During the 1980s there was both centralization and decentralization in the British policy process. The centre was to be responsible for broad policy whilst the institutions in closest contact with those who consumed or used a service were to be responsible for implementation. This style was, in part, a reaction to the perception that organized interests acted as a severe restraint on the centre. Experience, however, demonstrated government's dependence on the cooperation of organized interests and their intermediate organizations. This article argues that effective policy-making requires the formation of intermediate organizations linking macro- and micro-institutions. These organizations are vital for communication, representation and negotiation and therefore they inevitably constrain the centre's freedom. Effective policy requires a partnership between the centre and sub-centre via intermediate institutions and these institutions are likely to become more important as decentralization continues. The role of intermediate institutions are explored via case studies of training and arts policy.