The Cascade of Fear: Policy Implementation and Financial Management Reform in the European Commission

• DOI: http://doi.org/10.1111/faam.12051
• Date: 01 May 2015
• Published date: 01 May 2015

Financial Accountability & Management, 31(2), May 2015, 0267-4424

The Cascade of Fear: Policy

Implementation and Financial

Management Reform in the

European Commission

ROGER P. LEVY,MICHAEL BARZELAY

AND ANTONIO-MARTIN PORRAS GOMEZ∗

Abstract: The complexity of managing European Union (EU) spending pro-

grammes is the subject of much comment but relatively little academic analysis.

Using a multi-disciplinary analytical framework drawn from the management, policy

and social sciences, this fieldwork-based case study examines the reform of financial

management within the European Commission. In constructing an agent focussed

narrative of a specific reform episode, it contributes to a growing literature on public

management reform analysed from this perspective and also to the lightly developed

field of EU financial management.

Keywords: financial management reform, European Commission

INTRODUCTION

With the exponential growth in the budget of the European Union (EU)

since the late 1970s, the EU’s executive arm (the European Commission,

‘the Commission’), has had to adapt to the managerial consequences of its

large spending programmes (Metcalfe, 1992; Cini, 1996; Laffan, 1997; Levy,

2000; Stevens and Stevens, 2001; and Nugent (ed.), 2000). Since the advent

of the Kinnock–Prodi reforms in 2000, there is now a considerable body of

literature on the Commission’s public management self-reform policies (Pollitt

and Bouckaert, 2004; Levy, 2002, 2003 and 2006; Bauer, 2006; Bauer (ed.), 2008;

Levy and Stevens, 2004; and Kassim, 2004 and 2008), although relatively little

∗The first and second authors are from the London School of Economics. The third author is

an Assistant Professor at the American University, Beirut.

Address for correspondence: Roger P. Levy, Department of Management, London School

of Economics, Houghton Street, London WC2A 2AE, UK.

e-mail: R.Levy1@lse.ac.uk

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THE CASCADE OF FEAR 151

of it focusses on financial management or treats the reforms as policy making

processes in their own right (Barzelay and Jacobsen, 2009; and Levy et al., 2011).

As urged over many years by the European Court of Auditors (‘ECA’ or

‘the Court’, the EU’s external auditor), the European Parliament’s Budgetary

Control Committee (COCOBU), net contributor Member States (e.g., the UK,

the Netherlands, Sweden), and external stakeholders such as the UK’s House

of Lords Select Committee on the European Communities, the Commission has

progressively adopted the rhetoric of the ‘3 Es’ and devoted ever more resources

to audit activities (Laffan, 2003; Levy, 2000; Davies et al., 2008; and House of

Lords, 2007). Thus, by 2008 over 10% of the staff of the Directorate-General

for Regional Policy (DG REGIO) was employed on these activities compared

to less than 5% in 2000 (M´

endez and Bachtler, 2011, p.753). Our interview

fieldwork here confirmed a doubling of audit staff in the Directorate-General

for Employment, Social Affairs and Equal Opportunities (DG EMPL) over the

same period. The apotheosis of this trend was the commitment by the first

Barroso Commission in 2005 to the objective of achieving a completely ‘clean’

set of accounts (in the parlance, a positive Declaration of Assurance), by 2009. To

this end, it adopted the Integrated Internal Control Framework (IICF) Action

Plan in 2006, based as it was on the ECA’s 2004 single audit model (ECA, 2004;

European Commission, 2006; and Levy et al., 2011).

At one level, the Commission’s acquisition of new management respon-

sibilities can be explained by standard European integration theory as a

‘spillover’ effect of an expanding supranational policy role (Haas, 1968; and

Lindberg, 1963). At another level, it has been identified as part of the broader

‘audit explosion’ (M´

endez and Bachtler, 2011), delineated in Power’s work

(Power, 1997), or of New Public Management (NPM) reforms in the OECD

generally (Pollitt and Bouckaert, 2004; Levy, 2002; Kassim, 2004; and Ellinas

and Suleiman, 2008). While neo-functionalist integration theory posits an

apolitical technical teleology beneath human agency with a Weberian rationale

for the resulting organisational form, NPM gives an alternative vision of the

spread of ‘private sector’ forms, norms and values, through an almost ‘social

movement’-like international trend springing from concerns about government

‘performance’ and high levels of spending (Hood, 1991; and Dunleavy and Hood,

1994).

These approaches offer some valuable general insights, but are not designed

to bring a sufficiently fine grained understanding of the specific management

forms developed and implemented for particular programmes, the sequencing

of these reforms, or the social mechanisms underlying human agency in these

processes. Thus, neo-functionalist predictions of centralised bureaucratic out-

comes resulting from incremental policy change in the EU are contradicted, for

example, by the simultaneous fragmentation and centralisation of management

structures precipitated by the organisational crisis in the Commission in 1999

(Levy, 2006). Suggesting entirely different outcomes, the NPM framework has

been developed in the context of the adaptation of pre-existing large scale

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