20 Public Management Reform in France

Marc Robinson
Published Date:
October 2007
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Benoît Chevauchez

Public sector reform (la réforme de l’Etat) is today a significant—although not dominant—theme of public debate in France. It is nonetheless an ambiguous term, denoting both change and modernization in public administration. The theme of public sector reform resurfaces periodically, with varying levels of intensity. Often, it is put forward as a slogan supposedly embodying a miracle solution for the ills besetting French society. The aspiration may be strong, but the specifics are usually lacking: there is little in the way of structured analysis, systematic vision, or comprehensive solutions. It is a theme of discussion only in the media and in intellectual and political circles. For the average citizen, public sector reform is of little genuine interest other than at the level of routine denunciations of “waste” and bureaucratic conservatism.

It is above all the French elite—government officials, graduates of the grandes écoles, and political insiders—which takes an interest in public sector reform. Over past decades, members of the elite have from time to time turned their attention to the subject in a deeper and more comprehensive manner than usual. Examples of this can be seen in the work of the “X-Crise” group in the 1930s, and also in that of the “club Jean Moulin” in the early 1960s. In the 1970s there was an attempt, spearheaded by economists from the Ministry of Finance and engineers from the Ministry of Infrastructure, to modernize budgeting under the banner of Rationalisation des Choix Budgétaires (RCB, Rationalization of Budgetary Choices), which was inspired by the US Planning, Programming, and Budgeting System. All of these efforts failed, however, because they were too exclusively technical and lacked political backing. More recently, an influential circle of government officials and academics have sought to disseminate within government analyses of the “sociology of organizations.”1

During several periods over the decades, significant public sector reform has actually taken place: after the liberation of France, when the civil service was restructured and ENA (Ecole Nationale d’Administration) established; in 1959 with the return of General de Gaulle;2 and, lastly, in 1983 when major decentralization reforms were implemented. Apart from these high points of reform, there has been a series of more incremental changes, arising, for example, from the redesign of organizational structures (with frequent splits and mergers of units), the work of numerous “axe committees,”3 as well as with the far-reaching impact of new information technologies. Nevertheless, although the structure and operations of the government have not remained static throughout these decades, there was until recently no movement for public sector reform that was organized, systematic, and underpinned by an overall philosophy.

This situation began to change in the late 1980s-early 1990s with the Renouveau du Service Public (Public Service Renewal) movement under the Michel Rocard government. This focused on the development of a public service with greater managerial freedom and accountability for performance, on service delivery (with users of public services recast as “customers”), on contracts rather than rules, and similar themes. These ideas were embodied in the establishment of “accountability contracts”4 between different levels of managerial responsibilities. Largely unnoticed by the wider public, this movement won the support of many senior civil servants, who still consider it a seminal milestone. However, it was not sustained and did not lead to genuine far-reaching changes.

Since that time, successive governments have maintained a small public sector reform unit (consisting of a few dozen people) associated with the Prime Minister’s office and linked to the general directorate of the civil service.5 Its work focused largely on issues such as organizational rationalization, service quality, and improving relations with “customers.” However, lacking credibility among the greater mass of public servants and without any political backing, public sector reform languished. A handful of senior civil servants—heirs of the Jean Moulin clubs, the RCB, and Renouveau du Service Public—kept the torch burning. From contacts with their colleagues from other countries and in international organizations, they discovered the “new public management.” However, even these reform enthusiasts were very pessimistic about the immediate prospects for genuine public sector reform in France.

The budget reform legislation of 2001—the Loi Organique relative aux Lois de Finances (Organic Law on Budget Laws, LOLF)—therefore came as something of a “bolt from the blue.” This was particularly the case because it was an initiative that originated outside the bureaucracy. The impetus for the LOLF came from the parliament itself, reflecting the frustration of parliamentarians who no longer accepted that parliament’s role should be confined to rubber-stamping faits accomplis. The aim of the reform was to restore parliament’s budgetary powers and, more specifically, to broaden its powers to amend budget bills and to strengthen its right to budgetary information. The roots of this lay in major constitutional changes effected in 1958-59 with the establishment of the Fifth Republic under President de Gaulle. These constitutional changes brought about a major transfer of power from parliament to the executive branch, as a reaction to parliamentary excesses under the Fourth Republic. Particularly relevant here is the 1959 budget law, which many members of parliament never really accepted. Parliamentary criticism focused particularly on a provision (Article 40 of the Constitution) that prohibited any amendment of the budget bill by parliament that would lead to increased expenditures. When interpreted strictly, this provision prevented even expenditure reallocations that increased expenditure on some items without increasing aggregate expenditure. It was hardly surprising that parliament’s limited role in the adoption of the budget came to be characterized as “Liturgy, Litany, Lethargy” (Edward Faure).

Prior to the LOLF of 2001, 35 proposals for budget law reform had been put forward by the members of parliament, most of them primarily to restore parliamentary powers in budgetary matters. Finally, and quite exceptionally in a country such as France, the right and the left alike agreed, in the period between 1998 and 2001, to unite and address the problem by adopting the LOLF.6

It is understandable that in these circumstances, the initial response of the Ministry of Economy, Finance, and Industry (MINEFI, with a staff of 175,000) to the draft LOLF was reticence. The proposal to restore parliament’s powers raised some concern about a weakening of aggregate expenditure discipline. The bureaucracy did not, however, take the bill terribly seriously at first, seeing it as merely the 36th installment in a series of insignificant and ultimately unsuccessful attempts to change the budget law. However, the energy and commitment of the proponents of reform, the consensus of majority and opposition parties, and—decisively—the support of the Prime Minister all combined to ultimately overcome the Ministry of Finance’s reluctance to revisit the 1959 organic law.

On the surface, the scope of the LOLF was apparently restricted to dry and technical matters of budgetary, accounting, and financial management (such as budget classification, more global budget appropriations, the expenditure process, accrual accounting, and the content of the budget documentation). Nowhere in the 68 Articles of the law was there any reference to the far-reaching changes in administrative structures, the civil service, or the broader system of governance that today appear as essential elements of the public sector reforms initiated by the LOLF. The 1959 organic law that the LOLF replaced was concerned only with budgeting, and the aims of the parliamentarians who worked during 2000-01 to secure the passage of the LOLF appeared also to be focused on budgeting rather than on broader public sector reform.7

It is therefore hardly surprising that few government officials at the time believed that passage of the LOLF would lead to broader public sector reform. However, during the four years of discussion and preparatory work from time of passage of the LOLF through parliament and its full entry into force on January 1, 2006, everyone gradually came to discover the true scope of a law that, if fully put into effect, would inevitably lead to substantial changes in the French public administration. It has thus become gradually apparent that in France performance budgeting reform will bring with it far-reaching changes that extend well beyond the technical realm in which it originated.

There are three key areas where this seemingly technical budgeting reform has led to much broader changes. These are the civil service, organization of government, and the government/policy relationship.

The civil service

By placing “the end before the means,” performance budgeting lays the organizational groundwork in all areas of government operations for a trade-off between efficiency and control: there is a greater demand for government units to perform well, but in exchange for this demand, they are given greater freedom in their control of resources.

The most important of these freedoms is the “fungibility” of appropriations—that is, the removal (with certain exceptions8) of line-item controls by permitting spending agencies to transfer funds from one line-item category to another. For French managers, this was the main concrete innovation of the LOLF. The introduction of fungible appropriations led to a decision, taken after some hesitation, to do away almost entirely with what remained of the French system of ex-ante financial control.9 Under this system, established in 1922, spending ministries required the prior approval of MoF financial controllers (posted within their organizations) before they could enter into expenditure commitments. This system had already been relaxed somewhat some years prior to the passage of the LOLF. However, appropriation fungibility eliminated the raison d’être for even this somewhat less strict form of ex-ante financial control.

However, although the LOLF deliberately increases managerial freedom, it does so only within the realm of the budget. Increasing budgetary freedom was not enough to meet all the requirements of government managers for greater managerial flexibility to meet new challenges and responsibilities. In France, as in many other countries, many of the strictures that constrain public management have their origins elsewhere than in budgetary rules. These strictures derive from rules and regulations covering such matters as public procurement, procedures for initiating and managing capital projects, the use of supplies and services, recruitment, personnel management, working hours, compensation scales, travel allowances, and so on. These standards, which are set not only by the Ministry of Finance, but also by other government units, and in particular by the Ministry of the Civil Service, are generally centralized and very rigid and therefore incompatible with “performance-based” management, which advocates instead the freedom to use resources to meet the demands of performance management. The relaxation of regulatory constraints on public management is consistent with the rationale of the LOLF. There has already been some movement in this direction in France since the passage of the LOLF (specifically, reform of the public procurement code, new rules for real estate management, and more flexible compensation arrangements, mainly for professionals). However, these developments still fall well short of meeting the aspirations of public managers, who are now generally supportive of the idea of reduced control to facilitate improved efficiency.

Before turning to the specific areas in which greater freedom is required, it should be stressed that increased flexibility does not mean ignoring the need to comply with some basic rules and fundamental laws. Resource use must continue to be regulated, and the fundamental principles of public service—neutrality, equity, continuity—must naturally be maintained. Furthermore, the quid pro quo for increased freedom must be increased transparency and accountability in respect to performance. Finally, the march toward increased managerial flexibility should be gradual and in tandem with progress in terms of results. The better an agency’s performance, the more it can be freed of centralized regulatory constraints.

More flexibility in the civil service

In concrete terms, the area in which French managers run up against the greatest rigidities in the exercise of their daily responsibilities is human resource management. In service industries, whether in the public or private sector, human resources constitute the most important factor of production and their proper use is therefore the key determinant of success or failure. Managers, moreover, cannot be held responsible for results unless they are also given more freedom to manage the main resource used in the production process. French managers strongly demand greater freedom in the selection of their team members. At present, their authority in this area is very limited because personnel assignments are largely based on broad, centralized, and opaque mechanisms, notwithstanding that everyone knows that building competent and cohesive teams should be one of the major responsibilities of any manager. The other legitimate demand of managers in the French civil service concerns the way compensation is decided. Compensation decisions are currently centralized and rigid. Managers demand a role in compensation decisions in order to establish a link between each team member’s contribution to the work unit’s results and the compensation that team member receives.

Of course, this deregulation of management and the civil service is acceptable only if managers’ accountability is reinforced by a system of incentives. The move from a traditional system based on distrust of managers (with a plethora of ex-ante controls of resources) to a new system based on trust (supported by ex-post accountability for results) can be envisaged only if performance leads to rewards or sanctions. Without incentives, ex-post accountability would be a purely academic exercise with no effect on actual managerial and professional behavior. While these principles are easy to articulate, implementing them is a more difficult matter. The system of incentives to be devised should be neither repressive nor demeaning, but should instead send the right signals to encourage effective and equitable management of government units by those in charge. The fundamental issue of accountability goes to the very heart of the culture and rules of the French civil service. The organizers of an important colloquium held in France in the summer of 2005 were not mistaken when they titled their conference “Accountability: The Other Reform,” thus emphasizing that the success of the LOLF ultimately depends on setting up a completely new accountability/incentives system.

In reality, however, there have been over recent years been only a handful of limited changes in the French civil service, which remains characterized by the “career service” model (jobs for life, automatic advancement, rigid rules covering appointment and remuneration, compartmentalization of staff into narrow categories). Only very recently has the possibility of more far-reaching changes been raised. An important 2003 report of the Conseil d’Etat addressed the need for reduction of staffing levels, the simplification of rules, and increased use of contractual employment. However, for cultural and social reasons, such changes are difficult and no major changes have yet been implemented. The public stance of the authorities continues to be that the implementation of the LOLF does not imply any need to modify the civil service system, but if there is ultimately a move in the direction of civil service reform, the 2003 report should prove a valuable source of inspiration.

However, civil service reform does in fact seem an inevitable corollary to the LOLF. The traditional French civil service arrangements and the traditional budgeting systems embodied in the 1959 budget law were the two “pillars” of the post-war French of governance. Changes in the traditional budget system therefore call into question the traditional civil service system. If there is to be a performance-oriented budget, there must also be a performance-oriented civil service. More far-reaching reform of the civil service could thus emerge in coming years as the new frontier of public sector reform in France.

The LOLF has also had other consequences beyond the realm of budgeting—particularly in respect to the way ministries are organized and the relationship between the government and policy.

Organization of government

The introduction of performance budgeting must lead to sweeping changes in the distribution of powers and responsibilities in public administrations. As the French experience has shown, budget reform leads to at least two types of changes in the organization of government:

  • the redesign of government agencies to make them customer-oriented rather than a producer-oriented

  • the search for a new balance between the vertical and horizontal approaches to public policy management.

Organizational review

The implementation of performance budgeting has shaken up organizational structures, leading to changes in the distribution of powers and responsibilities between and within ministries. The pre-LOLF structures of directorates and ministries were not always built around clear and coherent public policy objectives, and often represented somewhat random configurations that could be explained only by historical evolution. Some organizational units contribute to several quite divergent government policy objectives. For example, the customs agency participates in tax collection and contributes to domestic security. Conversely, responsibility for some key policy objectives is in some cases split between several different agencies. Domestic security, for example, is the responsibility of several ministries: the Ministry of the Interior (which embraces the police), the Ministry of Defense (the gendarmerie), and the Ministry of Finance (the customs service). The new budget classification deliberately ignores these administrative divisions. Organized around comprehensive and coherent public policy objectives, it groups appropriations into missions and programs (“program” generically in what follows) which are focused on the services provided to users/citizens. By contrast, government organizational structures are often built around production processes and the constraints imposed by civil service regulations and processes. This disconnect between programs structures and organizational structures can in theory be addressed by two types of radical solution: programs can be made to fit the organizational structure or the organizational structure can be made to fit the programs. There are advantages and disadvantages to each of the two options: the first may quite simply prove incompatible with the performance budgeting approach, while the second can lead to sweeping changes in the administrative structure, with the attendant cultural, managerial, and social difficulties. The expectation in France has been that the structure of the organizational charts is logically expected to adapt to the contours of the programs.10 However, in practice, after several months of fits and starts following the passage of the LOLF, compromise solutions lying between the two radical solutions have had to be found in France.

The managerial, political, and social ramifications of the consequences of budget classification for the organizational structure of public administration should not be underestimated. One recent French example illustrates the heavy impact that such apparently technical appearance matters can have on the political leadership of these administrative reforms.

For over two centuries, French financial administration—that is, the administration of public monies for both the central and local governments—has been divided into two services: one that assesses and audits taxes (the Directorate General of Taxes—DGI, with a staff of 75,000) and one that collects revenue and pays expenses (the Directorate General of Govenment Accounts—DGCP, with a staff of 56,000). This division of labor, based on historical considerations, has serious drawbacks, particularly in terms of cost. For the government, it resulted in a costly duplication of effort. For citizens, it leads to a need to deal with two agencies in a context where, in most other countries, there would be “one-stop shop” service. Recognition of this problem analysis led the government to attempt in 2000 (that is, prior to the LOLF) to resolve the problem. However, the magnitude of this attempted reform, tactical errors made in implementing it, and the traditional conservatism of French civil servants unions all combined to lead to failure after several weeks of strikes and the resignation of the Minister of Finance. This experience led to a deep trauma that fueled fears that this reform, although a good thing, was completely dead.

Rather surprisingly, the development of the new LOLF budget classification has led to progress in addressing the problem. After much hesitation prompted by the fear of revisiting a topic that had proved so volatile, it was decided to establish a program entitled “Public Finance Management,” the purpose of which would be to collect taxes and manage public funds and which would pool the resources of both the DGI and the DGCP. Consistent with this, one program manager was appointed to oversee both directorates.11 The two organizations remain separate. However, their budgetary resources, and their wage bill in particular, are being combined and managed by a single manager. The eventual merger of the DGI and the DGCP seems likely.

The thorny issue of “multipurpose agencies”

Another issue encountered in France warrants emphasis here because it is probably common to many countries—that of multipurpose agencies. As noted above, certain agencies contribute to very different public policy objectives. The example was mentioned of the dual roles of the customs agency in collecting taxes and contributing to domestic security. Other examples are the technical agencies of the Ministries of Agriculture and Industry, which contribute not only to enterprise and job creation, but also to environmental protection. There are several explanations for this situation, the most important of which is the strength of the production-oriented approach (based on competencies and skills) in the structuring of large organizations. Whenever, throughout the history of the formation of governments and public services, a new public policy need has emerged, it has often seemed wise to avoid establishing new agencies, and to see instead to what extent existing government units possess the resources and competencies needed. This may be a common-sense approach. However, a customer-oriented, program-based budget structure is not always consistent with such a producer-oriented way of organizing work. Of course, the solution to this problem does not necessarily consist in dividing the agency concerned into two entities. Such a solution, although sometimes appropriate, will often be too costly. A readier solution is to finance the multipurpose agency using two different budgetary appropriation lines. The issue becomes complicated, however, when a single staff member is contributing simultaneously to the achievement of two different policy objectives. For example, should the customs officer who stops and inspects freight trucks at the border receive his salary in two installments—one for his contribution to a revenue-collection objective, the other for his contribution to combating smuggling? Various pragmatic solutions consistent with the theoretical requirements of performance budgeting are of course possible, but therein lies a tangible difficulty which will often require much effort and imagination to develop appropriate practical solutions (cost accounting, charge back, outsourcing, and so on).

This issue of multipurpose units is not simply a technical question of how to allocate costs and financing. It also raises even more difficult managerial issues. Managing an organization that pursues several goals, some of which might even be contradictory, is no mean feat: what are the priorities? What objectives should teams focus on? To whom should conflicts between “programs” be referred?

Rethinking “functional” directorates

The funding of support functions raises issues similar to those raised by multipurpose units.12 In France, the term “support function” refers to two rather different types of units: first, the top leadership of the ministry (the minister, his personal staff, the strategic bodies, and so on) and, second, the units such as property management, information technology, human resource management, and legal counsel that support the work of the various operational directorates. Maintaining single support units of this type, which serve all of the operational directorates of the ministry concerned, may seem desirable for technical, economic, and political reasons. The question then becomes one of finding out how to finance them and, in particular, to what line of a budget classification they should be allocated in a performance budgeting scenario. Since, for the most part, these units do not deal directly with the end user but instead work for the benefit of the operational directorates, the clearest theoretical solution would be for the operational directorates to fund such units through a charge-back system. This is how the headquarters or holding companies of large private groups are financed: their expenses are covered by contributions in various forms from the subsidiaries for whose benefit the headquarters is supposed to act. The French government did not go this far in its implementation of the LOLF. Under the new budget classification, it settled for creating specific appropriations lines for “support programs.” This soft option has, however, been criticized and may only be provisional.

Under the LOLF, the functional units now have another more serious problem with which to contend. It is no longer just their financing arrangements that are posing a problem. Rather, their very existence is now an issue.

With the advent of performance budgeting, the role and place of functional services—and in particular “finances” and “personnel”—are changing. Today, these directorates, generally discreet but powerful, wield almost exclusive authority over the budgetary and human resources that they manage. However, in the years to come, the responsibility for managing these areas should be largely transferred to the “operational” directorates, those that implement public policies directly and assume responsibility for the “programs.” The slogan for performance budgeting, “each minister must become his own finance minister,” must be applied across the board: “each program director must become his own budget director.” In France, the creation in most ministries of the position of “general secretary,”13 while not a direct result of the LOLF, is particularly relevant given the profound structural changes brought about by budget reform. The appointment of general secretaries introduces a cross-cutting management approach in areas where the new programs structure sometimes encourages an excessively vertical management approach.

The dangers of verticalism

Verticalism—to coin a new term—is one of the great dangers for performance budgeting in France. French prefects14 expressed great concern about verticalism at the very start of implementation of the reform. They reasoned that, with the advent of performance budgeting, each sectoral policy (agricultural development, transport, education, and so on) would be driven by overarching national objectives and the results achieved would be more closely monitored than in the past. The performance of officials working at the local level would be assessed and rewarded or penalized based on their success in achieving nationally defined goals and targets. The obvious danger was that these officials would focus their energy on achieving the national targets at the expense of local conditions. The responsibility of the prefects—coordination of ministries’ local policies, adjustment of national priorities to specific territorial circumstances, and so on—therefore at first seemed inconsistent with the performance budgeting approach. A tense debate arose between the Ministry of the Interior and the Ministry of Finance in the years following passage of the LOLF. Ultimately, a compromise was reached, based on two concrete measures. First, the prefects would be recognized as partners in the preparation of the budgets of the ministries’ local units. Second, they would have a [small] non-specific appropriations envelope that they would be permitted to use to address local priorities not sufficiently recognized in the national ministerial budgets.

In sum, the impact of performance budgeting on the organization of governments is a study in contrasts. The reorganization of services based on user needs and expectations is clearly the most positive aspect. However, everyone must bear in mind the risk of over-compartmentalization of public policies. Performance budgeting does not lead spontaneously to intersectoral consistency and to adjustment to specific local circumstances and constraints. Any structure and/or procedure intended to reinstate some horizontal view where verticalism is looming warrants attention.

The organization of ministries and central government units—over and above the merely financial aspect—will therefore be profoundly affected by the “public management” component of the LOLF.

The government/policy relationship

Performance budgeting affects not only public management but also public governance. In countries such as France, where politics and public administration are traditionally intertwined, the implementation of these new principles should bring about a profound change in the relationship between public servants and elected officials.

More emphasis on results first requires a clearer definition of public policy objectives, which should lead to the clarification of options, the setting of priorities, and the elimination of any ambiguities. The way public policy objectives are now set is often too general, unclear, ambiguous, and even contradictory. It contrasts with the performance-oriented approach, which dictates that objectives targeted through each of the public policies implemented by the central government must be clarified explicitly, in detail, and in quantitative terms. The LOLF therefore requires bold and responsible leadership.

Although politicians did not become spontaneously aware of this need, public servants, especially the program managers, can be counted on to raise awareness of this issue. If French government managers are to be prepared—as seems to be the case—to play the game of accountability, it will be on the condition that the objectives against which they are to be assessed and rewarded or sanctioned are clear, consistent, and achievable. A rigorous but fruitful dialogue should therefore take place between the politician who guides and monitors and the public servant who implements. The politician must demand results and the public servant must insist on the clarity of the objectives assigned to him.

More direct communication between public servants and parliamentarians

Significant change could also take place in the distribution of roles and responsibilities between parliamentarians, ministers, and public servants. Under the traditional arrangements that prevail in France today, things are simple: public servants are accountable to ministers, who issue them instructions and assess their performance; the minister in turn is accountable, along with the rest of government, to parliament. In this chain of accountability, typical of parliamentary democracy, public servants and parliamentarians, at least in theory, ignore each other. The LOLF, however, encourages unprecedented direct interaction between public servants and parliamentarians. From as early as 2001 there have been many indications that program managers would be questioned directly by parliamentarians on the objectives and results of the public policies entrusted to them, in line with practice abroad (especially in the United States). Granted, this development seems natural and consistent with the LOLF’s spirit of accountability and transparency, and program managers will consider it flattering because of the visibility it will give their actions. This is not, however, without risk, as it is always possible that the minister and the public servant will not agree. In the relationship between the parliamentarian, the minister, and the public servant, the substitution of a new triangular construct for the classic linear relationship deserves to be closely monitored.

In any event, the LOLF is bringing to the fore a new category of super-high-ranking officials. Eighty “program managers”15 pivotally positioned between the administration and politicians are to play an essential role in the reform. They can be expected to firmly assert their responsibility for implementing the strategy on which they will be judged. In this respect, the role and weight of the ministerial cabinets will have to be limited to prevent them from continuing to interfere in the management of staff, which is to be the purview of the program managers.16

The fact that the LOLF may remedy one of the recurring weaknesses of the French public governance is a clear sign that this is no mere technical reform.

Performance budgeting means permanent reform

The LOLF also leads to major changes in the annual budget decision-making process: the introduction of the “first euro budgeting” system,17 inspired by zero-base budgeting, and the concomitant elimination of incremental budgeting. Coming at a time of budget stringency, these innovations introduced by the LOLF will complete the transformation of the budgetary procedure already underway since the Maastricht Treaty’s Stability and Growth Pact. The purpose of the budgetary procedure is no longer to distribute supplementary appropriation margins generated by growth, but rather to achieve savings that can be used to finance government priorities. After years during which savings were achieved merely by cutting appropriations at the margin without substantially changing expenditure priorities, savings will in future need to be made mostly through structural reforms. The purpose of the new budgetary procedure established by the LOLF is to now to enable the government—and in particular the Prime Minister—to identify all conceivable reforms each year and decide which ones seem to be the most suitable for implementation: performance budgeting reform could itself become a “reform machine.”

It would seem, therefore, that in France, public sector reform and budget reform are fast becoming synonymous.

What conclusions should be drawn?

One should not exaggerate the broader international relevance of the French case study discussed in this chapter. French government has very strong national features; long and deeply rooted traditions; a highly specific institutional, political, and cultural context; and its own way of conceiving change. These specific characteristics limit the scope of the broader lessons one might be tempted to draw. It is nevertheless impossible to resist the temptation of drawing a few lessons from this analysis of the French experience. One is that performance budgeting reform is not merely a technical reform. Performance budgeting is a systemic reform that affects all public management and public governance. It leads to a re-examination of the powers and responsibilities of all stakeholders, and goes to the very heart of the architecture of public organizations.

If, in a given country, a performance budgeting reform were to have no effect—in the medium term—on any of the three areas of public administration discussed in this chapter, one could conclude that the reform was no more than superficial. It is perfectly possibly to put a huge amount of effort into changing mechanisms and procedures, creating new documents, remodeling information technology systems and the like, without ultimately bringing about any real change. The sign of a successful budget performance reform is that it has led to wide-ranging and deep impacts on management and public governance—perhaps including in areas where they are least expected.

In principle, one should seek to consider all of the likely ramifications of performance budgeting reforms when embarking out on the path to reform. In practical terms, however, this can be difficult. A reform of this type is a dynamic process that develops over time. It would be wishful thinking to believe that it was possible to plan everything in detail in advance. It is certainly necessary to start with clear, simple, and solid principles, recognized by all, which will serve as a guide for the entire reform process. However, it is inevitable that many difficult challenges will become apparent only during the actual reform process, and solutions to these changes will have to be improvised over time, often on a case-by-case basis.

Finally, because budget reform is actually a form of broader public sector reform, consideration must be given to the role of the Ministry of Finance in leading the process. Admittedly, there are good arguments in favor of Ministries of Finance assuming the lead role in public sector reform. Fiscal restraint is often both the trigger and the expected result of the reforms. Finance ministries have a number of tools and levers to force reform; and their public servants tend to be highly competent and talented. Nevertheless, it must be recognized that the image of the financial agencies is not always the best suited to encourage others to change. Other government agencies will not necessarily recognize the legitimacy of the leadership role of a ministry that they may see as stubbornly bureaucratic, out of touch with users’ real needs, and sensitive only to the accounting view of the government. This suggests that the involvement of the Ministry of Finance is necessary but not sufficient for the success of public sector reform.

In France, the formation of a new government in June 2005, headed by Dominique de Villepin, brought with it a clear and formal response to the issue at hand. Public sector reform and budget reform would be under the authority of a single minister, the Minister of the Budget, whereas previously public sector reform had been the responsibility of the Minister of the Civil Service. This decision was presented as “an absorption of the budget directorate by the ministry of public sector reform.” A general directorate of government modernization was established, which brought together the Delegation for Public Sector Reform18 with the Budgetary Reform Directorate, which had been set up in January 2003 to implement the LOLF. This rapprochement—a first in France—should give greater coherence to the reform program. It clearly demonstrated the conviction of government leaders that the LOLF would prove an instrument of broader public sector reform.


Largely inspired by the works of Michel Crozier.

The introduction of the role of regional prefect, town and country planning, and so on.

This generic term refers to the working groups or committees created from time to time—often at the suggestion of the Ministry of Finance—to identify and eliminate redundant administrative units or reduce their resource allocations. Experience indicates that the outcomes are generally disappointing.

Circular of February 23, 1989.

Known variously as the “Agency” [Commissariat] or “Delegation” [Délégation] for Public Sector Reform.

Law of August 1, 2001.

It bears noting, however, that A. Lambert, a senator and later Minister of the Budget and Budget Reform, considered budget reform a “prerequisite” to public sector reform.

In particular, the “asymmetric fungibility” provision governing wage expenditure, whereby agencies may not shift money from other input categories to wages, although the reverse in permitted. See Chapter 11 by Brice Lannaud.

Decree of January 27, 2005.

The restructuring of the central administration of the Ministry of National Education undertaken in France following implementation of the LOLF is one example of the impact of performance budgeting on administrative organization.

In the first instance, the General Secretary of the Ministry of Finance was appointed to this position—which clearly represents a temporary solution to the problem.

These issues are developed more broadly in Chapter 2.

General secretaries are senior officials who report directly to the minister and are responsible for managing the human and budgetary resources of all units. With rare exceptions, the general secretary has no say in the content of public policy.

In France, the prefect—a classic feature of the Napoleonic system of government—serves as the government’s representative in the regions (22) and departments (98). Prefects have authority over the local representatives (external services) of each ministry and coordinate the latter’s activities, while ensuring that the conditions are right for implementing national public policies at the local level.

A total of 80 managers for 132 programs, with some managers responsible for several programs.

The report by Alain Lambert and Didier Migaud on the implementation of the LOLF (Rapport sur la mise en oeuvre de la LOLF, September 2005) contains interesting proposals in this regard.

Which now draws inspiration from the zero-base budgeting method for its “justification of the first euro of expenditure” approach.

Delegation for the Modernization of Public Management and Government Agencies: Delegation for Users and Administrative Simplification; Agency for the Development of E-government.

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