New Public Financial Management financial definition of New Public Financial Management
new public management (redirected from New Public Financial Management)
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new public management a new approach to the administration and delivery of public services which has found favour in the UK and elsewhere in the last fifteen years, and can be contrasted with ‘old’ public administration. Its hallmark is greater emphasis on private sector styles of management and efficiency. Large public bureaucracies with centralized decision-making have been broken up into smaller units with each unit operating at ‘arms-length’ from each other on the basis of explicit contracts, as in UK central government (see AGENCY STATUS) and the health service. These contracts typically include a range of output targets, and the organizations' achievement of these is measured by a set of PERFORMANCE INDICATORS. Competitive pressures have been increased in these organizations by the use of COMPETITIVE TENDERING which in some cases has resulted in private sector firms taking over the delivery of public services. The rationale for these changes is that the costs of public service provision will be easier to identify and hence to reduce. Furthermore, the fragmentation of public organizations will facilitate flexibility, and hence make service delivery more effective and efficient. An important component of the new public management has been a new approach to industrial relations: PERFORMANCE-RELATED PAY has been increasingly adopted in place of standardized pay systems. Critics of new public management argue, however, that the emphasis on entrepreneurial styles of management could weaken the commitment of public sector employees to disinterested public service, and at the extreme encourage corruption. See also CITIZENS' CHARTER.