Contracts and Competition? a Reflection on the Nature and Effects of Recent Legislation on Modes of Control in Schools

This paper seeks to examine the extent to which recent legislative changes have introduced ’the market’, as a mode of control or discipline, into schools. In exploring these recent changes the paper examines the legislation in the context of a wider set of factors affecting the public sector as a whole. Whilst earlier legislation provided some initial impetus, and later legislation consolidated the approach in important ways, the Education Reform Act (1988) (ERA) provides the centrepiece for one of the most profound set of changes in the organisation of the provision of education in schools in the UK since the creation of the welfare state at the end of the Second World War. This can be seen as part of an on-going attempt to reform the public sector of the UK as a whole (Greer, 1994; Zifcak, 1994) and as a part of a movement to change the organisation of the Public Sector in different countries across the world (Broadbent and Guthrie, 1992). In order to examine the extent to which the changes introduce elements of market based control we build a heuristic framework developing ’ideal type’ models of Markets Hierarchies and Clans, thus, developing the ideas of Ouchi (1979). We will argue that ERA and the subsequent and related legislation forms an initiative which, whilst justified by an appeal to market based control, is essentially neo-liberalist (Miller and Rose, 1991). Thus, under the guise of a delegation of responsibility, the legislation has a strong centralising tendency, as with all neoliberalist thinking, and is an approach which seeks to restrict the autonomy of professionals. Introduction. This paper seeks to examine the extent to which recent legislative changes have introduced ’the market’, as a mode of control or discipline, into schools. In exploring these recent changes the paper examines the legislation in the context of a wider set of factors affecting the public sector as a whole. Whilst earlier legislation provided some initial impetus, and later legislation consolidated the approach in important ways, the Education Reform Act (1988) (ERA) provides the centrepiece for one of the most profound set of changes in the organisation of the provision of education in schools in the UK since the creation of the welfare state at the end of the Second World War. This can be seen as part of an on-going attempt to reform the public sector of the UK as a whole (Greer, 1994; Zifcak, 1994) and as a part of a movement to change the organisation of the Public Sector in different countries across the world (Broadbent and Guthrie, 1992). This movement itself can be seen as having roots back into the ideas developed in the Fulton Report in the 1960’s. Much has been written about this 'New Public Management' (NPM) from a number of different perspectives. For example, Hood, (1991, 1995) provides a summary of the common elements which, he argues, seem to characterise it and these include a strong element of delegation of responsibilities to operating units, competition and private sector approaches. Humphrey, Miller and Scapens, (1993), give an overview of the way in which this 'accountable management' has developed in the UK pointing out the diversity of ways in which these common themes have developed in practice. A central theme of this paper will be to explore the detail of the application of the NPM in the particular context of Schools in the UK. In seeking to explore these changes the paper will consider the actuality of the implementation of ERA, given its legislative centrality in relation to schools and the focus will be on the modes of accountability and control which this legislation provides. It will be concerned to explore issues of control and accountability especially given the 'market' rhetoric developed by successive UK governments in the last 15 years. This rhetoric has claimed that government would seek to control the waste and inefficiency in the public sector by introducing the approaches of the private sector and the discipline of the market. Humphrey, Miller and Scapens provide a commentary which locates the public sector changes in their political context discussing the importance of ' Thatcherism'. They note the difficulty in defining any specific phenomenon which can neatly be described as ' Thatcherism', at the same time referring to many of the different commentaries on the subject, however, to them, there was a strong seam of market rhetoric in many of the initiatives around at that time. Perhaps the very existence of the debate as to the nature of 'Thatcherism' highlights that the 'reality' this approach which prompted so many changes lies in the strength of the ideologies used to justify the reforms themselves and build the rhetoric which surrounded their justification. The rhetoric of the market and of individual enterprise may have had no substance as concrete categories, but they achieved a reality in that they became a ’shorthand’ for a way of thinking and acting and organising. In this context the NPM emerged. This paper will seek to reflect on the nature of the changed accountabilities and controls which ERA and subsequent legislation created and will explore the extent to which they can be seen as reflective of the NPM. The extent to which ERA and the subsequent legislation, as a reflection of NPM, can actually be seen as an example of market control will be examined in some detail. In doing so we will seek to illustrate the differences between the actuality created and the rhetoric and justifications used to enable the implementation. The paper will argue that the strength of the prevailing ideologies at the time of ERA’s conception created an ’aura’ (Gallhofer and Haslam 1991) which enabled the implementation of the Reforms and will provide an illustration of the way in which the actuality contradicts the justifications. Our conclusion will be that ERA is an initiative which, whilst justified by an appeal to market based control, is essentially neo-liberalist (Miller and Rose, 1991) and that the subsequent legislation has consolidated the neo-liberalist thrust. Thus, under the guise of a delegation of responsibility, the legislation has a strong centralising tendency, as with all neo-liberalist thinking, and is an approach which seeks to restrict the autonomy of professionals. In order to achieve this task the paper will be structured in the following fashion. First the context from which these changes have been developed will be explored and the nature of neo-liberalism discussed. In the second section the paper will explore the nature of accountabilities and control which could be seen to exemplify the market approach. The framework provided by Ouchi (1979) will be used as a heuristic framework upon which to develop this theme and the extent to which NPM can be seen as aligned with market approaches to control will be discussed. A third section will be concerned with the reality of the changes in schools. The way in which control of the organisation of the educational process has changed will be illustrated and the extent to which ERA both conforms with NPM and can be seen as a market approach to control and accountability will be discussed. A final section will suggest that the actuality of the changes is that there has been an attempt to reconceptualise the activity of teaching in such a way as to render it amenable to a market approach by defining the outputs of the activity and seeking to make them integral in the generation of resources. This will be argued to be accompanied by an attempt to decrease the power of professional controls operated by teachers replacing it with more centralised control from government level. In this final section the implications of the changes will be raised and the argument will be presented that ERA and subsequent legislation and the controls and accountability which they develop are not examples of the market approach per se, but rather this is a disguise for strongly neo-liberalist tendencies. The Context from which ERA Emerged. A first point to be made is that education was perceived to be a problem in that it was not seen to be producing the calibre of person needed for a thriving economy. The debates engendered by the Callaghan speech at Ruskin college (1977) provide an early example of the perceived problem that education was not providing effective citizens and providing for the needs of manufacturing. This was a perception also prevalent in the USA (see for example the report of the National Commission for Excellence in Education, A Nation at Risk: The Imperative for Educational Reform , 1983) where the influential work of Chubb and Moe (1990) which praised the development of markets in education was developed. Other issues also need to be highlighted. In seeking to explore the contextual tapestry from which ERA emerged, the aim of this section of the paper will not be to suggest any tight causal links between the environment and the resulting legislation. It should again be emphasised that the existence of a set of problems does not necessarily lead to a particular solution, however there was some consensus that there were problems which impinged on the area. Perhaps one enduring issue in the background tapestry which conceived and enabled the changes was the perception of the fiscal crisis of the state (O’Connor, 1975) and the growing concern about the ability of the state to fund the level of public expenditure which the institutions of the welfare state were demanding. These demands were growing given the increased expectations of society and the technological advances in areas such as healthcare. At the same time was a slowing down of the economy and hence a decreasing amount of resource available to fund the demands which can be argued to have led to the need to find some way to limit the calls for increased expenditure in the public sector. This focuses our attention on the fact that one of the central concerns of the plethora of changes is one of cost containment and control. It also indicates why it was that the public sector was to be the focus of immense legislative activity. Given that it is a huge consumer of government resources curtailing public sector expenditure was an attractive proposition for central government. Of course, the attempts to control expenditure in the public sector could have taken any one of a number of different paths and the actual direction adopted could be seen to be influenced by a number of other factors which need to be considered. Not least of these is the ideological view of those in positions of power to implement changes and the taken-for-granted assumptions held about how this is best achieved. One early control strategy was to implement direct controls over the salary increases teachers were to be awarded and this resulted in a series of strikes by teachers in the 1970’s which were probably damaging for both the state and the teaching profession. Whilst these disputes were eventually settled their memory remains. The election of the Conservative Government in 1979 brought a new approach. The election of the new administration was accompanied by a rhetoric of a change. This rhetoric celebrated a move away from bureaucratic control over everyday life and to giving citizens more ’freedom’ to spend according to their own resources and priorities and the use of a market approach to force efficiencies into ’unresponsive’ bureaucratic organisations. The change was, however, seen by some commentators to herald the shift not towards markets per se, but towards neo-liberalism (Marquand, 1988). It certainly heralded the ascendancy of different sets of ideas as to how to deal with the problems of government. Using the work of Robert Reich, Marquand sees a broad change from a culture of equitable consumption to one of profitable production. Miller and Rose (1991) provide a careful analysis of the change, labelling it a move from ’ welfarism’ to ’neo-liberalism’ and detailing the modes of thinking which characterise the two orientations. They see the labels they apply not as descriptive of a set of well defined processes but as indicative of different ways of applying a rationality of government. Whilst their analysis does not claim to be exhaustive, and should not be taken as indicative of a direct and deterministic cause-effect relationship between the modes of thinking and the resulting modes of control, it does provide a backdrop which gives some indication as to why particular ways of seeking to control were seen as possible. This is entirely in the spirit of the aims of this section of the paper and for this reason some detail of the two modes will be provided. ’Welfarism’ is argued (Miller and Rose, 1991) to provide an ethic of citizenship in which the citizen is made responsible to society through an entitlement to a level of welfare; citizens being linked to society by mutual dependency and responsibility. The state had obligations to provide for its citizens, and the citizen provided the means for which to support the state in this endeavour. In a sense the citizen was trusted to be responsible. ’Neoliberals’ broadly saw this approach as promoting dependency of the individual on the state and of the state stifling individual enterprise and endeavour. A point which will prove important in discussing the modes of control which were implemented by ERA is that ’ neo-liberalism’ provides ’...a critique of a government machine at the mercy of professional interests who ceaselessly seek to extract increased resources and to grant more power to sectional groups’ Miller and Rose, 1991, p.129) Thus, in a neo-liberalist way of thinking, there is a distrust of the discretionary power of the professional. Given that much welfare provision was focused around activities in which professionals had an important input, (for example, health, social work as well as the main focus of this paper, education) then it follows that the changed modes of control had great implications for these groups. Paradoxically, as the quotation above illustrates, this approach also demonstrates a distrust of the state which is seen as prone to granting power to sectional groups. The focus iis very much on the individual. Because the emphasis of neo-liberalism is on the individual and her/his capacity for autonomous action and entrepreneurship, the notion of state planning is anathema and the vehicle of re-generation is the free functioning of a competitive market in which firms can efficiently respond to customer demand. Broad societal worries about the slowness of some of the large bureaucratic structures of the public sector to respond to consumer needs have meant that the rhetoric of the market, free from unnecessary regulation has been influential. Despite this, the need for a strong central regulatory framework is required and the means of control is through a managerial framework which sets out to ensure that the required outputs are achieved. Here we find a central contradiction in the neo-liberalist approach. This is signified by the tension between the claim that the purpose of neo-liberalism is to delegate power to individuals and the attendant tendency to ensure that little discretion actually accrues to those individuals. The rhetoric is one of decentralisation, of moving towards competing autonomous units in order to achieve efficiencies. In the context of the fall of the bureaucratic communist states of Eastern Europe centralised planning is frowned upon and the ’free hand’ of the market is heralded. The relationship between the individual and society is characterised by the role of the consumer not citizen and the linkage is a material one based on possession of wealth rather democratic and filial rights and obligations. In this situation the technology used to operationalise the ideology is that of the contract. The use of ’contracting out’ of services has been used to promote competition and efficiency and to downsize the bureaucratic structures of public sector organisations. The split between purchasers and providers of services has been used to promote the use of contractual forms of control and to suggest that local solutions can be sought for local problems. In his discussion of the ’Contracting State’ Harden (1992) notes that one of the uses of contract in public services is the pursuit of specific political objectives (p.xi). He notes that the language of contract has a largely ideological significance connoting individual rights and freedom of choice, pointing out it is essential to the functioning of the market. It is useful to note that the need to define outputs is also essential to the contracting process and the working of the market, if tight control is to be achieved by this approach. So, the election of the Thatcher Conservative Government brought forward a set of seemingly different approaches to the fiscal control of the nation and in this context introduced notions of monetarism and a rhetoric of entrepreneurialism and competition. The control of public expenditure was a central plank of this and in this context the Public Sector came under scrutiny and was over time subject to new management approaches. In essence new approaches to accountability and control were developed over a period of time and were not simply concomitant with this change of government, although could be argued to have been given an impetus by the new administration. The context of their emergence is made more complex because of this. Greer (1994) documents the development of new forms of organisation and control in Central Government in the UK, showing that the roots of change go back, as indicated in the introduction, to the Fulton Commission set up by the Labour government of the time and reporting in 1968. In this report the difference between policy making and the meeting of objectives at an operational level was explicitly raised. Despite their disparate roots, the election of the Thatcher Government and a Conservative administration developed this thrust in a very proactive manner. The Financial Management Initiative in 1982 developed the theme of having explicit objectives and an output measurement system. Issues of efficiency reached the agenda on the creation of the Efficiency Unit, headed initially by the then Sir Derek Rayner. The influence of the private sector was apparent in this appointment as Sir Derek was the joint managing director of Marks and Spencer (M&S). It is probably also fair to say that M&S has a good reputation with consumers as a reliable producer of good quality middle range goods. No doubt the hope was that this type of ethos and reputation could be passed to the public services which the Efficiency Unit was to scrutinise. This development was followed by the Next Steps Initiative in 1988 launching the move to a total separation of policy and provision of services through the creation of agencies which were to fulfil specified tasks, the relationship between agency and operator being contractually regulated. The contractual nature of the relationship required a focus on the nature of the task which should be specified, again focusing on the issue of output measurement. The Citizen’s Charter Initiative, launched in 1991, was perhaps another important element of the formal efforts to promote change in the public sector. This initiative aimed to improve the quality of public services and make them more amenable to user (or as they now became ’customer’) demand. Again the operationalising of this was through the specification of the service and the production of output measures and performance indicators. Given its importance in relation to the provision of education services in the past the situation of local government must not be forgotten. It should be recognised that in seeking to control total government expenditure, then central government had also to control local government expenditure and this led to conflict. The election of the conservative party to government led to attempts to contain the influence of local authorities, especially those of the left who were seen to be undermining the attempts to control the expenses of the public sector. The role of the Local Education Authorities (LEAs) in the control of education meant that tensions in this relationship are a particularly significant contextual factor in considering ERA and subsequent legislation in the field of education. It will be shown that one of the effects of ERA was to dilute the power of the LEAs by delegating financial control to schools. Thus, there was a rich and varied context from which the rhetoric of the market was developed and various formats of the NPM emerged . The notion that the market needed to be implemented to promote efficiency in the public sector was promulgated. Despite the fact that much was made of this linkage as both Marquand (1988) and Miller and Rose (1991) argue, it can be seen as problematic. In order to explore the nature of the change more closely we shall develop Ouchi’s (1979) framework of Markets, Hierarchies and Clans to allow us to reflect how closely the changes can be described by the term ’market’, A Framework of Accountability and Control. In seeking to examine the changes in control and accountability in schools our first task will be to provide a framework upon which to analyse the changes. In seeking to do this we shall bring together work which has previously been undertaken in regard to both the areas of accountability and control. The overall aim will be to provide a framework which allows both the consideration of the actuality within the organisations in question (the ’micro’ level of schools) as well as the broader adoption of these approaches in the ’macro’ context of the UK education service. One way of seeking to conceptualise the changes in control and accountability which have taken place is to develop the framework of markets, hierarchies and clans provided by Ouchi (1979) and in turn based on the work of Williamson (1975) and transaction cost economics. This framework will be used in part because the changes which have taken place on the macro level make great play on the desirability to move towards implementing a more market driven approach within the UK public sector. Ouchi’s framework is not seen as a tight analytic tool which describes in total the changes which have taken place, but is used as a heuristic device to typify three ideal-type approaches to control. Issues about accountability will be amalgamated into this framework. In any organisation the likelihood is that all three approaches will be present and that changing modes of control and accountability will change the relative balance of the different elements. The paper will be centrally concerned with this balance in the context of the changes engendered by the Education Reform Act. The three elements of the Ouchi framework are perhaps intuitively recognisable. Certainly the notions of market control and of bureaucracies are commonly used with little reflection. However, in order to enable a richer debate about the nature of the controls which are being implemented the categorisation given by Ouchi is helpful as it assists in clarifying the differences between all three categories. Ouchi’s framework is built as a two by two matrix formed by the intersection of two continua. The two elements of the framework are, first, the extent to which the transformation process which is undertaken in the activity is understood and, second, the extent to which it is possible to measure the outputs of the activity. Figure 1 illustrates this relationship Extent to which outputs are measurable __________________ Nature of understanding of process Easily measured Not measurable easily Process well understood Markets or hierarchies Hierarchies Process not well understood Markets Clans Figure I: Adaptation of Ouchi’s Framework. Where the transformation process is not well understood, but the outputs are easily identifiable then Ouchi would see the market mode of control as appropriate. Transaction costs economics would suggest that, in this case, a market is appropriate as the costs of contracting are less than the efficiency gains of competing. Where outputs are easy to recognise, then the costs of ’policing’ the value of the exchange and of comparing the offerings of different suppliers is easier to achieve. The approach assumes that there are multiple suppliers who will compete amongst themselves and that the rationality of the purchasers is such that ’efficiency’ will follow from the choice process in which they are involved. ’Efficiency’ implicitly seems to be a combination of lowest price and best quality and the elusive nature of this concept will be highlighted in the final discussion section of the paper. What is clear is that the mode of control which this ’ideal type’ encompasses is one in which the discipline over a supplier is one which is based on the ability of a purchaser to change allegiance quickly and easily to another ’better’ supplier with the corresponding financial implications. A ’better’ supplier is recognised because outputs can easily be identified. This contractual discipline is one in which there is an assumption of a lack of personal direct involvement in the disciplinary process. Responsibility, on the other hand, is individualised and in the context of a contract relates to the formal contractual terms. Where the outputs are difficult to define, but the transformation process is easy to understand then the approach which Ouchi suggests as appropriate is a hierarchical one. Transaction cost theory sees this approach as being appropriate in situations where efficiency is promoted not through repeated contracts but through the development of long term and stable relationships. In schools, for example, the hiring of a chemistry teacher is not something which would usually be seen as a process to be gone through by the repeated issuing of contracts for each class to be taught, thus the formal organisational structure of the school develops to enable a longer term relationship. The purchase of laboratory equipment, in contrast, as a one off exchange would more likely take place outside the organisational boundary. Bureaucracies are one example of hierarchical organisations. Here, discipline is provided by the on-going rules and regulations of the organisation and is one in which personal and direct relationships are likely to be involved, albeit in the context of the framework of rights and obligations set down in the hierarchy. Responsibilities are likely to be embedded in the systems of the organisation and will be individualised to the extent that they relate to the holders of roles within the organisation. Two other situations can be see to exist when Ouchi’s two dimensions are combined. Where there is a good understanding of the transformation process and a clear output he argues that either markets or hierarchies could be appropriate. Where neither of these two criteria apply then a category not found in transaction cost economics, the clan, is seen as the appropriate means of control. This type of control is one which is much more oriented to adherence to intersubjective norms through personal choice and self control as well as the pressure of peer groups. Professional groups provide an example of a situation where this type of control would be strongly in evidence. In this type of context the nature of the disciplinary process is likely to be interpersonal and effected through direct relationships. In the extreme the disciplinary processes will involve the expulsion of the individual from the peer group. Where the normative involvement is high this is a very strong discipline. It follows that the responsibilities are individualised but embedded in the norms of the group. In all of the three categories highlighted by Ouchi different forms of accountability will exist. Various analyses of approaches to accountability have been developed (Birkett, 1988; Laughlin, 1990; Pallot, 1991; Roberts, 1991; Stewart, 1984) but some common themes emerge suggesting a polarisation between contractual approaches to accountability in which there is some formal specification of the expectations of different parties and communal forms of accountability in which the expectations are more informal and relate to the normative expectations within the group. The work of Stewart is rather different and presents an analysis which is more related to the focus of the accountability rather than the nature of its expression. He uses the notion of a ladder, with different types and approaches to accountability which increasingly focus on the detailed activity of the actor who is held accountable. Thus at the lower ’rung’ of the ladder is an accountability which is concerned with probity and legality, here the actor can do whatever she wishes provided it is legal and her actions accord with views on probity. Process accountability comes next where the focus is on the means adopted by the accountable actor. Performance, programme and policy accountability focus more on the ends and the ethos of the activity. The differentiation between contractual and communal approaches to accountability along with the insights of Stewart’s ladder can both be used to enrich the illustration of the nature of the ’ideal types’ of market, hierarchical and clan controls. Thus, it can be argued that in a market approach to control, accountability is likely to be contractual in nature with a focus on performance, programme and policy accountability. This is possible because of the ability to define outputs and the focus of the whole approach on such outputs, the process by which outputs are achieved is to some extent secondary. In a clan, because of the centrality of shared values accountabilities are likely to be communal and relate to probity and legality. Hierarchies are more difficult to characterise in relation to contractual and communal accountabilities, but are likely to develop a more process based focus, accountabilities which focus on ends being difficult to implement where the ends (or outputs) are difficult to specify. In summary, the framework which will be used as a basis for discussion of the changing modes of control and accountability comprises the three elements defined by Ouchi. Market based control is seen as requiring a specification of outputs, in order that processes of exchange are possible and contracts are easily written and policed. Accountabilities are contractual in nature and responsibilities tend to be individualised. The discipline of the market is economic and relates to the threat of withdrawal of a resource base sufficient to survive if customer needs are not met. Where outputs cannot be easily specified but the process is well defined, contracts would be difficult to write and police and the on-going nature of relationships is such that economic efficiency is best achieved through the formation of a hierarchy. Here accountability is likely to be a mixture of contractual and communal approaches and have a process focus. Responsibilities are likely to be embedded in the roles of the system and discipline is embedded in the rules of the hierarchy. In a clan, control of the process and specification of outputs are both difficult to achieve and control is provided by the social and self controls promoted through the intersubjective norms of those who are members of the clan. Accountability is likely to be communal and embedded in those norms and responsibility lies with the individual, discipline being interpersonal. These elements are illustrated in Figure II. Market Hierarchy Clan Outputs easily measurable not easily measurable not easily measurable Process not well recognised easily recognisable not well recognised Accountability Contractual and performance and programme focused Process focused Communal and focused on probity and legality Responsibility Individualised Embedded in roles and responsibilities defined by system Embedded in norms and values defined by the group Transactions costs Minimised by the writing of new contracts for each transaction, thus promoting efficiency through competition Minimised by the formation of on-going relationships. Efficiency is the product of these relationships not competition. Figure II: Characteristics of the ’Ideal Type’ of the three categories These three categories provide templates with which to analyse the controls which existed prior to ERA as well as those which were created by its implementation. It should be re-emphasised that these are simply ’ideal types’ to enable a tighter analysis of the changes taking place. Equally any organisation will tend to contain all elements of the controls to a greater or lesser degree, what is important is the balance and weight of the three elements. Our argument is that one one level the intention of the broad thrust of NPM can be seen to be seeking to push the balance toward a market approach to control. Yet, as will become apparent, in actuality there are important elements of the changes which do not ’fit’ neatly with such an approach and which take the control towards a more neo-liberalist strategy, developing hierarchical and centralised controls of a particular nature. It is to this that we now turn. NPM and the ’Market’ Before turning specifically to schools, we first provide an overview of the wider intention of New Public Management (NPM), of which ERA and related legislation is just one element. As noted above, we shall argue that the overall thrust of NPM is to seek to move control and accountabilities away from a combination of clan and professionally supportive hierarchical modes and towards a mixture of market and managerial and, in the final analysis, neo-liberalist hierarchical forms. We shall argue that, in particular, there is an impetus to undermine the clan approach to control and accountability. To follow this argument we need first to develop a rather clearer understanding of what is meant by NPM. To do this we turn to the work of Hood (1991,1995) who, in explicating the changes which have affected the public sector, describes seven ‘doctrinal components’ of NPM. Whilst these might not be universally adopted in all situations they are elements which describe the common elements of the approach and they comprise: delegation to operational units, contracting, stress on private sector approaches, frugality of resource use, visible ‘hands-on’ top management, explicit measurable standards and measures of performance and, finally, greater emphasis on output controls. Dunleavy and Hood (1994) develop these ideas and discuss the move from the previous ‘administrative’ era to NPM seeing it as going ‘down group’ and ‘down grid’ (Dunleavy and Hood, 1994, p.9). By this they are describing the change from a previous era in which there was a highly distinct public sector group and in which there was a dense grid of procedural rules, arguing that in NPM this has been superceded. Instead NPM has sought to make the public sector less distinctive from the private sector, going ‘down group’; and to, in effect close down much of the discretionary power of individuals, going ‘down grid’. In going ‘down grid’ it is not that rules are abandoned, but that their nature is changed with the procedural rules which previously existed being replaced by ones which more formally specify outcomes. In the context of the framework for control developed (Fig II), the changes are ones which are seeking to move the activities away from a mixture of hierarchies and clan controls moving them towards a mixture of markets and hierarchies. In this move the nature of the hierarchy is changed from one which is supportive of professional discretion to one which seeks to control professionals and remove discretion. By seeking to move down grid and down group we can argue that the intention is to ‘reconstruct’ the activity in a market mode, a point which we will return to in the final section of the paper. In moving ‘down group’, towards private sector modes of control, the change is overtly characterised as one moving towards a market approach as commercial firms are claimed to operate in the ‘market place’ 1. In going ‘down grid’ there is a change in the nature of the rules which makes them ones which are more supportive of the market, stressing the nature of the outputs and regulating the contracting process. Accordingly, they are less supportive of the clan approach, the previous situation, where the rules and regulations would be geared to the maintenance of the norms and values of 1 This is a problematic assumption in many ways as it is quite clear that there are tight networks and long term relationships in the private sector. However, the intention remains, that in moving down group the desire is for more contractual, market relationships. the group and the on-going relationships. In summary, the approach now being developed is commensurate with the ideal type of the market, as described in Fig II. It is one in which outputs are specified which can be easily measurable, accountability is contractual and performance and programme focused, responsibility is individualised and efficiency is assumed to arise through the competitive demands of competition. The assumption is that transactions costs can be reduced by the demands of competition and the discipline of the market. The Rhetoric and the Reality of the Changes in Schools Having developed a framework to examine the changes of NPM this section will now turn to a consideration of the particular changes which affected schools. (a) Modes of Control and Accountability Prior to ERA. Our argument is that prior to the introduction of the Education Reform Act the balance of control in schools was biased towards hierarchy of an acceptable nature to the professions, with a significant element of clan control and a small market influence. These controls affected different aspects of schools activities in different ways. It should be recognised that the actuality of control in different places might differ from that described here which gives only the broad overview of the intention of the system. Also, although there have been changes to the system not all these elements have necessarily changed.