a fearful prospect outside of the EU club. For others, the future is not so much the UK leaving the EU, as re-joining the rest of the world. ONS figures give a glimpse of the way things may develop. For example, although the media often refer to the EU as a single entity, in reality the relationship in politics, defence and trade terms the UK has with each member state is very different. In 2015, 47% of the UK's exports were destined to go to the EU collectively (£134 billion, 7.1% of GDP) (Office for National Statistics, 2017). This means that 53% went to the rest of the world, the UK having a trade surplus with 108 territories including Switzerland, South Korea and, most importantly, the USA. The USA is the UK's largest trading partner accounting for £59.3 billion of imports into the UK and a healthy surplus in the form of £96.4 billion of UK exports into the US market. By contrast, most EU member states have very small trading relationships with the UK—for example Estonia accounting for just £0.3 billion of exports and Greece £2.2 billion. South Korea, in the top 10 of the UK's trading partners, accounts for £6.3 billion of UK exports and is another country with which the balance of trade is very much in the UK's favour. Most UK–EU trade is with the small number of large economies and here the UK has major deficits with all the major EU economies; the largest deficit overall (in terms of global and EU markets) is in the UK's trading with Germany. It remains to be seen just how much of this will change and what the impact upon public sector managers will be. But the knockon effect from Brexit will affect EU, UK and other states’ regulation, environmental impact, employment and trade, all of which are the entities from which public management and finance flow. This issue of Public Money & Management (PMM) addresses some aspects of these points and also the wider comparative, and often, global concerns and discourse of public sector managers and academics.

Accordingly, we begin this issue with two EU-focused debate articles. Noel Hepworth (p. 80) discusses the issues surrounding improving financial management and control (FMC) as part of the EU's Public Internal Financial Control (PIFC), noting the significance of increasing the financial awareness of managers. The importance of financial literacy for policy-makers (politicians and senior managers included) being an essential constituent of the reform process in developing and transition countries. Michael Ambühl, Martin Gutmann and Daniela S. Scherer (p. 83) also examine the EU theme, but combine it with asking whether the Swiss model is viable and one for the UK to emulate after it secedes from the Union. They note that the ‘EU needs to ensure that a non-member cannot get a better deal than a member’, but the Swiss experience suggests that a solution ‘is achievable’ if both sides avoid all-or-nothing approaches. They note that just as the UK's accession to the EU was decisive for the Swiss, so the secession will also have a major impact on that country. In addition, not only will the UK have to secure a deal with the EU but also it will need deals with all the important non-EU trading partners and the Swiss model may signal a way forward. This reminds us that the British exit from the EU contains within itself the potential for painful consequences for EU member states (far more so than for the UK) as well as non-members, especially those dependent upon the UK for trade and political support.

Ulf Papenfuß, Marieke van Genugten, Johan de Kruijf and Sandra van Thiel (p. 87) explore the EU's initiative on gender diversity and senior salaries in public enterprises in The Netherlands and Germany. Their research suggests a mixed result, with the initiatives often not fully implemented. They recommend using a mix of hard and soft regulation options at the local and national levels across the EU. Jan Boon (p. 97) turns his attention to the governance of shared service centres, analysing the work and experience of both EU and wider scholarship on the topic. He notes the limitations of our current understanding and calls for further empirical research and theoretical understanding of this important managerial development. In its broadest interpretation, we remain with governance and public sector institutions’ responsiveness to citizen preferences with the paper by Louise Bringselius (p. 103), who discusses the importance of ethics alongside the three Es of efficiency, effectiveness and economy with regard to supreme audit institutions, expanding on the concept that ‘audit can really benefit society if auditors take a broader focus to include values beyond financial terms’. Persisting with the concept of accountability, Rodney Dormer (p. 111) applies it to a study of New Zealand's tertiary education institutions, recognizing the diversity of aspects to the concept and the different levels and functions where we must seek to find and support aspects of accountability. Clare Butler and Kathryn Haynes (p. 121) deliver an accounting paper that seeks to explore what is understood by the public and whether public value may be interpreted as a monetary or a moral concept. It is a topic with which public service accountants may wrestle and challenges more traditional perspective of professionalism and neutrality. Benedetta Bello, James Downe, Rhys Andrews and Steve Martin (p. 131) ask whether public service innovation can be driven by austerity, in other words: is austerity a driver in the new approaches to service delivery in English district councils? This is a particular focus on shared management teams, where they suggest that thus far savings have been modest, but there remains a greater potential to make more efficiencies as the innovations work through the system of sub-national government. Alessandro Spano and John Martin (p. 139) stay with the notion of austerity as a driver of change and look at the use of complementary currencies in local and regional government, a development spurred on by austerity measures. Alan Doig's paper (p. 147) returns to the thorny issue of corruption. In this case, he explores one UK region's response to various national strategies and, in particular, the climate post the 2006 Fraud Review, concluding that strategic approaches can only be considered a work in progress. (See p. 85 for a call for papers for a PMM theme on ‘Fraud and financial crime in the public sector’, which Alan Doig and Michael Levi are editing.)

This issue of PMM therefore addresses a range of questions, riddles, paradoxes and enigmas with which public sector managers and policy-makers wrestle. Each paper is also accompanied by our own innovation, a box that asks the authors to demonstrate the ‘real-world’ impact of their work. We note others are beginning to emulate this, which is pleasing. Let us hope that the suggestions and research contained in PMM also act as drivers for positive change.

Additional information

Notes on contributors

Andrew Massey

Andrew Massey is Editor of Public Money & Management and Professor of Public Administration, University of Exeter, UK.