Strong Local Government - Quality Public Services

Strong Local Leadership –Quality Public Services

Presented to Parliament by the Secretary of State for Transport, Local Government and the Regions,

by Command of Her Majesty.December 2001

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December 2001

This white papersets out a new

vision for localgovernment at thebeginning of the21st Century. Itseeks to establish apartnershipbetween centraland localgovernment,reflecting the

critical importance of local authorities as a tierof democratic government, delivering highquality public services to local people.

Democratically-elected councils are part of thefabric of our communities. The services theyprovide have a vital part to play in sustainingand enhancing the social and economicprospects and environmental quality of ourtowns, cities and countryside. They can have aprofound effect on the opportunities and qualityof life of the people who live and work there.

People want good standards of education, safecommunities, efficient transport systems andhigh quality care for the vulnerable in oursociety. They want clean streets, decent housing,good leisure and cultural facilities, and well-planned neighbourhoods. They want theirvoices to be heard when decisions are madeabout how these services are delivered, and theywant someone looking after and speaking up forthe interests of their communities.

People therefore expect a great deal from theircouncil. And those expectations are rising. Tomeet them, councils have constantly to seeknew and more effective ways to delivercustomer-focused services and lead theircommunities. The proposals in this white paperwill provide a framework in which all can do so,through the application of the Government’sfour principles of public services reform:

Establishing a national framework of standardsand accountability for the delivery of highquality services and effective communityleadership

Within this framework, devolution to localcouncils to encourage diversity and creativity,giving them the freedom they need to respond toand meet their communities’ needs.

Building local capacity in recognition of theneed for flexibility at the front-line to exploitthe opportunities we are opening up, and deliverthe improved services and effective leadershipwe all want to see.

And more choice for customers, with access toan alternative supplier where performance fallsbelow acceptable standards.

The implementation of this white paper will seegreater freedoms for high performing councils,incentives to support the achievement ofstretching targets, focused attention wherecouncils are struggling, and effectiveintervention to tackle failure.

These proposals form part of the Government’sagenda for modernisation and reform. For many,they will be challenging. They are meant to be.We propose these changes not for their ownsake, but because local people will benefit. Fromthe requirement that all services should bedelivered to an acceptable standard. From thefact that the changes we all really want to see –better schools and social care, improved localenvironments, better transport and other vitallocal services – will get the priority they deserve.And from effective community leadership bycouncils in touch with local people and workingto meet their aspirations.

I want to see central and local governmentworking together in a constructive partnership todeliver high the quality public services that localpeople have the right to expect. In a practicalway this white paper shows how we can do so.

Tony Blair

Foreword

CONTENTS

PART I Pages 7 to 60

PART II Pages 61 to 139

CONTENTS: PART I

CHAPTER 1

Introduction 9

CHAPTER 2

Leading and empowering communities 13

CHAPTER 3

Quality public services 23

CHAPTER 4

Freedom to deliver 40

CHAPTER 5

Support for councils 47

CHAPTER 6

Investing for improvement 51

CHAPTER 7

Working together for better outcomes 56

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Strengthening localgovernment1.1. The Government wants to see strong,vibrant, innovative and responsive localgovernment delivering the quality of localleadership and public services that theircommunities need. Councils are run by peopleelected by the local community. That gives thema unique role and responsibility to respond tolocal needs and circumstances, and to providethe leadership that helps to create and supportthriving communities.

1.2. The proof that they can do so is allaround us. In the magnificent municipalachievements of the nineteenth century. In thecontribution that councils made to theestablishment of our welfare system andeconomic prosperity in the last century. And it isthere today in the things which councils up anddown the country do day in and day out to helpmake peoples’ lives better.

1.3. Four years ago councils were not wellplaced to respond to the Government’s vision ofsuccessful local government. The resources theyneeded for essential investment were not inplace. An effective, constructive partnershipbetween central and local government did notexist. Universal capping and compulsorycompetitive tendering (CCT) were the order ofthe day, focusing on inputs and relegating theachievement of outcomes that matter, such as

improvements in education, social care, housingand transport, and the creation of a clean andsafe local environment.

1.4. Since 1997 the Government hasintroduced a wide range of measures designed todevelop better local leadership and focus onservice delivery. Financial support for councils’revenue and capital expenditure has risen in realterms in each of the last four years (in starkcontrast to the 4 years before that), alongsidefinancial reforms including the end of universalcapping.

1.5. A major public service reformprogramme has begun. The bureaucracy of CCThas gone. In its place, councils strive forcontinuous improvement through theachievement of best value. This meansbalancing costs and quality in consultation withlocal people, and identifying the mostappropriate method of service delivery, be itpublic, private, voluntary, or in partnership.Local Public Service Agreements (PSAs)encourage councils to stretch their performancestill further, in return for additional finance andthe freedoms and flexibilities needed to do so.

1.6. The new constitutions that councils areintroducing following consultation with localpeople will improve the efficiency, transparencyand accountability of local leadership anddecision making. The introduction of statutorycommunity strategies and the broad newenabling power to promote community well-being encourage councils to face outwards andwork alongside public, private and voluntary

We want a vibrant local democracy in whichcouncils deliver high quality and improvinglocal services and provide strong and confidentleadership.

We will work with local government to achievethis and remove unnecessary controls whichstifle local innovation. The proposals we setout in this white paper mark a radical change inthe relationship between central and localgovernment.

CHAPTER 1

Introduction

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partners to develop and deliver theircommunities’ vision for their locality.

1.7. We need to build on these reforms toensure effective service delivery and communityleadership across the whole of local government.Further reform is needed so that councils havethe tools they need to make the improvementslocal people want to see. In particular, we needto get rid of regulations where these impedecouncils in finding innovative ways of tacklinglocal problems, and to modernise localgovernment finance.

1.8. Reform is needed because Governmenthas a responsibility to ensure that whereverpeople live in this country, they have access togood quality public services. Where localgovernment is responsible for providing theseservices, it must be held to account for achievingappropriate standards across the country. Thatmeans tackling the current variability in servicequality, especially in critical areas like educationand social services.

1.9. Reform is needed to lay the foundations forlocal government’s future. A future in whichcouncils enjoy the confidence of all the partnersthey work with and all the people they serve,and which sees local government return to thevery centre of life in their communities.

1.10. The proposals we set out here will mark anew and lasting basis for effective localgovernment – by celebrating councils as asignificant and vital sphere of government andby enhancing their ability to make a realdifference to peoples’ lives.

Summary of proposals1.11 We will support councils to make asuccess of their unique role as democratically-elected leaders of their local communities.We will help them to develop the democraticlegitimacy and sound governance needed to

underpin community leadership and effectiveservice delivery building on the new well-beingpowers and local strategic partnerships. We willencourage other public sector partners to workeffectively with councils to tackle local problemsand exploit local opportunities. We will promotecloser engagement between councils and theircommunities, and give councils further powersto serve local people and improve the localenvironment and public spaces. We will allowcouncils to introduce Business ImprovementDistricts to promote partnership with localbusinesses. Significant deregulation will increasecouncils’ freedom of action.

1.12 In line with our principles for publicservice reform, we will shift our focus to theassured delivery of outcomes through a nationalframework of standards and accountability, andaway from controls over inputs, processes andlocal decisions. This white paper sets out acomprehensive performance framework forimprovement, accompanied by a substantialpackage of deregulation.

1.13 The framework (which will becomplemented by the new performance ratingsystem for social services) comprises:

• clearly defined priorities and exactingperformance standards, developed withlocal government through the CentralLocal Partnership;

• regular comprehensive performanceassessments for all councils, identifyinghow they are performing against thesestandards;

• co-ordinated incentives, rewards andtools which address the results of thecomprehensive assessments and driveservice improvement including:

– clear and concise public informationabout councils’ performance;

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– integrated inspection programmestailored to councils’ strengths,weaknesses and needs;

– additional freedoms, powers andflexibility over resources for councilswith the track-record and capacity touse them;

– tough action to tackle failing councilsand services;

– stretching targets and rewards forservice improvement, through localPSAs; and

– a streamlined, proportionate andintegrated best value regime.

1.14 With this framework in place there will bean increased emphasis on delivery, responsibilityand accountability. By removing restrictions andrequirements on planning, spending anddecision-making and providing new powers totrade and charge, we will free up councils toinnovate and deliver tangible improvements inthe quality of services and effective communityleadership. Unnecessary bureaucracy, red-tapeand regulation will be removed for all councils.We will adopt a more co-ordinated andproportionate approach to the demands wemake of councils, focusing on the delivery ofpriorities and outcomes. There will be morefinancial freedom within a basic frameworkunderpinned by sound financial managementand prudent decision-making.

1.15 Specifically, for all councils we will:

• abolish the council tax benefit subsidylimitation scheme;

• shift control over council borrowingdecisions to the local level;

• significantly reduce the numbers of plansand strategies that councils are requiredto produce;

• scale back on area-based initiatives andgive greater scope to rationalisepartnerships;

• remove unnecessary red tape andbureaucracy including many requirementsfor councils to obtain Governmentconsent before acting;

• provide councils with wider powers toprovide services to others; and

• allow councils to charge for thediscretionary services they provide.

1.16 Additional freedoms will be available forhigh performers, with less ring-fencing, fewerplanning requirements and greater freedom touse income from fines. These councils will alsohave more discretion over best value reviews, amuch lighter touch inspection regime and thewidest freedom to trade across their services. We will not use reserve powers to cap thecouncil tax increases of high performingcouncils. Other councils will also be able toagree additional freedoms, depending on theirperformance profile. Freedoms will also benegotiable through local PSAs, to accelerateprogress on key national and local priorities.

1.17 This package of reforms demonstratesGovernment’s commitment to bring aboutvibrant, innovative and responsive localgovernment. Local authorities will have morefreedom and responsibility to improve theirperformance and serve their communities. Thiswill enhance local democracy, with localauthorities being more clearly accountable totheir electorate for service delivery and counciltax levels. In return, Government will expectlocal authorities to rise to the challenge andbring about significant improvements inperformance and overall efficiency.

1.18 Police authorities are a special type oflocal authority, whose national standards andpriorities are the responsibility of the HomeSecretary. They will retain their own separate

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performance framework and will benefit fromelements of the wider local authority proposals,such as the new freedom to borrow.

1.19 We will draw together support, on a cross-departmental basis, for:

• building councils’ capacity to deliver; and

• improving the skills of councillors andcouncil staff.

1.20 The emphasis will be on targetingresources where they are needed most and onenabling councils themselves to tackle theirweaknesses and develop their strengths. Chapter5 seeks views on our proposals to do this. We willhelp councils to exploit the potential that newtechnologies offer to restructure services, speedup transactions, provide a single point of contactfor people’s needs and join up delivery by localauthorities and other agencies.

1.21 We will promote sound financialmanagement in local government includingrequiring councils to maintain adequate reservesand keep finances under review. We will reformthe single capital pot to reduce the proportion ofring-fencing of Government support for capitalinvestment for high performing and strivingcouncils.

1.22 Chapter 6 outlines our proposals forreform of the local government finance systemincluding reforms for parish and town councils.Part II of this publication describes our localgovernment finance proposals in detail.

1.23 We will clarify accountability for financialdecisions. In providing greater responsibility tocouncils for decisions on borrowing, fees andcharges and council tax, we will also strengthenthe scrutiny role of councillors and reinforce theneed for local consultation. Council tax billswill be clearer. They will show the annualpercentage change in council tax for differentauthorities up front, not hidden away in a leaflet.

1.24 We will design new grant formulae thatare more intelligible and transparent to allstakeholders.

1.25 The Government’s goals of bringingdecisions closer to the people they affect,increasing democratic participation andimproving the efficiency and effectiveness ofservice delivery are also being addressed at aregional level. The Government is committed topublishing a white paper setting out proposalsfor giving people in the English regions a bettersay in how they are governed. These proposalswill be based on the drawing down of powersfrom central government, as part of our widercommitment to devolution. This will haveclose links with the ways in which we arestrengthening the role of local government andimproving the working relationships betweendifferent levels of governance.

Wales1.26 The policy proposals set out in this whitepaper are for England. The National Assemblyfor Wales will be consulting shortly on proposalsfor local government in Wales.

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Why local democraticleadership matters 2.1 Thriving communities and strongdemocratic leadership go hand in hand. Suchleadership helps to enhance the quality of life of individuals and communities, boost the localeconomy, improve the environment, andcontribute to the achievement of wider regionaland national policy goals. Councils are uniquelyplaced to provide this leadership. TheGovernment is committed to helping them to do so.

THE VALUE OF DEMOCRATICACCOUNTABILITY

2.2 Effective local democracy is essential tostrong community leadership and improvedservice delivery. Because they are elected bytheir communities, councillors play a uniquerole in linking the delivery of services with local people’s needs and ambitions.

2.3 Resources are finite, and communities’views and priorities can diverge and conflict.Consensus cannot always be reached, and sochoices and compromises have to be made. Thatcan mean creating winners and losers, tradingshort-term losses for long-term gains, or

foregoing one set of opportunities in order toexploit another. It also means making strategicchoices for future generations not just dealingwith immediate interests and issues.Democratically-elected councils provide themeans for expressing and resolving theseconflicts, for ensuring that differing points ofview are heard and understood, for promotingunderstanding, and for making tough choices.Councils are then responsible for explainingthose choices and will be held to account forthem by local people.

2.4 Councils – unlike any other localorganisation – are designed specifically to play this role.

COMMUNITY COHESION AND CIVICRENEWAL

2.5 Communities and places differ andchange, and so do the challenges they face.Local areas are becoming more diverse. Ourtowns, cities and rural areas contain manycommunities, often sharing space and resources,with many similarities but also significantdifferences.

2.6 Communities everywhere face rapidchanges to their economy, environment andsocial mix. The leaders of those communitieshave to adapt continually to such changes. The

An effective local democracy, with strong andaccountable political leadership, is central tocommunity leadership and the delivery ofpublic services.

We will support councils in their efforts tolead their communities and meet people’sneeds. In particular we will:

• help councils to enhance their democraticlegitimacy and improve governance;

• encourage other public sector bodies towork effectively with councils;

• support greater levels of communityengagement and involvement in councilbusiness;

• give councils greater freedom and morepowers to meet people’s needs; and

• allow the introduction of BusinessImprovement Districts.

CHAPTER 2

Leading and empowering communities

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best councils anticipate change and respondaccordingly. Shifts in economic activity are metby developing new foundations on which tobuild economic success. Changes in cultural mixare met by developing positive communityrelations and promoting inclusiveness. Failuresin community leadership can contribute to abreakdown in community cohesion. This canlead in the most serious cases to the sorts ofincidents of civil disorder that we saw lastsummer in a small number of our towns andcities. A report on these incidents produced bythe Ministerial Group on Public Order andCommunity Cohesion1 examines the linkbetween community leadership and communitycohesion in more detail.

2.7 Successful councils ensure that the voicesof all get heard – not just the most vociferous,powerful or well-established. They assess theproblems faced by different groups and tacklediscrimination and disadvantage wherever it isfound. They enable individuals, families andcommunities to find and develop solutions totheir own problems, provide the resources andopportunities to help them do so, and work withothers to contribute to those solutions. Theystand up and speak out for all local people. Andthey engage them in the design and delivery ofservices.

DELIVERING SUSTAINABLE DEVELOPMENT

2.8 Strong community leadership meansproviding the economic infrastructure neededby local businesses to compete successfully onthe local, regional or wider stage. It meansdeveloping social capital by supporting civicengagement and networks of neighbourhoodorganisations. It means enhancingenvironmental quality by reducing waste, energyuse and air pollution and improving public

space. And it means safeguarding the interests offuture members of the community. Manydecisions made now will have long termimplications. These need to be identified,understood and designed into local policies.These are not separate goals – sustainabledevelopment means addressing all of them at thesame time.

2.9 Communities are inter-dependent.Actions taken at sub-regional or regional levelcan have a profound effect on the developmentof local areas. Local activity contributes to theachievement of wider goals. Someone needs tochampion their communities’ interests at thesewider levels, join up with neighbouring areas toidentify and achieve common goals and takelocal action which promotes the widereconomic or environmental interests of theregion and beyond. Councils are the best placedlocal bodies to do this.

DELIVERING HIGH QUALITY SERVICES

2.10 The Government believes that all residents,no matter where they live, are entitled to goodquality public services. Local government has akey role to play in enabling people to receivethis entitlement, through arrangements thatreflect local circumstances and that empowerlocal communities. This is particularly true ofservices (such as social services, planning,transport and leisure) that need to be tailored tothe particular needs of the locality or individualservice users. And it is true for problems whichare to some extent rooted in local circumstancesand therefore vary from area to area(neighbourhood renewal and improving publicspaces are good examples). Local authorities arewell placed to achieve this balance betweennational policy goals and local service delivery.

1 This report is to be published by the Home Office shortly.

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A ROLE FOR ALL COUNCILS

2.11 All councils can contribute to effectivedemocratic leadership. As the most local formof democratic governance, parish and towncouncils have an invaluable role to play inidentifying needs in rural areas and markettowns, and then working with others to meetthem. Our proposals to establish QualityParishes2 will strengthen their role still further.

2.12 Districts have a strong local presence too.They are responsible for many of the services –planning, housing, leisure, environmentalservices – which have a direct impact on qualityof life. The contribution of upper-tierauthorities, especially for education and socialservices, is equally important. This is the level at which links to other key service deliverers –such as the health service and the police – can most effectively be formed.

2.13 Each tier therefore makes an importantand distinctive contribution. Effective workingbetween all tiers – both strategically throughlocal partnerships and in the day to day deliveryof services – is essential if communities are to bewell-served by their councils.

Helping councils to leadtheir communities2.14 Responsibility for community leadershiprests with councils. Government can help tocreate the conditions that enable councils tomake a success of their leadership role. AsGovernment at all levels must recognise, real

leadership has to be earned – it cannot beconferred through the ballot box alone. To besuccessful community leaders, councils need:

• democratic legitimacy;

• sound governance;

• effective partnerships with other localorganisations and their communities;

• powers that enable them to make a realdifference;

• real community engagement andempowerment;

• room to respond effectively to localpriorities;

• continuous improvement in their servicedelivery; and

• a willingness to exploit the potentialafforded by new technologies.

2.15 The Government has already takenaction to help councils with each of these. We can and will do more.

DEMOCRATIC LEGITIMACY

2.16 Improving turnout is one of the key waysof bolstering democratic legitimacy and civicengagement. Currently, turnout at elections isfalling and in local elections is frequently below35%. There are many reasons for this. Reversingthe trend will require long term changes inpeople’s behaviour. In their report on the 2001elections3 the Electoral Commission concludedthat it is above all the quality and persuasivenessof policies put forward by the political parties

2 Our Countryside: The Future A Fair Deal for Rural England, DETR, MAFF, November 2000, Cm 4909, ISBN 0101490925.http://www.defra.gov.uk/erdp/erdpfrm.htmQuality Parish and Town Councils: A Consultation Paper, DEFRA, DTLR, NALC, LGA, Countryside Agency, November 2001http://www.defra.gov.uk/wildlife-countryside/consult/qtpc/index.htm

3 Election 2001: The Official Results Electoral Commission, Politico’s Publishing, July 2001, ISBN 1842750208.http://www.electoralcommission.gov.uk/publications.htm

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and their ability to motivate voters that willdetermine future trends for electoral turnout.This is as true for local elections as forParliamentary elections. The Commissionrecognise also that it is essential to moderniseelectoral arrangements and respond to people’schanging expectations.

2.17 Central and local government have ashared interest in working with the Commissionto tackle these issues. We will continue withpilots of electoral innovations, includinginvesting in and promoting e-voting. We areworking with the Improvement andDevelopment Agency (IDeA), localgovernment and others to introduce anelectronic register of electors. And we aredeveloping an implementation plan and strategyfor e-democracy and e-voting.

2.18 The current cycle of local governmentelections is confusing. Some councils haveelections once every four years while others haveelections in three years out of four. It is too easyfor electors to lose track of when elections are tobe held or how many votes they have on anyparticular election day. And this arrangement canlessen the immediate impact of voters’ behaviouron council control. We will therefore invite theElectoral Commission to propose options tosimplify the current cycle of local elections.

SOUND GOVERNANCE

2.19 People will have more confidence in theircouncils as leaders if they know who actuallymakes the decisions, how they are made, andhow the decision-makers are held to account.

2.20 Our approach is that people should beable to choose how they are governed locally.Councils need to listen to people’s views whendeciding what their constitutions should be andhow to conduct their business. The reformsintroduced in last year’s Local Government Actprovide a range of choices. Decisions will be

made efficiently and openly by people who arevisible to their communities, and overview andscrutiny arrangements will strengthen the linksbetween councillors and the people theyrepresent.

2.21 We have introduced statutory codes ofconduct, standards committees, and theindependent Standards Board for England. Thisframework means that councils operate under amore rigorous ethical regime than any otherlocal partner. These measures will help to halt theslide in public trust caused by the small numberof high-profile cases of councillor misconduct.

2.22 To support these changes, we will

• work with the Local GovernmentAssociation (LGA) and the IDeA todevelop a best practice programme onhow the new arrangements are operating;

• evaluate the benefits that newconstitutions are bringing, and ensure theresults inform the work that councils do;

• review the help and guidance we give tolocal authorities;

• support efforts by the IDeA and others tobuild capacity for political leadership; and

• continue to support local authorities indeveloping their approach to overview andscrutiny. We will clarify our statutoryguidance to make clear our view thatoverview and scrutiny committees should:

– focus on reviewing the actual outcomesthat their councils’ policies are achievingfor local people in practice, as well asreviewing the policies themselves;

– search for innovative ways to improvethe quality of services within best value;

– involve other local stakeholders in theirwork; and

– review the work of other local serviceproviders.

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2.23 We are monitoring the experience ofthose councils who have held referendums andare now moving forward to hold elections for amayor. In last year’s Urban White Paper we saidthat where local people think that a directlyelected mayor is right for their town or city, theyshould have the opportunity to vote for one.

2.24 In partnership with councils where peoplehave decided to pursue this form of governance,we will develop a support programme whichincludes:

• education of voters about mayors and thevoting system;

• learning from the lessons of the firstround of mayoral referendums andelections, in order to refine and improvethe process, in particular how people goabout submitting a petition to require areferendum; and

• sharing information with all councils onbest practice.

2.25 As experience grows, we want councils tolook again at their constitutions, including theform of leadership chosen, taking account oflocal opinion. We therefore propose that after aset period – perhaps five years – councils shouldreview their constitutions. Local choice willremain the guiding principle, based on fullconsultation and, where appropriate,referendums.

2.26 Councils will need to bring to suchreviews the developing body of best practice andthe experience of others. We will help localauthorities to undertake such reviews and lookto see that they are guided by what local peopletell them. We believe that independent andrepresentative democracy commissions providea good vehicle for this.

2.27 We recognise that there are circumstanceswhere having a mayor would have particularbenefits, for example where a council has beenfailing and requires decisive managerial andpolitical leadership to sustain improvement. Inchapter 3 we set out proposals for intervening infailing councils. One option would involveputting the council into a form of administrationfor an interim period. As the position stabilisedfollowing this, we think that, subject to theviews of local people in a referendum, a mayorand council manager could provide the decisiveleadership to ensure that improvement issustained. We will set out more detailedproposals on this in due course.

2.28 It is important that local authoritiescontinue to operate transparently and increasethe openness with which they do business.Authorities already operating executivearrangements must publish a forward plancontaining details of key decisions they aregoing to take and they must take such collectivedecisions in public. We have defined keydecisions as those which will result in significantsavings or expenditure or which are likely tohave a significant impact on two or moreelectoral divisions or wards within the localauthority, or both.

2.29 Following consultation,4 we believe localauthorities are best placed to make the choice asto what constitutes a key decision for thispurpose. We plan to review the access toinformation regime for councils during 2002 atthe same time as we are preparing forimplementation of the Freedom of InformationAct in local government. As part of this, we willwork with authorities and the LGA to identifybest practice in defining what is a key decision.

4 Access to Information in Local Government: A Consultation Paper on Aspects of the Access to Information Regime for LocalAuthorities in England, DETR, April 2001 http://www.local-regions.detr.gov.uk/consult/infoinlg/index.htm

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EFFECTIVE PARTNERSHIPS

2.30 In recent years there has been anincreasing recognition, in both central and localgovernment, of the importance of successfulpartnership working. To tackle our mostchallenging problems – on health, crime,education, transport, housing and the localenvironment – we need to marshal thecontributions of the public, private andvoluntary sectors, and of communitiesthemselves. We will not achieve genuinelycitizen-centred services unless service delivererswork well together.

2.31 The Government has done a great deal toencourage such partnerships in policy andservice delivery at both national and locallevels. We are committed to building on thesuccessful track record of partnerships like theNew Commitment to Regeneration and HealthAction Zones. In particular, we will completeour drive to establish effective local strategicpartnerships (LSPs). These partnerships are thekey element in developing integratedapproaches to local service delivery, and totackling policy priorities in a joined-up way.They bring together service deliverers,communities, the voluntary sector and businessto identify local priorities and to devise andimplement strategies to meet them. They alsolead local efforts to close the gap in livingstandards and opportunities between the mostdeprived neighbourhoods and other areas.

2.32 We are therefore committed to playingour part to help LSPs succeed. Local authoritiesand their partners have put in a great deal ofeffort to establish LSPs. In many areas,significant progress has been made, andexamples of exciting and genuinely inclusiveapproaches to partnership working arebeginning to emerge.

2.33 In practice, it is clear that success dependson securing the effective involvement of the

public, private, voluntary and communitysectors. Local partners are best placed to decidehow to achieve this. So the detailed structure,membership, and geographical coverage of LSPsshould be determined locally.

2.34 The Government Office accreditationprocess now underway in the 88 most deprivedareas will provide a rich source of feedback andlearning on how LSPs are developing. We willlook carefully at the lessons learned from theaccreditation process, and draw these out inrevised, non-prescriptive guidance to bepublished next summer. The Government hasno intention of imposing a one-size-fits-allapproach, or of attempting to micro-manageLSPs through Government guidance oraccreditation.

Councils’ role on local strategicpartnerships

2.35 Councils have a particular responsibilitytowards LSPs. Our recent guidance reflects this.We look to councils to be the prime movers ininstigating LSPs where they do not already existand in guiding them through their early stages.Once LSPs have been set up the partnershipsthemselves should decide who leads. As many asone in four LSPs are chaired by partners otherthan the local authority. This is in keeping withour non-prescriptive approach. That does notmean that once an LSP has been established alocal authority’s leadership role has ceased.Irrespective of who chairs an LSP, someoneneeds to take responsibility and be accountablefor ensuring that:

• the membership and methods ofconsultation and engagement arebalanced and inclusive;

• difficult decisions are addressed andresolved, not just the easy ones. Thosedecisions should not simply represent the“lowest common denominator”; and

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• the partners properly resource andsupport the LSP.

2.36 In one sense these responsibilities areshared by all partners. But someone needs to stepforward and take a lead on these issues if othersare failing to do so. This is a key part of everycouncils’ responsibility as the community leader.

Rationalising partnerships

2.37 Some partnerships are established bystatute. Others derive from the requirements offunding or planning activities. Proliferation ofthese separate partnerships can lead tofragmentation, duplication and inefficiency.LSPs were established, in part, to bring someorder to this situation, by placing themselves atthe apex of local partnership arrangements andorganising existing partnerships on a sensiblebasis.

2.38 The Government will reduce the numberof partnerships it requires. The Regional Co-ordination Unit’s review of area-basedinitiatives will help to reduce the number ofpartnerships associated with these initiatives.Our proposals to reduce the number of ring-fenced grants and plans will also lead to areduction in funding and plan-based partnerships.

2.39 Local partners should not have to wait forthese deregulatory initiatives to bite. From nowon they will have wide discretion as to how andwhen to rationalise their partnerships. LSPs willbe able to slot any statutory partnerships intotheir emerging structure, for instance as sub-partnerships of the LSP. They will have a freehand to rationalise other partnerships, bringingthem together in mergers, nesting them withinthe LSP and so on. In doing so, partnershipswhich have a separate legal status will need tomaintain a distinct identity.To ensure that thesechanges are effective, LSPs must develop, discussand agree them with the partnerships inquestion.

2.40 Government Offices should be keptinformed of any such developments and may beable to provide advice and assistance (but notexercise a veto).

2.41 For the future, the Government willcommit itself to working within existingstructures wherever possible, signalling to LSPswhen we expect a particular policy initiative tobe dealt with collectively and looking to LSPs todecide how best to arrange that locally.

Public sector involvement in LSPs

2.42 If LSPs are to succeed, all the relevantpublic sector partners – as well as those inother sectors – need to play their part. TheGovernment doubts whether a statutory dutywill improve the participation of public sectorbodies although we will keep this under review.Instead, it will use various other means toencourage engagement with LSPs, including:

• budgetary mechanisms to ensure that publicbodies that wish to contribute financially toLSPs have the ability to do so;

• performance management instruments(Public Service Agreements, businessplans, service level agreements,management statements and so on);

• line management systems to provide staffwith incentives to achieve partnershipobjectives, and support for staffdevelopment and capacity building inrelation to partnership working;

• organisational incentives (e.g. throughthe wider distribution of local PSArewards); and

• organisational restructuring to providegreater freedom of action to localagencies.

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2.43 Levers such as these can have a greateffect. In relation to the public bodiesaccountable to Government, Departments arewilling to use any and all of these in order tosecure a suitable level of involvement in thework of LSPs as the best way of delivering sharedoutcomes. During 2002 we will explore in detailwith the LGA and other stakeholders how wecan best do so, with a view to implementingchanges through guidance by April 2003.

Working with business to improvecommunities

2.44 The Government wants to see councilsand businesses in their areas working together toimprove local conditions. As part of this, we willlegislate to allow Business ImprovementDistricts (BIDs) to be established in any areawhere they are backed by the majority ofbusinesses. The BID will be funded by anaddition to the business rate. The Governmentwill introduce legislation dealing with suchessential issues as the arrangements for the voteon whether to have a BID. Guidance will beprovided on how BIDs should work, drawing onexisting best practice in establishing anddelivering BID-type schemes. We do not wishthis to be prescriptive. The Government willencourage the local authority and businessorganisations to produce this guidancethemselves.

PROMOTING EFFECTIVE COMMUNITYENGAGEMENT AND EMPOWERMENT

2.45 Effective community engagement leads tobetter decisions and better implementation.Community involvement is a key component ofbest value, an increasingly important element inthe improvements we are making to healthservices and is an important goal for LSPs in

taking forward community strategies and otherinitiatives. To help build social capital and thecapacity of communities to engage in localdecisions we have established schemes such asthe Community Empowerment Fund,Community Chests and the CommunityChampions Fund. We shall review the supportthat Government provides to build communitycapacity in next year’s spending review.

2.46 Councils themselves (both members andofficers) need the capacity and skills to engagewith and empower their communities. Theproposals in Chapter 5 to build the capacity andskills base of officers and members will helphere.

2.47 We believe that councils should allowmore input from citizens, including giving thembetter access to council meetings. Areaconsultation and decision making arrangementshave a valuable role to play in helping toinvolve citizens in decisions which affect them,particularly on neighbourhood issues. We wantlocal authorities to make more use of area forums,public assemblies and citizen’s user boards.

2.48 We want people with a stake in thequality of council services to make a more directcontribution to council decision-making. Whenlegislative time is available we will providegreater flexibility for more voting non-councillormembers to be co-opted onto overview andscrutiny committees, so that they can take partin activities such as best value reviews.

2.49 We will also develop a programme forpromoting civic education and training. Ouraim, with local authorities, will be to alert youngpeople to the working of social and public life,their rights and responsibilities, theconsequences of the choices they will be calledon to make and the means at their disposal forinfluencing local policies.

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2.50 Advisory referendums are a useful way ofgiving local people a direct say in importantdecisions affecting their lives. Following throughthe commitment in our 1998 Local GovernmentWhite Paper5 we will legislate at the earliestopportunity to confirm the power of councils tohold referendums on important matters whichrelate directly to the services they provide andthe finances associated with them. Whilst suchreferendums would be neither obligatory norbinding, they would clearly have considerablestatus in guiding local decision-making.

GIVING COUNCILS POWERS TO MAKE AREAL DIFFERENCE

2.51 For councils to lead successfully they needthe powers to make a real difference to thequality of life of people in their areas. The LocalGovernment Act 2000 provided councils with anew and wide-ranging enabling power topromote the economic, social andenvironmental well-being of their areas. Thereis scope to go further. We shall carry through ourpledge to provide a wide-ranging power for allcouncils to charge for discretionary services.And we shall provide new powers for all councilsto provide goods and services to other partners,building on our recent proposals6.

2.52 The quality of our public space has adirect impact on the quality of our lives. That iswhy we are working on a wide ranging study onimproving the public space in preparation fornext year’s spending review. This includes anexamination of the responsibilities, powers,freedoms and enforcement mechanismscurrently available to local authorities. Inparticular, we want councils to have a fully

effective range of powers to deal with social andenvironmental nuisances. We are alreadyconsulting on proposals to enable councils todeal more effectively with abandoned vehicles.We will work with the LGA to extend awarenessof current powers and good practice in applyingthem, and consider changes to the currentframework where it is unclear, contradictory orineffective.

2.53 We will also use deregulatory legislation(such as Regulatory Reform Orders) to simplifyexisting powers where this would help councilsto use them more effectively. For instance, ourproposals to replace closely prescribed privatesector renewal legislation with a new generalpower will make it easier for councils to take astrategic approach to housing renewal, givingthem more freedom to respond to local priorities.

CONTINUOUS IMPROVEMENT IN THEDELIVERY OF SERVICES

2.54 A council that does not secure realimprovements in the services for which it isresponsible will not inspire confidence as acommunity leader. So efforts through best valueand the comprehensive performance frameworkset out in chapter 3 to raise the quality ofcouncil services will also help to validatecouncils’ community leadership role.

ALLOWING COUNCILS ROOM TO RESPONDEFFECTIVELY TO LOCAL PRIORITIES

2.55 Chapter 4 sets out a range of proposals onring-fenced grants and to free councils fromother central controls (plans, strategies, consent

5 Modern Local Government: In Touch with the People, DETR, July 1998, Cm 4014, ISBN 0101401426. http://www.local-regions.dtlr.gov.uk/lgwp/index.htm

6 Working with Others to Achieve Best Value, DETR consultation paper, March 2001 http://www.local-regions.dtlr.gov.uk/consult/bestvalue/index.htm

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regimes and so on). These will significantlyincrease councils’ freedom to respond to locally-defined needs and priorities.

EXPLOITING NEW TECHNOLOGIES

2.56 New technologies have the potential totransform relations between local people andtheir councils. They open up possibilities to

• integrate a wide variety of council andother providers’ services around the needsof their customers;

• increase participation in council activitiessuch as overview and scrutiny;

• provide more and better information aboutcouncil and other local services;

• conduct transactions more efficiently andconveniently; and

• improve and speed up access to servicesand help.

2.57 Exploiting that potential is essential iflocal government is to keep pace with changingpublic expectations. Some local authorities arealready challenging their ‘silos’ of service deliveryby enabling their citizens to have a single point of

access to services in ways which best suit them.There is much scope for extending such initiativesthroughout the country. Local authorities wereasked to demonstrate their commitment tomeeting the Government’s electronic servicedelivery targets by 2005 in their individualImplementing Electronic GovernmentStatements. The task is a significant one andwill require sustained commitment over thenext few years.

2.58 Many local authorities are using thepotential of communications technology to helpsupport community engagement and leadership.To assist this we will redevelop the gateway tointernet consultative forums on the UKgovernment portal – www.ukonline.gov.uk. Wewill also commission research on howinformation and communications technologiescan enhance new member and officer roles incouncils.

2.59 To help build greater communicationscapacity, we will work closely with localgovernment on a longer term communicationsstrategy following the outcomes of the currentpilot project and the results of our forthcomingresearch on public participation.

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A national framework3.1 The first of our four principles of publicservice reform is a national framework ofstandards and accountability.

3.2 Best value and local PSAs bothcontribute significantly to improvements in thequality of council services and help councils toserve their communities better. Best valueprovides the foundation for a much more openand imaginative rethinking of the way servicesare provided and for councils to work in new andstrategic ways with partners from all sectors.Local PSAs, with their focus on voluntarynegotiation of stretching targets in return forfreedoms and other incentives from Government,promise to accelerate improvements in priorityservices and are a new way for local and centralgovernment to work together. We want to buildon the potential of both to realise our sharedambitions for excellence in the quality ofservices for local communities.

3.3 The Government will put in place acomprehensive and integrated performanceframework to help councils deliver betterservices for their communities. This willinclude:

• clearly defined priorities and exactingperformance standards;

• a framework for performance assessmentand proportionate and co-ordinatedinspection including regularcomprehensive assessments of eachcouncil’s overall performance;

• extra freedoms and flexibilities forcouncils which are able to use them tomake a real difference for theircommunities, over and above theuniversal deregulation described inchapter 4;

• local PSAs to deliver acceleratedimprovements in priority servicessupported by additional freedoms; and

CHAPTER 3

Quality public services

A national framework of standards andaccountability and removal of unnecessaryburdens and bureaucracy are essential forensuring that services improve across the board.

Building on the successes and potential of bestvalue and local Public Service Agreements(PSA) the Government will put in place acomprehensive framework for continuousimprovement in the quality of localgovernment services to help councils make areal difference for their communities.

Specifically we will:

• clearly define service priorities for localgovernment that have been agreed throughthe Central Local Partnership (CLP);

• introduce a framework for the overallassessment of performance which addresses

these priorities and includes the standardswhich councils will be expected to deliver;

• publish clear and concise information aboutcouncils’ overall performance;

• in addition to freedoms for all councils (seechapter 4), grant extra freedoms according tocouncils’ ability to use them to make a realdifference, including wide-ranging freedomsfor high-performing councils;

• move quickly to a proportionate and co-ordinated inspection regime;

• intervene decisively where councils arefailing; and

• publish a national strategy for exploiting thepotential of new technologies in localgovernment.

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• a streamlined and reformed best valueframework to help councils manageimprovement across all services.

3.4 Information from comprehensiveperformance assessments combined with clearpriorities and standards will lead to:

• targeting of support and inspectionresources according to councils’ strengths,weaknesses and needs;

• clear and concise public informationabout councils’ performance;

• targeting of additional freedoms tocouncils with the capacity and trackrecord to make best use of them for theircommunities;

• easier identification of poor performanceand earlier action by councils and othersto tackle it;

• better informed negotiations on localPSAs; and

• fewer and more targeted best valuereviews.

Priorities for localgovernment3.5 Local government and those charged withauditing and inspecting councils’ performancerightly complain that central government hasnot been clear enough about what it expectsfrom councils. In future, priorities will be moreclearly identified. But this will not be effective ifthe Government simply specifies targets fromabove.

3.6 Local government is a partner withcentral government which, throughdemocratically accountable decision making,

identifies and responds to local needs andcontributes towards national services throughlocal delivery. Councils will make their mosteffective contribution if, alongside centralgovernment, they take responsibility for keynational priorities and instigate correctiveaction when standards are not being met.

3.7 The Government agrees with the LocalGovernment Association (LGA)1 that thereshould be joint ownership of the priorities forlocal government. Through the Central LocalPartnership, we will define a single list ofpriorities for local government. The list ofagreed priorities will inform the national PSAfor local government to be developed in nextyear’s spending review.

3.8 The Government’s top four public servicepriorities are education, health, crime andtransport (see the box for those to whichcouncils contribute most directly). Councils,often working in partnership with others, have akey role to play in the delivery of each of these.Their education, social care and transportresponsibilities are clearly important here, andcouncils’ activities on housing, environmentalservices, culture, sport, neighbourhood renewaland planning can also contribute. Asdemocratically elected bodies they also havefreedom and scope to determine their ownpriorities locally, based on the needs andaspirations of their communities.

3.9 The Government will expect to seecouncils’ approaches to best value and theirlocal PSAs give clear expression to the prioritiesin the national PSA as well as locallydetermined priorities. How priorities aredelivered at local level will vary depending onlocal circumstances. All authorities will beexpected to deliver rapid improvements on thepriorities identified in the national PSA.

1 Partnership for Ambition: councils and government working together, LGA Paper, November2001.http://www.lga.gov.uk/lga/clp/ambition.htm

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3.10 Local government’s commitment toimprovement is demonstrated in the LGA’s sixpriority areas for service delivery (see box), someof which reinforce the Government’s priorities.The Government has welcomed these and iscommitted to supporting them. We alsowelcome the LGA’s offer in their recent paperPartnership for Ambition of a further commitmentto specific actions that support improvements inservice delivery, including:

• a specified number of councils to have anImprovement and Development Agency(IDeA) Local Government ImprovementProgramme visit or re-visit each year;

• poor-performing councils to receive IDeAsupport;

• a specified number of councils to pilotnew ways of joint county-district working;and

• a continuing commitment for a specifiednumber of councils to sign or review theirlocal PSA.

Government’s priorities for public services

Education

• Transforming secondary education.

• Improving recruitment, retention and quality in theteaching profession.

• Improving access to higher education.

• Raising standards in primary education.

Health

• Improving older people’s care and children’s services.

• Narrowing the health gap.

Crime

• Reducing crime and the fear of crime.

• Tackling drug abuse.

Transport

• Reducing congestion in large urban areas,increasing bus and light rail patronage, reducingaccident rates and contributing to the improvementof local air quality as set out in Transport 2010: The 10 Year Plan.2

LGA’s six priorities for public service delivery

• Supporting children and their families.

• Assisting schools to match the excellence ofthe best.

• Helping the hardest to reach into work.

• Helping older people live independent lives.

• Delivering higher quality, more reliable bus services.

• Transforming the local environment.

PERFORMANCE MEASURES

3.11 All effective organisations need to knowhow well they are performing and what theirstrengths and weaknesses are. The Governmentmust ensure that the priorities on which it waselected are being delivered and that standardsare being met across the range of statutory publicservices.

3.12 Currently there are many overlappingperformance measurement frameworks in use bycentral Government to monitor localgovernment services. The cumulative effect ofthese can be an overload of confusing measuresand a loss of focus on priorities.

3.13 We will move towards a more coherentand integrated system of performance measures

2 Transport 2010: The 10 Year Plan, DETR, July 2001, ISBN 1851124136. http://www.dtlr.gov.uk/trans2010/index.htm

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across the range of local government services.We will aim in the spending review, inconsultation with the LGA, to:

• put in place a national PSA for localgovernment informed by the prioritiesdefined through the CLP, which drawstogether all the relevant outcome targets;

• devolve these targets to local servicesthrough best value and local PSAs;

• ensure that, as far as possible, these localtargets are aligned across different publicservices; and

• update and integrate the SpendingReview 2000 floor targets relating todeprived areas.

3.14 In partnership with local government andother stakeholders, we will aim, as part of thecoherent and integrated system of performancemeasures, to put in place a framework in whichthere are:

• defined standards focused on priorityareas identified in the national PSA forlocal government; and

• clear criteria against which performancecan be assessed for each defined standard.

3.15 All authorities will be expected to deliveron these standards. They will be assessed againstthem through inspections and comprehensiveperformance assessments. Where councils fail todeliver they will be expected to put things right.Where necessary the Government will takedecisive remedial action.

Performance assessment3.16 High quality council services rely onstrong corporate governance from their politicaland administrative leaders. Where individualservices fail the reason often lies in political oradministrative shortcomings at the heart of the

organisation. Service-based inspections andassessments do not in themselves providesufficient means to address overall corporateperformance. We will therefore introducecomprehensive performance assessments for allcouncils building on existing audit, inspectionsand assessments and including assessments ofcorporate capabilities.

3.17 These assessments will be a cornerstone ofthe Government’s performance framework forlocal government. They will provideGovernment, councils and the public with aclear performance profile for each council. Thisinformation will:

• enable a proportionate action plan,linked to the Best Value PerformancePlan, to be agreed with each authority toaddress areas of concern highlighted inthe comprehensive performanceassessment and to help better targetresources for support;

• inform negotiation of targets andfreedoms through local PSAs; and

• provide a robust basis for action to tacklepoor performance and failure.

3.18 Evidence on councils’ performance iscurrently gathered from a wide range of differentassessments. The comprehensive performanceassessments will draw these together. Eachcouncil’s performance and capacity to improvewill be assessed, taking into account localcircumstances, bringing together:

• performance indicator data (on currentperformance and past trends);

• OfSTED, the Social ServicesInspectorate, the Benefit FraudInspectorate and other service basedinspections and assessments together withaudit reports; and

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• a corporate governance assessment of theauthority as a whole, undertaken indialogue with the authority andincorporating an element of peer review.

3.19 The result will be a ‘balanced scorecard’compiled by the Audit Commission withassistance from other inspectorates and bodieswith an assessment role, and working withcouncils themselves. This will identify eachcouncil as either:

• high-performing – near the top of theperformance spectrum, with highperformance in priority service areas, nopoorly performing services and withproven capacity to improve;

• striving – not necessarily at the top of theperformance spectrum but with provencapacity to improve;

• coasting – not at the top of theperformance spectrum and with limitedor no proven capacity to improve; or

• poor-performing – consistently near thebottom of the performance spectrum andwith limited or no proven capacity toimprove.

3.20 These assessments will be complementedby the new performance rating system for socialservices described in the box.

3.21 Over time we want all councils toprogress up the performance spectrum.Successive comprehensive performanceassessments will show which councils aremaking such progress. They will also show ifany councils are standing still or sliding downthe performance spectrum.

3.22 In addition, each authority’s performanceon all the key services will be identifiedseparately using the appropriate inspectorates’assessment wherever these have beensatisfactorily completed. The Audit Commissionwill aim to complete the first comprehensiveperformance assessments for all upper tierauthorities by late 2002 and for district councilsby late 2003.

3.23 The Audit Commission is developing,and will pilot, the methodology for thecomprehensive performance assessments withother inspectorates and Departments. They willdo this in consultation with local governmentand other parts of the public sector where there

The social services performance rating

Comprehensive performance assessment builds on the development of social services performance ratings, to bepublished for the first time in Spring 2002-03. The social services performance “stars” will provide judgements ofperformance for social services in a way that is understandable for the service users and the general public.

Social services performance assessment brings together evidence from indicators, inspections and in-year monitoring. Each year, the Social Services Inspectorate meets with each council to review performance andidentify key improvements for the year ahead.

As well as the single star rating for overall social services performance, judgements on services for children andservices for adults will be presented. Judgements will be made on the basis of current performance but will also includeprospects for improvement.

A range of “freedoms” will be available for the best performers. Three-star councils will have access to their share ofthe social services performance fund by right, for example. This approach will be extended to other grants and theGovernment is considering how, for those performing well, planning requirements could be reduced and a lighter touchinspection regime introduced.

The social services performance ratings will feed into the comprehensive performance assessment for all local authorityservices.

is the potential for joint action, for examplewith the Commission for Health Improvement.

PUBLIC ACCOUNTABILITY

3.24 To enhance local accountability theGovernment will publish clear and conciseperformance information from these assessmentsfor each class of authority. This will include a‘scorecard’ available to the public so they can seehow well their council is performing. It will alsoinclude the overall classifications and a summaryof current performance levels for key services.

HIGH-PERFORMING COUNCILS

3.25 Chapter 4 sets out our proposals forderegulation to encourage innovation andcreativity, to identify local solutions and toimprove performance. In addition, in ourmanifesto we promised to provide “furtherflexibility to high-performance authorities, withreformed inspections and more local discretionto encourage civic renewal”. This reflects ourconfidence that the best performing councilswill be able to use this additional freedom for thebenefit of their areas, and to improveperformance still further.

3.26 The additional freedoms that we willprovide include:

• a right to have existing ring-fenced grantreplaced by targeted grant in any casewhere the council and Government judgeit to be desirable except in respect ofgrants which have to be passed to schools;

• not being subject to the reserve powers tocap council tax increases;

• more freedom to use income from fines;

• further reductions in plan requirements tobe agreed with Government; and

• a reduction in proportion of ring-fencingof Government support for capitalinvestment.

3.27 Chapter 4 sets these additional freedomsin their wider context. As a result of ourproposals for new trading powers (see chapter 4),streamlining best value reviews (see below) anda more proportionate and co-ordinatedapproach to inspections (see below), high-performing councils will also have:

• freedom to trade more widely across therange of their services;

• more discretion over the content andtimetable of their best value reviewprogrammes; and

• a much lighter touch inspection regime.

3.28 In addition, high-performing councils willhave access to further freedoms through theirlocal PSA negotiations.

3.29 Complacency will not be a characteristicof high-performing councils. On the contrarythe Government will look to them to lead theway to further service improvements and toshare their expertise with other councils. Theywill also receive targeted support for capacitybuilding and training to help them do this.Subsequent comprehensive performanceassessments will look for evidence of this.

3.30 The Government’s aim is to see allcouncils moving into the “high-performing”category by strengthening their capacity todeliver on priority services. This reflects ourgoal to see widespread excellence across localgovernment. We will keep the package offreedoms for high-performing councils underreview. We expect that, over time, furtherfreedoms will be added to the package as theyare identified (e.g. through local PSAs) andsome of the freedoms in the package could berolled out more widely if they are shown to besuccessful in delivering service improvements.

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STRIVING COUNCILS

3.31 Further freedoms will be available tostriving councils following their comprehensiveperformance assessment, including through localPSAs.

3.32 We would expect to agree more extensivefreedoms for striving councils than for othersincluding access to a package of freedomsapproaching that available to high performers.They will also be free to trade in areas wheretheir performance is strong (see chapter 4).

3.33 Striving councils will have a bespoke,lighter touch inspection regime, and morediscretion over their best value reviewprogrammes. They will receive targeted supportfor capacity building.

COASTING COUNCILS

3.34 Coasting councils will have theirperformance monitored against theproportionate action plan they agree followingtheir comprehensive performance assessment(including their best value review programmeand audit and inspection programme). They willreceive support for capacity buildingconcentrating on areas of weakness. With thatsupport, the Government will expect to seerapid improvement in their overall performance.

3.35 Like others, coasting councils will be ableto secure further freedoms through negotiationson their local PSAs where the freedoms canassist in delivering stretching targets to helpimprove local services. They will also be able totrade in areas where their performance is strong(see chapter 4).

POOR-PERFORMING COUNCILS

3.36 For poor-performing councils it may alsobe appropriate to temporarily ease some

regulatory requirements as part of an overallplan for tackling their weaknesses.

3.37 Poor-performing councils will receive adirected approach to support and capacitybuilding and Government intervention wherethis is necesssary to tackle corporate or serviceweaknesses. As described later in this chapter,we will draw from a range of interventionoptions depending on the nature and seriousnessof the weaknesses identified. Their performancewill be monitored against the action plan theyagree following their comprehensiveperformance assessment (including their bestvalue review programme).

Proportionate and co-ordinated inspection3.38 External scrutiny plays a key role indriving up performance. We remain committedto the principle of external inspection and thereis a broad consensus amongst all concerned onits potential for delivering improved outcomes.

3.39 The Government recognises that increasedinspection activity has led to additional costs forlocal authorities both directly through fees andindirectly (through the member and staffresources required for inspections). The recentPublic Services Productivity Panel reviewconcluded that inspections need to be better co-ordinated and re-focused to reflect and bettersupport council performance.

3.40 We will therefore move quickly toestablish a new model of inspection for localgovernment based on the following principles:

• effective co-ordination of inspection acrossthe full range of local authority functions;

• the amount and nature of inspectionactivity for an authority will reflect itsperformance profile identified through

the performance assessments and riskanalysis, taking account of local priorities;and

• inspection must be an effectivecomponent of intervention measureswhere services are failing.

3.41 In the case of high-performing councilsthis will lead to a substantial reduction ininspection activity.

3.42 The Government believes that existinginstitutional arrangements need to bestrengthened. In particular:

• the Audit Commission will have aleading role in helping to develop eachcouncil’s inspection programme workingwith the other inspectorates. This willflow from the council’s action planfollowing its comprehensive performanceassessment;

• we will extend the remit of the BestValue Inspectorate Forum to encompassthe full range of local governmentinspection activity. We will task this newForum and the Audit Commission withdelivering the new inspection regime;

• the Forum will be required to report onprogress to a joint Ministerial Groupsupported by a new unit; and

• in 18 months time the Government willassess progress towards delivering the newinspection regime and consider morefundamental institutional change to drivethe process further should this provenecessary.

Tackling poor performance3.43 The Government will not tolerate poorperformance or failing councils and services.They let down the people councils represent andserve. They damage the reputation of the rest of

local government. Local government is equallycommitted to tackling poor performance. Wherea council or service is poor or failing we willexpect councils to act to put things right andwhere necessary we will take decisive and toughaction.

3.44 Comprehensive performance assessmentswill provide the basis for a common approach tointervention across Government. Informationfrom those assessments will enable us to identifycouncils that are failing, on the verge of failingor consistently performing poorly. In discussionwith the Audit Commission and otherinspectorates, we will establish common criteriaacross Government which will determine howand when action is taken to tackle failingcouncils and poor service performance. This willbe reflected in a revised intervention protocolwith local government. In addition, Ministerswill reserve the right to act swiftly to tackleservice or corporate failure where a serious risk isidentified either to local people or to the well-being of their community. All existing powersfor Ministers to intervene where performance isinadequate will be preserved within the newframework.

3.45 Information from comprehensiveperformance assessments will enable earlieridentification of potential corporate failure andpoor service performance. Where this occurs wewill identify with the authority a package ofsupport provided either from within the localgovernment community or by external bodies.The package will focus on areas of greatestweakness and be designed to remove barriers togreater efficiency and higher quality services.Where support is provided from within the localgovernment community it will generally be underthe guidance of the IDeA. If we cannot reachagreement with the authority we will prescribethe measures that are required.

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3.46 Poor-performing and failing councils canexpect a comprehensive programme ofinspections to monitor progress across the fullrange of services. We will adopt a more directiveapproach to best value review programmes andlocal PSA negotiations, with less discretion forthe council about the targets to be met. We willalso consider the temporary relaxation of nationalrequirements for less critical services, so that theauthority can concentrate on improvements inpriority areas.

3.47 Where, following a comprehensiveperformance assessment, a council is identifiedas failing with little or no prospect ofimprovement we will apply early interventionmeasures. Which measures are used will depend

on the specific circumstances of the authorityand the nature of the failure. They will includenegotiated or imposed peer and external support(described above) and further, tougher actionssuch as:

• transfer of functions to other providers;

• placing the council into administration;and

• franchising management (where strongercouncils are given a role in runningweaker ones).

3.48 We will consult on the alternative formsof intervention (including those described inthe box) and the way in which they might workin practice. In doing so we will draw on

Tackling serious corporate failure

In addition to early intervention through negotiated or imposed peer and external support, the actions described below could be taken where very serious failings are identified.

Transferring functions to other bodies

Where a council is failing, particularly where the authority is in serious financial or corporate difficulty, one option is to require certain functions to be transferred to another body. Options include:

• enforced contracting out of the function to another body such as another local authority, a not-for-profit company or trust or the private sector with the council retaining statutory responsibility for strategic decisions; and

• transferring responsibility in this way but with no residual statutory role for the council.

Administration

Where financial mismanagement is at the root of failure, the law at present requires the council’s finance officer to issuea notice suspending all new commitments until the council has met to take decisions. These warning stages aredesigned to require councillors to rethink their spending decisions. We believe that a stronger process is required wherecouncils are facing persistent financial difficulties with adverse consequences for local people. A further possibility is toappoint an administrator with widely drawn powers to restore solvency while ensuring the continuity of essentialservices. This would be triggered on public interest grounds and could be the precursor to a longer term negotiated orimposed support package once financial stability has been restored. Administration can also be an effective solution formore general corporate failure.

Franchising management

Incoming managers from a high-performing council or another public body would take on management of the authorityunder a franchise. Such arrangements could include success-related reward or bonus arrangements. This approachwould allow for cross-fertilisation of good practice between authorities, across service boundaries and from otherpublic bodies. It would also promote greater choice of providers for public services.

experience of intervention across all services.Tackling poor corporate performance will opennew opportunities to change the way in whichservices are provided and encourage real choice.

Local PSAs3.49 Local PSAs concentrate on a limitednumber of important targets for improvingperformance. Their particular strength is thatthey are negotiated and agreed betweenindividual councils and Government. Eachcouncil makes a commitment in its local PSA toachieving a dozen or so targets for stretchingperformance focussed on clearly specifiedoutcomes. These targets relate to both theGovernment’s priorities and locally identifiedpriorities. For its part, the Government commitsitself to supporting the delivery of national andlocal priorities by:

• promising performance reward grant forachieving the targets;

• providing a pump-priming grant to helpthe authority achieve these targets; and

• negotiating freedoms and flexibilities instatutory and administrative requirementsthat hamper delivery of the targets.

3.50 This year, local PSAs have been agreedwith twenty councils in a pilot scheme. Allother upper tier authorities have been invited tonegotiate agreements over the next two years.Nearly all those authorities have now bookedtheir negotiations and the first four haveconcluded their agreements. The box givesexamples of commitments made by councils andof freedoms agreed by Government in the pilotscheme.

3.51 The Government and the LGA haveworked together to develop local PSAs, whichhave been welcomed by both central and localgovernment. Councils have found them useful inproviding a focus for improvements in priority

service areas and have welcomed the opportunityfor discussion with senior Government policyofficials. Central government has found themuseful both as a contribution to meeting nationaltargets and as a forum for developing wide-ranging freedoms to make it easier for councils todeliver high quality services.

3.52 We intend to build on the success of thelocal PSA pilots to stimulate and rewardimprovements in performance in those aspectsof a council’s activities that are of the greatestimportance locally and nationally. We willretain the main features of the present schemedescribed above.

3.53 To ensure greater focus on deliveringimprovements in priority service areas we willtake a more proactive approach to local PSAnegotiations. In particular we will:

• approach the council well beforenegotiations commence to identify asmall number of areas in which we willexpect their local PSA to include‘stretch’ targets. These will focus on thoseareas within the Government’s top fourpriorities where the council’s performanceis relatively weak (as identified by thecomprehensive performance assessments);

• encourage councils to propose ‘stretch’targets in other service areas included inthe national PSA for local government,particularly in areas in which theirperformance is relatively weak; and

• retain a substantial minority of ‘stretch’targets for locally identified prioritieswhich matter to local people.

3.54 The Government will continue to assessproposals for freedoms and flexibilities accordingto their potential to help councils achieve betteroutcomes. We will recognise strongerperformance by agreeing more ambitiousfreedoms.

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Examples of commitments to better outcomes and freedoms and flexibilities agreed in pilot local PSAs

Better outcomes

Education: to increase the percentage of 14 year olds at or above the expected standards for their age in literacy (by6%), numeracy (by 8%), science (by 7%) and information technology (by 5%). (Previous council target increases withouta local PSA were: English 4%; Maths 4%; Science 4%; and IT 3%).

Crime: to reduce the number of domestic burglaries from 4,366 in 1999/2000 to 3,275 in 2003. (Previous council targetfor 2003 without a local PSA was 3,711.).

Transport: to increase bus use from 31.3m passenger journeys in 1999/2000 to 33.05m in 2003/2004. (Previous counciltarget for 2003/04 without a local PSA was 32.55m.).

Social services: to increase the number of looked after children who are adopted by at least 66% between 1999/2000and 2003/04. (The expected increase without a local PSA was 33%.)

Waste: to reduce the number of fly tips from 9589 to 8221 between 2000/01 and 2003/04. (The number without a localPSA was expected to rise to 11,986).

Rural areas: to improve access to services in rural areas, reducing poverty and connecting isolated communities,measured by a range of indicators.

Regeneration and neighbourhood renewal: to reduce dependency and increase employment and fulfilment of peoplein two deprived areas of the county, measured by a range of specific indicators.

Freedoms and flexibilities

• Participation in work on rationalising planning regimes for education and social services.

• Greater ability to transfer funding between education Standards Fund categories.

• Greater certainty of funding from education and crime prevention initiatives.

• Advance piloting of proposals in the Adoption White Paper.

• Return of income from litter fines, to use for street cleanliness projects.

• Agreement with the Driver and Vehicle Licensing Authority to act as agent in removing unlicensed vehicles.

• Permission for provision of joint arrangements in respect of services to address abuse of drugs.

• Experimental lane rental schemes to reduce traffic congestion.

• Better links between local authority closed circuit television monitoring and police radios, overcomingconfidentiality problems.

3.55 We will also continue to expect to seeevidence in local PSA negotiations that acouncil is working with other local partners(including other upper-tier councils, single-purpose authorities and district councils) wheresuch collaboration is likely to lead to betteroutcomes. As local strategic partnerships aredeveloped we will expect them to contribute tothe council’s shaping of their local PSA and to

the delivery of the targets it contains. This willopen the way for local PSAs to evolve to coverwider aspects of public services than just those ofthe local authority. We will retain the flexibilityfor councils to strike deals with other partnerson how to share their pump-priming and rewardgrants for shared targets, and to request freedomsand flexibilities for their partners to support thedelivery of shared targets.

DISTRICT COUNCILS

3.56 District councils are an important featureof the local government landscape especially inrural areas. They deliver important serviceswhich affect every household or manyhouseholds – environmental services, benefits,housing, planning, waste collection, local taxcollection, electoral services and so on. Thismakes districts well placed to benefit from andpromote e-technology. They also have anincreasingly important role in delivering localenvironmental improvements (the “liveability”agenda).

3.57 Districts should not work in isolation.The Audit Commission’s recent annual bestvalue statement4 highlights that while somedistrict councils deliver very good services manyhave limited capacity to improve and innovate.There are particular issues facing small districtswhich have a limited council tax base andlimited capacity to undertake significantdiscretionary activity, not least because theyemploy only a small number of officers.

3.58 District councils are best placed torespond and adapt to meet local challengeswhen working in partnership with others. We continue to believe that collaborationbetween districts and counties will result inbetter outcomes than would be achieved bythose authorities acting alone, particularly indelivering access to services in rural areas.

3.59 We will continue to provide incentivesfor county-district co-operation in local PSAsthrough:

• strong encouragement for countycouncils’ local PSAs to include targetsthat require working with districts;

• a larger potential reward grant wherethere is substantial district involvement(reflecting the budgets of participatingdistricts as well as counties); and

• a larger pump-priming grant in recognitionof the extra administrative costs ofnegotiating the involvement of districts.

Streamlining best valuereviews and plans3.60 Best value replaced compulsorycompetitive tendering, and with it removed theconstraints on local authorities which preventedthem from working in new and strategic wayswith other partners. It is designed to put highstandards and the needs of people andcommunities above cost reduction.

3.61 Best value is already making a differencein delivering service improvements and inclosing the gap between the authorities whichwere lagging well behind the best. Someauthorities have shown that step changes in thequality and efficiency of services are possible.

3.62 All this is a promising beginning. Like theAudit Commission, we recognise that there arevaluable lessons to be learned from the first yearof best value on which we need to act. We alsorecognise the case for streamlining the best valueregime, to enable authorities to use it as anopportunity for radical challenge rather than abureaucratic process, and to engage citizens andstaff in improving services.

3.63 Best value reviews are becoming morestrategic and fewer in number. We will introducefurther measures to reinforce a more challengingand strategic approach. We will also simplify andreform the best value performance plan.

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4 Changing gear: Best Value Annual Statement 2001, Audit Commission, September 2001, ISBN 1 86240 307 4http://www.audit-commission.gov.uk/publications/nrchanginggear.shtml

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5 Best Value Performance Indicators 2002/2003: A Consultation Paper DTLR, November 2001 http://www.local-regions.dtlr.gov.uk/consult/best02-03/index.htm

3.64 Our recently published consultation onperformance indicators for 2002-035 proposed areduction in the total number of indicators from123 to 95. This represents a reduction of 23%from 2001-2 and of almost 50% from the highpoint of 189 indicators in 2000-01. Furtherreforms will arise from the rationalisation andconsolidation of performance measures in nextyear’s spending review.

3.65 These proposals, together with furtherchanges to come following the wider review ofbest value, will streamline and strengthen thebest value framework so that it provides a betterbasis for developments in:

• performance assessment and inspection;

• local PSAs; and

• intervention where councils or servicesare failing.

BEST VALUE REVIEWS

3.66 Each council’s review programme will beinfluenced directly by information from thecomprehensive performance assessment. Inparticular:

• high-performing and striving councils willhave greater flexibility to determine theirreview programmes in the light of ourintention to remove the requirement toreview all of their functions over a fiveyear period; and

• coasting and poor-performing councilswill be required to negotiate with theAudit Commission a programme ofreviews focusing on particular areasof weakness identified by their

comprehensive performance assessment.For poor-performing councils there willbe a greater degree of prescription.

3.67 In each case, review programmes will benegotiated alongside audit and inspectionarrangements.

3.68 Challenge remains an essential element ofbest value reviews. It has often been neglectedby local authorities. We will promote a strongerchallenge element in best value reviews by:

• encouraging early involvement of auditorsand inspectors to ensure that hardquestions are tackled at the scoping stage;

• requiring the involvement of ‘thirdparties’ (service users, other stakeholdersand ‘independent’ participants) in allreviews, including elements derived fromthe IDeA’s “peer challenge”. Chapter 2describes some measures for strengtheningthird party involvement in the work ofoverview and scrutiny committees; and

• issuing clear guidance on the respectiveroles of executive members and overviewand scrutiny committee members inreviews, emphasising the importance ofstrong corporate leadership within theauthority.

3.69 We will also encourage greater use ofcross-cutting and joint reviews by:

• building on the findings of councils’comprehensive performance assessmentsto deliver the priorities set out in thenational PSA for local government;

• providing incentives for joint action bytying them more closely to sources offunding such as that for e-government;

• building capacity to manage joint reviewsinvolving third parties; and

• requiring joint reviews as part of apackage of remedial measures for poor-performing councils.

BEST VALUE PERFORMANCE PLAN

3.70 The best value performance plan willremain central to our performance frameworkand provide a focus around which planrationalisation can take place. It draws togetherfuture and past information on councils’performance, plans and finance, and it willfeature prominently in the comprehensiveperformance assessment of each council.Together with the assessment results, it willprovide the basis for dialogue with auditors andinspectors on a more integrated andproportionate audit and inspection regime.

3.71 These plans need to be better focused onservice delivery priorities, councils’ capacity todeliver and financial performance. To achievethis we and councils need to be clearer about theintended audiences for the plan. It is unrealisticto seek to meet the needs of Government, localpeople and stakeholders, inspectors and auditorsin one document.

3.72 The content of the plan will be keptunder review to ensure that it is fit for purposeand does not pose excessive burdens. In doing sowe will remove the requirement for it to includeexplicit policy statements on different issues.Instead we will rely on the development ofperformance indicators such as those on cost-effectiveness. We will move towards a broaderannual assessment of the plan and integrate thiswith traditional audit processes such as theopinion on accounts and the management letter.This judgement will be communicated to

stakeholders and the public in the form of a ‘reportcard’ on the council’s performance and capacity.

3.73 From 2002 we will change the annualdate for publication of the full plan to 30 June sothat it is based on actual rather than estimatedperformance information. This will bring it intoline with the planned date for publication ofcouncils’ annual financial statements. We willrequire publication of summary informationtargeted at local taxpayers and service users by31 March. The summary publication will beintegrated with the council tax leaflet sent outwith council tax bills from 2002. We are alsoconsulting on medium term proposals forstreamlining council tax information6. Localauthorities will be able to provide thisinformation in a form which helps people tounderstand it and secures a better fit with othercorporate information. The council’s monitoringofficer and chief executive will be responsibilefor ensuring the objectivity and politicalimpartiality of the summary.

BEST VALUE PARISHES

3.74 We will issue separate guidance to bestvalue parishes tailored specifically to theirneeds. That guidance will include all thestreamlining measures described above. Whenlegislation permits, we will pay a grant of£30,000 each year to best value parishes to coverthe costs of audit and best value related worksuch as the preparation of performance plansand the management of reviews.

3.75 Best value should, wherever possible,provide opportunities for principal authorities todelegate functions to parish and town councilsand encourage partnership working between thedifferent tiers of local government. We will issuefurther guidance to principal authorities

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6 Improving Communication with Council Tax Payers: A Consultation Paper, DTLR, September 2001http://www.local.dtlr.gov.uk/finance/ctax/consult/index.htm

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advising them to include in their Best ValuePerformance Plans their arrangements forworking in partnership with parishes onneighbourhood service delivery.

THE REVIEW OF BEST VALUE

3.76 The review of best value will build onthese simplifications and reforms and:

• explore ways in which best value can bemore focused on higher standards ofservice;

• ensure best value is neutral as to whetherservices are provided by the public,private or voluntary sectors, havingregard to the need for alternativeproviders to challenge existing providersand tackle failing services;

• ensure that terms and conditions of staffare fair, both in terms of the work beingdone and incentives for betterperformance and, where there is evidenceof a two-tier workforce, to proposeeffective remedies;

• consider how staff can be fully involvedin best value; and

• review the scope for providing incentivesto managers and employees in the publicsector.

DIVERSITY AND CHOICE

3.77 One of our key principles of public servicereform is more choice for the consumerincluding the ability, particularly where qualityfalls below acceptable standards, to have analternative provider. We believe that risingexpectations amongst the public, together withsignificant advances in the way in whichservices can be delivered, make it essential that

there is real variety in the way in which servicesare delivered, genuine choice of serviceproviders and genuine choice for service users.

3.78 In most cases the highest standards ofservice provision are more likely to be achievedwhere there is competition and choice ratherthan any one supplier dominating the provisionof services. We believe it is essential that whereservices are failing there should be a wide rangeof alternative options available. Where possiblewe want to see real choice for the consumer. Sowe will ensure that the plans drawn up withcoasting and poor-performing authoritiesfollowing their comprehensive performanceassessments address the extent to which greaterdiversity of service provision would improveperformance. Where councils do not followthese plans the Government expects the AuditCommission and other inspectorates torecommend the remedial action to be taken byGovernment.

3.79 Consumer choice comes in various ways.For some services it can come directly so thatthe public can choose who to go to for aparticular service. Where this is possible wewant to see it happen: for example in parentalchoice of school or offering a range of supportand care packages for older people. For otherservices, such as waste collection, choice is lesspracticable although success in meeting sharedobjectives, such as on waste recycling, will stilldepend on meeting householders’ preferences.Consumer choice can also come from activeparticipation in council decisions on choice ofprovider and ultimately through the ballot box.

3.80 No sector – whether public, private orvoluntary – is indisputably the right choice inevery circumstance. We want to establish theconditions under which all sectors have anopportunity to make a contribution toimproving local services, either separately or inpartnership. There is no reason why, in

principle, these conditions should not apply toall areas of local government responsibility. Andwe want to give all those delivering high qualityand efficient public services, from whicheversector, every incentive to make good use of theirexperience and expertise to help authorities thatare struggling.

3.81 The responsibility for creating theconditions for real choice of this sort rests on allthose with an interest in local services. Localauthorities, service deliverers, frontline staffand their trades unions all have roles to play.Fair competition and fair employment gohand in hand.

3.82 We will consider urgently therecommendations of the review of best value onways in which a level playing field can beestablished for local government services. In thelight of the review’s recommendations we willconsider:

• amending statutory guidance to placegreater emphasis on:

– the use of fair and open competitionwherever practicable,

– diversity in service provision,

– wider choice of service providers, and

– analysing, developing and creatingmarkets to encourage diversity,innovation and competitiveness;

• developing better indicators of diversityand choice against which performancecan be assessed;

• how best to build capacity so thatcouncils can exploit the opportunitiesprovided by the new powers to trade setout in chapter 4; and

• encouraging better use of best valuereviews to identify and tackle deliveryoptions that require partnership withothers, including public-public partnerships.

3.83 The Strategic Service DeliveryPartnership Task Force has been asked to helpevaluate and develop alternative models forservice delivery. This development work willmake an important contribution to genuinechoice for councils and in particular for users of council services.

Exploiting newtechnologies for betterservices3.84 Chapter 2 describes the potential for newtechnologies to transform the relationshipbetween local people and councils, and to helplocal government adapt and respond tochanging public expectations. New technologiesare also critical to improving service quality andcost. These technologies open the way for thepublic to go to a single website or call centre tofind information or transact business. They alsoreduce information, handling and process costs.These technologies can enable dramaticefficiency gains alongside transformation of theeffectiveness of services. They can also open upgreater demands on services as access becomeseasier.

3.85 This makes it crucial to develop electronicstrategies alongside best value reviews and localstrategic partnerships. Effective grasp of thetransforming potential of e-government will be akey factor in the council’s capacity to improve.

3.86 The 100% response rate to the call forcouncils to prepare Implementing ElectronicGovernment statements is an encouraging signof local government’s readiness to move forward.It is also important for local and national e-strategies to be coherent, so that functionaland service plans are thought through from thepoint of view of local delivery and allow roomfor local imagination and innovation.

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3.87 Early in the new year a national strategyfor local e-government will be published. Thiswill provide a platform for central-local co-operation. It will map the building blocksthat need to be in place and clarifyresponsibilities for building national capacityand infrastructure and developing skills andsupport. It will provide comprehensiveinformation about who is doing what and towhat timetable. It will show the way to meetingour target for electronic delivery of all serviceswhich can be delivered in this way by 2005. Thenational strategy will set out an ambitious visionfor transformation, integration and change builton exploiting the potential of new technologiesto the full.

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Introduction4.1 The second principle of the Government’sprogramme for public service reform is thateffective delivery of national standards requiresthe devolution of real power and responsibilityto local leaders and frontline staff. We have toincrease councils’ room for action, giving themthe powers and freedom they need to innovateand shape services in ways that respond to andmeet local needs. We will do this for all councilswherever that will deliver better services. Wherecouncils have the track record and capacity touse substantial extra freedoms for the benefit oftheir area, we will go further.

4.2 The importance of local government’scontribution to improving people’s quality of lifein areas such as health, education, transport andcommunity safety gives central Government asignificant and legitimate interest in theefficiency and effectiveness with which councilsdeliver services. As a result, Government hassought to influence councils’ behaviour, byintroducing controls over inputs (e.g. bycontrolling borrowing, and ring-fencingresources or channelling them through specialprogrammes), processes (by requiring theproduction of plans or establishment ofpartnerships) and decisions (e.g. through theintroduction of consent regimes).

4.3 There are problems with this approach.Over the years, the cumulative effect hasbecome significant:

• the level of ring-fenced grant is in dangerof rising to levels that seriously restrictcouncils’ financial room for manoeuvre;

• councils are now required to producesome 66 separate plans and strategies,with top tier councils alone required toproduce more than 40;

• the Regional Co-ordination Unit hasidentified some 30 key initiatives targetedat deprived areas and neighbourhoods.

4.4 This accumulation of centralrequirements and initiatives can becomecounter-productive, especially if – as has oftenbeen the case – measures are not focused on theclear delivery of outputs and outcomes, and areintroduced without considering their potentialto increase bureaucracy and inefficiency.

4.5 That is not to say that these mechanismsare of no value. They can be an effective andappropriate response in certain circumstances,notably to kick start action on a nationalpriority that is not yet being effectivelyaddressed at local level. But Government needsto use them in a more measured and consideredway. Too often they are seen as a first resort,rather than as one of a range of policy responses.Once introduced, Government is often slow toremove or wind them up, even when they haveserved their purpose. Too little account is takenof the cumulative effect that such measures canhave – including the attendant dangers offragmentation, duplication and rigidity in the

CHAPTER 4

Freedom to deliver

To realise our common aim of improvingpeople’s quality of life councils need greaterfreedom and wider powers to deliver.

We will:

• provide greater freedom to borrow, invest,trade, charge and set spending priorities;

• abolish Council Tax Benefit SubsidyLimitation;

• cut back on planning requirements, area-based initiatives, consent regimes and otherred-tape; and

• take steps to prevent the future impositionof unnecessary new burdens.

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efforts of councils and their partners to tacklelocal problems.

4.6 The new arrangements described inchapter 3 will allow Government to shift itsfocus to the assured delivery of outcomesthrough a national framework of standards andaccountability, and away from controls overinputs, processes and local decisions. In chapter6 of part II of this publication we set outproposals to promote sound financialmanagement and responsibility. With theseinitiatives in place, many of the existingcontrols over processes and finances will becomeunnecessary. So over the course of thisParliament we will give councils more space toinnovate, to respond in ways that areappropriate to local circumstances, and toprovide more effective leadership.

4.7 We will provide greater freedom forcouncils to borrow, invest, trade, charge and setspending priorities. We will reduce the numberof plans councils are required to produce atGovernment’s behest, rationalise area-basedinitiatives, abolish a large number of consentregimes, and tackle a number of other items ofregulation or red tape. And we will put in placeeffective mechanisms to prevent the impositionof new and unnecessary burdens.

Freedom to borrow andinvest4.8 We will abolish the existing system ofcredit approvals. It will be replaced by a localprudential regime under which individualauthorities will be responsible for deciding howmuch they can afford to borrow, in accordancewith the code which CIPFA is developing.There will be reserve powers to set a nationalborrowing limit in circumstances where the total

local authority borrowing seems likely to resultin a level of expenditure which the economycould not afford. There will also be reservepowers to re-impose Government control onauthorities which abuse the new freedom.Instead of controlling the borrowings of allcouncils, the Government will intervene onlywhere an authority proves unable to dischargethe responsibility itself.

4.9 The amount of borrowing that anauthority can afford will normally depend on therevenue income available to service debt aftermeeting other spending commitments. It wouldnot be prudent for authorities to borrow againstthe security of their capital assets and we shallretain the present prohibition on the mortgagingof local authority property.

4.10 This new approach to capital investmentwill also cover housing, giving authoritiesfreedom to borrow to the extent that they canafford to service the additional debt from theirexisting resources. We believe that housingfinance must remain separate from other funding.It would be wrong for council housing either tosubsidise or be subsidised by the general counciltaxpayer. But we will simplify housing financeand eliminate unnecessary divergence betweenhousing and the rest of the finance system.

4.11 When the new prudential regime comesin, we will end the unnecessarily complex‘receipts taken into account’ mechanism, andnot replace it with an alternative system1. Thiswill mean that authorities will no longer havepart of their capital receipts taken into accountin the allocation of Government capital support.The current housing ‘set aside’ arrangement willbe replaced by a simpler housing capital receiptspooling system that will apply to all housingreceipts, including those received by debt freeauthorities.

1 See paragraph 4.32 of part II.

4.12 We will create new options to allowauthorities to get best value when they investthe funds they hold. We are consulting on givingauthorities access to commercial ‘money marketfunds’ and to a similar public sector fundoperated by the Public Works Loan Board. Wepropose to make the latter available in advanceof the new legislation.

Greater freedom to tradeand charge 4.13 The Government wants to see a dynamicand entrepreneurial public sector which willincrease diversity and choice in the delivery ofpublic services. In March, we published aconsultation paper with proposals to allow bestvalue authorities to supply and charge for goodsand services to others in the public, private andvoluntary sectors.2 The proposals were intendedlargely to replace reliance on the LocalAuthorities (Goods and Services) Act 1970,which restricts local authorities’ trading powersto dealings with other authorities and designatedpublic bodies.

4.14 We will go further than the proposals inthe consultation paper and provide wider powersto trade for all authorities, where this helpsachieve best value in the delivery of publicservices. Councils should be able to trade in anyservice in which they have a strong performanceon delivery. High performers will therefore beable to trade across a wide range of their services.Trading will not be subject to any centrallyimposed financial limit or be limited to theexploitation of existing assets. We will provideincentives to good service providers to take onnew work and build their capacity to provideservices to others. We will publish statutory

guidance on the use of these powers, which willprovide the necessary safeguards for taxpayers,local service users and businesses. This guidancewill ensure that councils do not distort marketsthrough cross-subsidation and other forms ofunfair competition. It will also be tailored to theeffectiveness of each council, giving the bestperformers the widest freedom and flexibility touse the new powers.

4.15 In addition, we will give authorities thepower to charge an appropriate fee for providingdiscretionary services.

Greater freedom to setspending priorities4.16 We have undertaken a review of ring-fenced grant. We conclude that ring-fencingremains an important means of bringing aboutchange, for example ensuring that councils andschools devote sufficient attention to areas thathave been neglected in the past. However, thegrowth in ring-fencing is excessive – from 5%of all grant in 1997 to 12% this year and onpresent trends to 15% in 2003-04. This growththreatens to erode local decision-makingresponsibility, limit authorities’ ability to tackleimportant local environmental priorities (suchas litter, graffiti and public spaces) and toincrease council tax levels.

4.17 We will therefore restrict ring-fencing tocases which are genuine high priorities forGovernment, and where we cannot achieve ourpolicy goal by specifying output or outcometargets. Any new ring-fenced grant schemes willbe time-limited and have no match-fundingrequirements, other than for very small pilotschemes. All authorities will benefit from these reforms, which demonstrate that the

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2 Working with Others to Achieve Best Value, DETR consultation paper, March 2001 http://www.local-regions.dtlr.gov.uk/consult/bestvalue/index.htm

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Government is committed to reducing the levelof ring-fenced funding. High-performingcouncils will have a right to have existing ring-fenced grant replaced by targeted grant in anycase where they and Government judge it to bedesirable except in respect of grants which haveto be passed to schools. We will also restrict theproportions of ring-fenced capital support.

4.18 We have already announced that we willallow local authorities to use the money fromfines for dog fouling and littering to provideadditional spending to enhance the localenvironment. We also intend to make surplusrevenue from parking fines available foradditional spending on local environmentalimprovement rather than just transport projects.We will give high-performing authoritiescomplete freedom to decide how to spend theincome from dog fouling, littering and parkingfines. In addition, we will review other new andexisting powers to levy civil penalties with apresumption that further freedoms can beoffered to high-performing authorities. Thepowers under which councils levy fines arecontained in various legislation. Suitableamendments to these will be made in order toprovide the flexibilities we propose.

Other finance freedoms4.19 We will abolish council tax benefitsubsidy limitation. We are consulting on givingcouncils greater freedom to decide council taxdiscounts and exemptions. We will also not usethe reserve power to cap high-performingauthorities.

4.20 Details of our plans to modernise capitalfunding arrangements are set out in chapter 6and in part II of this publication.

Cutting back on plan andstrategy requirements4.21 A recent study by the Department ofTransport, Local Government and the Regions(DTLR) has identified some 66 planswhich councils are required to produce atGovernment’s behest. Three Departments –DTLR, the Department of Health and theDepartment for Education and Skills (DfES) –are responsible for 48 of these.

4.22 The Government wants to see sustainabledevelopment become a mainstream issue forlocal authorities, their partners, and localcommunities. We believe that the most effectiveway to achieve this is to subsume Local Agenda21 strategies within statutory communitystrategies (which are required, by law, topromote sustainable development3). Manycouncils have already done this, and weencourage others to follow suit.

4.23 Our guidance on local strategicpartnerships (LSPs) published in March4

recognised the link between communitystrategies and neighbourhood renewal strategies.Both strategies will be prepared by LSPs, andthere are clearly important links between effortsto renew the most deprived neighbourhoods andwider initiatives to improve quality of life in anarea. LSPs will therefore be free to decidewhether to combine these strategies in a singledocument. If they decide to do this, the specificmeasures for tackling neighbourhood renewalshould not be lost in doing so.

4.24 The requirements to produce corporatecapital strategies and asset management plans(AMPs) are relatively new. They wereintroduced as part of the efforts within the single

3 Section 4 of the Local Government Act 20004 Local Strategic Partnerships: Government Guidance, DETR, March 2001, Product code: 01LG9011. http://www.local-

regions.dtlr.gov.uk/lsp/guidance/index.htm

capital pot to improve the way in whichauthorities develop their capital investmentstrategies and promote better use andmanagement of assets. Corporate capitalstrategies and AMPs will be needed for councils’own purposes. As soon as councils are producingcorporate plans to a sufficiently robust standard,the requirement for these plans to be submittedto Government will be dropped.

4.25 Education AMPs were developed andintroduced in advance of the corporate AMPsand serve significantly wider purposes. Theyinform directly allocations of capital support tocouncils as well as providing a basis for localimprovement through the benchmarking of dataand performance. They are still in the process ofdevelopment, for instance to support bettermanagement of capacity and more robustoptions appraisal. These and other differencesmean that the requirement to submit EducationAMPs, including information on priorities andprocesses will continue. DfES will look to reducethe information needed for high performingcouncils, and will publish guidance onimproving the joining up of Education AMPswith councils’ wider, corporate document.

4.26 The recent Housing InvestmentProgramme (HIP) Review has already removedthe requirement on local authorities to make aseparate HIP submission. HIP performanceassessments are now based on annual HousingBusiness Plans and Strategies which councilsneed to prepare in order to discharge theirresponsibilities. Legislation currently beforeParliament introduces homelessness strategies.The DTLR will publish guidance to bring theseplans together under the umbrella of the housingstrategy. The intention is to move to a singlestrategy that is current for 3-5 years once thedocuments have reached a ‘fit for purpose’standard.

4.27 The green paper on developmentplanning proposes a radical restructuring of andreduction in the number of development plans.

4.28 The Department of Health has recentlycarried out a major review of the plans it requiresin relation to social services. The reviewconcluded that there is scope for a significantreduction in the numbers of plans. Ministershave accepted those conclusions. As a result, asignificant proportion of the Department’s planswill be abolished, merged, or otherwisestreamlined.

4.29 DfES guidance on the new AccessibilityStrategies5 will allow these to be subsumedwithin an existing plan of Local EducationAuthorities’ choice. The rolling together of anumber of other plans into a single LocalEducation Strategy, currently being piloted byfive councils through local Public ServiceAgreements (PSAs), will be extended to otherauthorities if the pilots are shown to besuccessful. And the DfES will look favourably atfurther suggestions for plan rationalisationwhich come forward in local PSA negotiations.

4.30 We will no longer require the production ofa separate Air Quality Management Action Planwhere an air quality problem arises because oftransport pollution. Instead, councils will be freeto address this through their Local Transport Plan.And the Department of the Environment, Foodand Rural Affairs will remove the requirementto produce the Waste Recycling Plan once thestatutory requirement to produce a MunicipalWaste Management Strategy is in place.

4.31 With the introduction of the newperformance management framework, theDepartment for Culture, Media and Sport willreview the amount of information required ofcouncils in the Annual Library Plan with a viewto streamlining those requirements and the

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5 Introduced by sections 28D and 28E of the Disability Discrimination Act 1995 and amended by the Special EducationalNeeds and Disability Act 2001.

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6 Policing a new century: a blueprint for reform, Home Office, December 2001, Cm 5326, ISBN: 0-10-153262-8,www.policereform.gov.uk

7 The Government’s new Strategy for Children and Young People was published for consultation in November. Building aStrategy for Children and Young People includes proposals for simplified and rationalised planning arrangements for childrenand young people’s services, in line with the proposals in this white paper. To obtain a copy of the strategy, visit the websiteat www.cypu.gov.uk or call the Unit’s dedicated phone line on 020 7273 1120.

process. This will be done in conjunction withexpert library bodies.

4.32 The White Paper on Police Reform6 setsout proposals for Crime and Disorder ReductionPartnerships and Drug Action Teams to worktogether in developing and implementing localcrime and disorder reduction strategies and thedrugs strategies. Proposed mergers of these twogroups will help improve efficiency and delivery.

Streamlining the requirements that remain

4.33 The remaining requirements should work,as far as possible, with the grain of councils’ ownactivities. We will work with the LocalGovernment Association (LGA) to review theremaining plans in order to:

• identify further scope for rationalisationwith the aim of a reduction of at least50% from current levels; and

• identify the minimum requirementswhich Government needs councils tofulfil and seek to amend thoserequirements that remain so they fit aseffectively as possible with councils ownplanning requirements.

4.34 This review will be informed by the workundertaken by the Children and Young PeoplesUnit on rationalising planning for childrens’and young people’s services7, and the inter-departmental component of the Department ofHealth’s review of health and social care plans.Our review of emergency planning will look atthe scope for rationalising the Civil DefencePlan, Pipeline Safety Plan and the Control ofMajor Accident Hazards Plan.

4.35 For high performing authorities there willbe opportunities to negotiate and agreeadditional freedoms from requirements toproduce plans.

Rationalising area-basedinitiatives4.36 Local joined-up action designed to tacklespecific area-based challenges has an importantrole to play in improving services for localpeople. However, there is a need to rationaliseand streamline these area-based initiatives(ABIs), in order to maximise local flexibilityand minimise bureaucracy.

4.37 Government is currently reviewing ABIswith a view to amalgamation, integration ormainstreaming. Government Offices for theRegions and local government are engaged inthis process. We have already announced stepsto bring Education Action Zones together withthe Excellence in Cities programmes. An actionplan to rationalise the Government’s smallgrants programme for community groups will bepublished in shortly.

4.38 The Government will extendopportunities for the pooling of ABI budgets atlocal level to deliver initiatives more effectively.A pilot study currently taking place in onecouncil is considering the pooling of budgets fora range of initiatives including the SingleRegeneration Budget, Education Action Zones,the Neighbourhood Renewal Fund and theChildren’s Fund.

4.39 The Government has also encouragedlocal government both directly and throughtheir membership of LSPs to play a key role inthe rationalisation and streamlining of ABIs.We are also considering how LSPs can be givengreater discretion to widen targeted programmesto meet local circumstances.

Abolishing consentregimes 4.40 Requirements on local authorities to seekGovernment consent before taking actionweaken local accountability and stifleinnovation. With the introduction of theRegulatory Reform Act 2000 Government nowhas the means to repeal unnecessary consentregimes without resort to primary legislation.Decisions have already been taken to repeal 52consent regime powers. Decisions on a further30 powers outstanding from the 1997 EfficiencyScrutiny’s recommendations will be takenshortly.

Removing other “red tape”4.41 In a joint exercise with the LGA theCabinet Office Regulatory Impact Unit hasidentified some 61 items of potential red-tapethat would benefit from closer examination witha view to their removal. Several of these aredealt with by the proposals elsewhere in thiswhite paper, in the Planning Green Paper, or inthe current review of road traffic legislation. Onthe others, the Government will work jointlywith the LGA to review each item, and take thenecessary steps to remove unwarranted burdens.We will publish the joint study report with theLGA and Cabinet Office early next year. Thisreport will contain a timetable for completing and implementingthe review.

Controlling new red tape4.42 Government’s efforts to reduce red tapewill be of little benefit to local governmentunless effective means are in place to minimisethe imposition of new requirements. Themeasures described above will be accompaniedby the piloting of a new policy evaluation tool –the Policy Effects Framework – which will seek toprevent the imposition of unnecessary burdens.We need to ensure that we establish a consistentgateway process on the introduction of newplans, performance indicators, ring-fencedgrants and other regulatory controls.

4.43 As noted earlier, planning requirementscan serve a useful purpose in certaincircumstances. But the need to introduce afurther plan needs to be considered alongsidealternative ways of achieving the policy goal inquestion. Where the conclusion is that a newplan is needed, we will:

• consider how the proposed requirementfits in with council processes as well asGovernment’s needs; and

• seek to agree any new requirement withlocal government, rather than simplyimposing it.

4.44 Ring-fenced grants can also have a usefulrole to play in certain circumstances,particularly to kick-start action on a priority areawhich is not being addressed. Before introducingany new ring-fenced grant we will have regard tothe criteria described in paragraph 4.17 above.

46

47

Partnering Taskforce and our Local GovernmentModernisation Team all make significant andvaluable contributions. Their work willcontinue to evolve to meet new needs. But moreneeds to be done.

5.3 In the context of next year’s spendingreview we will undertake a wide-ranging review ofsupport for councils and training for councillorsand council staff. Our proposals for moreeffective and co-ordinated support will focus on:

• rationalisation of the current wide rangeof funding streams available to councils;

• more effective targeting to address eachcouncil’s strengths, weaknesses and needsas revealed by the comprehensiveperformance assessments;

• making the best use of scarce skills; and

• facilitating effective exchange of skillsand ideas between local authorities andbetween local authorities, centralgovernment and other public, private andvoluntary sector organisations.

5.4 This chapter describes some actions wewill be taking now and some of the options wewill be considering during the spending review.We would welcome views on the issues andproposals put forward in this chapter1.

Support for capacity building for councils andtraining for members and officers is animportant part of our proposals to see excellentlocal government services and leadership.

We will:

• conduct a wide-ranging review of support forcapacity building and training to developproposals for more effective use of resources;

• develop and pilot a gateway review processto support complex, high risk or novelprocurement projects; and

• develop the Beacon Councils Scheme,integrate it with our performanceframework and maintain its focus on peersupport and best practice guidance forfrontline service delivery.

CHAPTER 5

Support for councils

Building capacity andsupporting councils5.1 The ambitious agenda for local governmentset out in this white paper presents significantchallenges to local authorities, their members andstaff. They need to access a range of new skillsand build their management capacity to meetthese challenges and to take full advantage ofthe greater freedom, new powers and increasedresponsibility we are proposing. The Governmentis determined to ensure that councils, membersand officers all have the support they need tobuild their capacity to deliver strong andconfident community leadership and highquality public services. In particular there is aneed to build up capacity and skills in:

• strategic leadership;

• effective overview and scrutiny; and

• partnership working, performancemanagement, project management, newtechnologies and commissioning andprocurement.

5.2 The Improvement and DevelopmentAgency (IDeA), Employers’ Organisation, PublicPrivate Partnership Programme (4Ps), SocialCare Institute for Excellence, Strategic1 Responses should be sent by 28 February 2002 to Ben Turner, DTLR, 5/B6 Eland House, Bressenden Place, London,

SW1E 5DU, e-mail [email protected]. In line with normal practice, Ministers may wish to publish responses andmake them available to Parliament. Should respondents wish their comments to be treated in confidence they should makethis clear in their response. All responses may nevertheless be included in statistical summaries of the comments receivedand views expressed.

48

2 Delivering Better Services for Citizens – A review of local government procurement in England, DTLR, August 2001, ISBN1851124853 http://www.local-regions.dtlr.gov.uk/consult/betterservices/report/index.htm

Resources and delivery5.5 The Government will consider theeffectiveness of current support and funding. All Government Departments will examine,with the Local Government Association (LGA)and others, the roles, capabilities and potentialof the bodies currently providing support forcapacity building in local government, andconsider:

• whether a different institutional structureis needed, and if so if there is a need for anew joint central-local body to plug gapsand remove overlaps in provision and co-ordinate support more effectively;

• how existing funds can be consolidatedand rationalised to provide more effectiveand co-ordinated support to councils,including the option of a single fund;

• how funding should be distributed andtargeted, including the possibility of anew targeted grant to provide councilswith resources to build capacity; and

• whether the current balance betweenrevenue and capital support for capacitybuilding and training is right.

Training and development5.6 Better targeted and co-ordinatedresources will improve the effectiveness ofinvestment in training and development formembers and officers. The steps which councilsand Government can take to improve thequality of member and officer training include:

• joint member and officer training;

• capacity building for senior managementteams as well as individuals;

• self-managed learning supported byexperienced mentors;

• joint training across sectors;

• joint training for central and localgovernment officials, and across thepublic sector;

• wider use of secondments and jobshadowing between central and localgovernment and between localgovernment and other public, private andvoluntary sector organisations;

• a ‘directory’ for member and officertraining; and

• effective use of new technologies such ase-briefings, e-learning and telephone andvideo conferencing.

5.7 The Government will look at howsupport can best be provided for these activitiesand what more the Government can do tofacilitate and encourage them.

Making the best use ofscarce skills5.8 For the scarcest skills it may not be cost-effective or realistic to build up sufficient in-house resources for all councils to be self-reliant.For example, local authorities may only beinvolved in one ‘big ticket’ procurement everyfew years and may need to import the necessaryexpertise. This was recognised by the Taskforceled by Sir Ian Byatt and reflected in their reporton procurement in local government2.

5.9 The Government agrees with theTaskforce that the use of gateway reviewprocesses by local authorities will help improvethe quality of delivery for complex, high-risk or

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3 Leading and Learning: perceptions and attitudes toward the Beacon Council Scheme and motivations for attending events(Rashman, L. Hartley, J. and Gulati, A., August 2000) and Monitoring and Evaluation of the Beacon Council Scheme: reportof the process outcomes evaluation (Hartley, J. Rashman, L. Downe, J. and Storbeck, J., to be published shortly)

novel procurement in local government. Wewill support the implementation of thisapproach as part of the wider initiatives oncapacity building. We will do so in co-ordination,as appropriate, with the Office of GovernmentCommerce, Partnerships UK, the 4Ps and theIDeA. We will work with these agencies on anumber of other initiatives to help improve localgovernment procurement, including:

• brokerage (helping local authorities andother public bodies come together towork in partnership and to gather marketintelligence);

• mentoring;

• training;

• an advisory service;

• good practice guidance; and

• standard core contract documentation.

5.10 We will also work with the private andvoluntary sectors to maximise theircontribution to building capacity and diversity.

Peer support and bestpractice5.11 The dissemination and sharing of bestpractice has an important part to play indeveloping and improving councils’ capacityand capability to deliver quality local servicesand leadership. There is a great deal of goodpractice within local government and we needto maximise the opportunities for councils tolearn from one another.

5.12 The Government recognises and welcomesthe significant contributions made by the IDeA’sLocal Government Improvement Programme

and other initiatives such as IDeA Knowledgeand Learning. We need to build on these.

5.13 The Government will encourage districtcouncils to make more use of the LocalGovernment Improvement Programme,particularly in the run up to theircomprehensive performance assessments.District councils will be able to focus theirresources for capacity building on weaknessesidentified in their peer review report.

5.14 Our review of support will also look atproposals to:

• include in all pathfinder and similarschemes an explicit requirement, as acondition of award, that councils work withone or more authorities whose performanceis weak in the service in question;

• encourage high-performing authorities towork with poor-performing councils,perhaps by twinning high-performingauthorities with poor-performingauthorities; and

• establish a pool of accredited membersand senior officers who will be availableto support and advise other authorities.

BEACON COUNCILS

5.15 Independent research has identified theconsiderable progress achieved by the BeaconCouncils Scheme and its contribution toimproving services3. Attaining Beacon statusprovides national recognition for front-line staffdelivering public services and helps all councilsto learn and to improve their own performance.The research and feedback from councils andthe Beacon Councils’ Advisory Panel haveidentified a need to clarify the future of the

50

scheme, examine the resources available to itand streamline the application process. We willretain the scheme, including the principle ofvoluntary participation, and we will:

• integrate it with the comprehensiveperformance assessments set out in chapter3, for example by using those assessmentsto inform the Panel’s consideration ofapplications for beacon status;

• provide greater certainty about the futureof the programme and strengthen linkswith best value reviews by moving to alonger-term rolling programme of Beaconthemes;

• open up the scheme to applications fromall best value authorities, includingnational parks authorities, policeauthorities and best value parish andtown councils;

• develop with the IDeA a more effectiveapproach to disseminating best practice;and

• consider the adequacy and effectivenessof the financial support for BeaconCouncils, as part of our wider review ofsupport.

Recruitment and retention5.16 Terms and conditions of localgovernment employment are rightly a matter for local authorities themselves to determine.We are aware of concerns from councils thatrecruitment and retention of some high calibrestaff is becoming increasingly difficult. So wewill work with the LGA and the Employers’Organisation on a strategy to help localgovernment recruit and retain the right staff. In doing so we will examine:

• the option of a ‘Graduate ManagementProgramme’ for local government, similarto the Civil Service Fast Stream;

• the feasibility of central recruiting inrelation to specialist skills, to build up acadre of specialists that could be trainedand deployed flexibly, possibly throughregional centres of excellence; and

• how councils can be encouraged toprovide incentives to front-line staff todeliver performance improvements,including more imaginative payframeworks.

Working with others 5.17 An important method of increasingcapacity is through working with others,whether that is other local authorities, the widerpublic sector or the voluntary and privatesectors. This encourages cross-fertilisation ofideas and skills and provides access to theresources, technology and scarce skills thatmany councils urgently need.

5.18 Through initiatives such as the StrategicPartnering Taskforce we will ensure that adviceis available to authorities on new ways ofworking and new models of service delivery.This will include encouraging authorities toprovide services to others using the new tradingpowers described in chapter 4.

5.19 If there is to be genuine support for theprinciple of working with others to deliver highquality services, then employees and their tradesunions need to be confident that improvementsdo not come at the expense of their terms andconditions. The Government recognises thathigh quality services depend on highlymotivated staff and employers who recognisetheir staff as a valuable resource. The review ofbest value (see chapter 3) will makerecommendations on how this can be achievedas part of the best value process. Both tradesunions and employers share a common interestin making sure that best value achieves highstandards of service.

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CHAPTER 6

Investing for improvement

Where we start from6.1 The local government finance systemshould help authorities deliver on national andlocal priorities. It should also reinforce localdecision making.

6.2 The local government finance systemwhich we inherited in 1997 did not meet thesecriteria. In particular:

• Government grant was declining in realterms. Services were suffering. There wasserious neglect of capital investment andmaintenance;

• public expenditure totals and grantformulae were revised annually. Therewas no certainty about future funding. So, authorities could not plan ahead;

• too much power was vested in Whitehall.Local authorities had little control overtheir own income. They requiredGovernment permission to borrow;

• the distribution of Government grant wasunfair. Resource was not always allocatedwhere it was most needed and would domost good; and

• the system was too complicated.Councillors could not understand how

grants were allocated. Head-teacherscould not understand how their budgetswere set. Council taxpayers could notunderstand their bills.

6.3 In the last Parliament, we concentratedon tackling the first two problems. We haveprovided substantial real increases in revenuegrant and support for capital investment (seecharts). We have delivered greater predictabilityand stability – by setting three-year expendituretotals in the spending reviews, by freezing thestandard spending assessment (SSA) formulae,by introducing floors and ceilings on the grantincreases for individual authorities, and bymaking earlier announcements on ring-fencedgrants and credit approvals. Local authorities arebetter funded than they were, and can planahead with greater confidence.

6.4 It is now time to tackle the outstandingissues. We need to:

• promote local freedom and responsibility,and strip out unnecessary bureaucracy;

• address the unfairnesses in revenue grantdistribution; and

• try to make the finance system moreintelligible to those it serves.

A sound local government finance system needsto promote local financial freedom andresponsibility, address and minimiseunfairnesses and be readily understood bythose it serves.

We will implement freedoms proposed in lastyear’s green paper Modernising LocalGovernment Finance and we will go furtherby:

• introducing a number of additional reformswhich give all local authorities greater

control over how they raise, spend andinvest their money, and which reducebureaucracy; and

• giving extra freedoms to high-performingand striving authorities.

Alongside these new freedoms, we willintroduce measures to promote good financialmanagement at the local level.

We will ensure that changes to the localgovernment finance system are managedsensibly.

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Central government support for local authority revenue expenditure

Central government support for local authority capital expenditure

-3%

-1%

1%

3%

5%

7%

9%cash terms

real terms% change overprevious year

1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02

Central government support includes revenue support grant, specific grants within AEF and business rates.

No adjustments have been made to take account of changes in local government responsibilities.

–20%

–10%

0

10%

20%

30%

40%

Central government support includes credit approvals, capital grants and PFI credits.Figures include capital grants to grant maintained and voluntary aided schools.Figures for 2001/02 include major repairs allowance (MRA)

% change overprevious year

cash terms

real terms

1993/94 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02

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6.5 Chapter 4 sets out our proposals forsubstantial freedoms and flexibilities for allcouncils and additional freedoms for councilsdepending on their performance. It includesproposals for greater financial freedom andresponsibility such as:

• abolishing council tax benefit subsidylimitation for all authorities;

• greater freedom for all authorities to decidecouncil tax discounts and exemptions;

• the power for all authorities to charge anappropriate fee for providing discretionaryservices;

• more freedom for all authorities onborrowing and investments;

• the right for high-performing councils tohave ring-fenced grant replaced bytargeted grant in any case where they andGovernment judge it to be desirableexcept in respect of grants which have tobe passed to schools;

• not using the reserve power to cap thecouncil tax increases of high-performingcouncils; and

• greater freedom for high-performingcouncils to decide how to spend theincome from certain civil penalties.

6.6 The remainder of this section summarisesthe other key elements of our local governmentfinance reforms all of which are set out in detailin part II of this publication.

Local authorities’ income6.7 Local authorities raise about one quarterof their income from council tax and about 11%from fees and charges. Most of the remainingtwo-thirds of their income comes fromGovernment grants, which are funded fromnational taxes including the business rate. It isoften argued that this balance between national

and local taxes has an adverse impact on localauthorities’ autonomy, but there is little hardevidence for or against this view, and there is noconsensus on how the balance might be shifted.Once we have done some further analysis of this,we shall establish a high-level working group,involving Ministers and senior figures from localgovernment, to look at all aspects of thequestion – reviewing the evidence and lookingat reform options.

6.8 We do not consider there are any quick oreasy ways of securing a major shift in the balanceof funding, particularly given the need to respectthe views of taxpayers and to ensure thatfinancial reform does not become a distractionfrom the delivery agenda. However, we need tobe clear what the longer-term reform optionsare. We also need to consider whether there aremore modest reform options that could bepursued more quickly.

6.9 As part of our deregulatory agenda, we areabolishing council tax benefit subsidylimitation, and we will not use the reservecapping powers against high-performingauthorities. We are consulting on givingcouncils greater freedom to decide council taxdiscounts and exemptions. And we will makecouncil tax bills more transparent, so thattaxpayers can see by how much differentauthorities are increasing their council tax.

6.10 We will also bring the council tax up-to-date. Bills based on new property values willissue in 2007. We will legislate to require ten-yearly revaluations in the future. A revaluationshould have no impact on the total amount ofcouncil tax raised. Ahead of revaluation, we willlisten to the views of taxpayers and localgovernment about council tax bands and relatedmatters. We shall introduce legislation to makeit clear that additional council tax valuationbands can be created without new primarylegislation.

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Financial support fromGovernment6.11 Government support for revenuespending takes the form of ring-fenced grant(which has restrictions on how it is spent) orgeneral grant (which has no such restrictions).As described in chapter 4 any new ring-fencedgrants will be time-limited and have no match-funding requirements other than for very smallpilot schemes. We will also give high performingcouncils the right to have ring-fenced grantreplaced by targeted grant in any case wherethey and the Government judge it to bedesirable except in respect of grants which haveto be passed to schools.

6.12 Most general grant will be allocated bynew formulae. We will not base grant decisionson the Government’s assessment of authorities’own forward spending plans.

6.13 We will introduce new grant formulae for2003-04 which will replace SSAs. We aim tomake the new formulae more intelligible thanexisting SSA. We want to move away from theuse of regression analysis which replicates past patterns of spend and to focus on up-to-dateevidence on why the cost of providing servicesvaries. We will take more account of the fixedcosts that authorities face. Floors and ceilingswill set limits on the annual change in grant.They will ensure that all authorities receive areasonable increase in grant.

6.14 Once the new formulae are in place, therewill be a further ‘freeze’ on formula changes for2004-05 and 2005-06, except where there arechanges in the functions of councils, or thefinancing of particular services. We will workwith local government with the aim ofintroducing a safety-valve grant in 2004-05. The grant will be available to authorities whichhave high levels of council tax and low unit

costs, but which do not benefit from the newgrant formulae.

6.15 We will consult local government aboutthe best way of providing Government supportfor capital investment under the new regime.We will also:

• reform the single capital pot, to reducethe amount of ring-fencing of capitalsupport available to high performing andstriving authorities;

• abolish the unnecessarily complex‘receipts taken into account’ mechanismwhen the prudential borrowing systemcomes in (the current housing ‘set aside’arrangement will be replaced by a simplerhousing capital receipts pooling systemthat will apply to all housing receipts,including those received by debt freeauthorities); and

• phase out the requirement for localauthorities to send their corporate capitalstrategies and asset management plans toGovernment. Requirements for servicespecific AMPs, such as that for Education,although reduced for high performingauthorities, will continue in order to fulfiltheir specific purposes such as enablingneeds related resource allocation.

6.16 We will maintain the Bellwin scheme ofsupport for authorities faced with floods or otheremergencies. We will reform the scheme alongthe lines recommended by the joint DTLR/localgovernment review group, by setting its fundingon a sounder footing and issuing clearerguidance on what costs are eligible for support.

Parish and town councils6.17 We will make the financial arrangementsfor parish and town councils more responsive tothe current needs and future aspirations of those

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councils – particularly the larger ones – and ofthe people who use and pay for the serviceswhich they provide.

6.18 Chapter 9 of part II describes a package offinance measures for parishes. Some of them willbenefit all parishes, whereas a few are intendedspecifically to meet the needs of the larger ones.The key measures include:

• paying a grant of £30,000 per year to eachbest value parish, when legislationpermits (see chapter 3);

• improving the borrowing approval systemby removing the annual fixed limit,streamlining the application process andby clarifying and advertising the criteriamore widely;

• increasing the ceiling on ‘section 137’expenditure (expenditure of generalbenefit to the area, on activities forwhich specific powers do not exist) to £5per elector and then raising it annually inline with inflation; and

• encouraging good practice in establishingfunding arrangements when parishes workin partnership with principal authorities(for example by taking on responsibilityfor providing some local services). We areworking to produce a set of guidelineswith the National Association of LocalCouncils and the Local GovernmentAssociation (LGA).

The challenge for councils6.19 This white paper sets out what theGovernment will do to promote better servicesand community leadership by enhancing localfreedom and responsibility. Success will require amatching effort from councils. Good financialmanagement will be one of the keys to success.

6.20 The best authorities plan ahead. Theyhave clear long-term objectives, which drivetheir spending plans. Their capital investmentstrategies are based on a sound assessment of thecondition of their assets. Their council tax,charging and revenue spending plans are basedon proper consultation with local people abouttheir willingness to pay for better services. Theyhave good internal systems for monitoring spendand delivery. They are serious about increasingtheir spending power by improving efficiency.They set prudent levels of reserves. They sharethe benefits of the greater predictability andstability on funding: schools have indicativebudgets for future years; voluntary sector bodiesdon’t have to bid for funds annually; council taxdecisions do not take local people by surprise.Members are actively involved at every stage.The executive takes full responsibility for settingobjectives and budgets, including the toughdecisions on priorities that are an inevitablepart of the budget-setting process in anyorganisation. Overview and scrutiny committeeschallenge budgets and monitor spending,delivery and efficiency.

6.21 We want to see all local authorities bringtheir financial management arrangements inline with this best practice. We will introducelegislation to reinforce the role of members insetting and monitoring budgets. We shall workwith the LGA on guidance for publicconsultation. We will ensure that the AuditCommission’s comprehensive performanceassessments take account of whether authoritiesare following best practice in all aspects ofplanning and managing their finances (seechapter 3).

6.22 We believe that the greater financialfreedom and responsibility we are offering localgovernment, backed up by good local financialmanagement, will reinforce local democracy andimprove service delivery.

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7.3 The proposals set out in this white papersignal a major shift in this direction. A start hasalready been made, with the introduction ofinnovative schemes such as local Public ServiceAgreements (PSA). Further steps will follow.Progress will depend on effective joint workingbetween central and local government – agenuine central local partnership. The prize forsuccess will be faster progress towards our jointgoal – providing a better quality of life foreveryone.

7.4 The Government recognises thedistinctive roles to be played by different types oflocal authority: upper-tier councils, districtcouncils and parish and town councils. The vastmajority of proposals in this white paper applyequally to all principal authorities: countycouncils, unitaries, metropolitan and Londonboroughs and shire districts. The exceptions arein our approach to local PSAs and the timing ofcomprehensive performance assessments. Thebox summarises our approach for districtcouncils in these two areas and describes ourapproach for parish and town councils.

CHAPTER 7

Working together for better outcomes

The proposals in this white paper willtransform relations between central and localgovernment.

Old-fashioned, top-down approaches will bereplaced by clear standards, jointly agreedpriorities, and effective systems to secure theirdelivery.

The clutter of current controls and regulationswill be replaced by streamlined, better targeted

and more effective approaches which:

• recognise and reward good performance;

• encourage improvement; and

• trigger tough action on failure.

Effective and practical arrangements atnational level will support this partnershipbetween central and local government.

Transforming therelationship betweencentral and localgovernment7.1 Central and local government have acommon interest: improving people’s quality oflife. The ability of local government to play itspart in this joint endeavour is affected, in part,by the way in which central government seeks toinfluence its actions. In the past, too littleimportance has been attached to thisrelationship, and how well it works. We havesuccessfully addressed this shortcoming atnational level, with the establishment of theCentral Local Partnership.

7.2 The challenge for the future is totransform Government’s relationship withindividual councils. In some instances this workswell. In others it does not. Across allDepartments, Government needs to move awayfrom a fragmented and uncoordinated approachto a partnership based on clear standards,common priorities, greater freedoms for councilsto deliver, and effective action where they do not.

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Our approach for district, parish and town councils

Shire district councils

The large majority of proposals in this white paper apply to both upper tier and shire district councils. The exceptionsare the approach to local PSAs and the timing of comprehensive performance assessments.

Local PSAs are being extended to all upper tier councils (on a voluntary basis). The Government recognises theimportance of district councils and believes that the way forward is for districts to work in collaboration with upper tiercouncils on local PSAs. Chapter 3 underlines this by providing for:

• strong encouragement for county councils’ local PSAs to include targets that require collaboration with districts;

• a larger potential reward grant where there is substantial district involvement (reflecting the budgets of participatingdistricts as well as counties); and

• a larger pump priming grant in recognition of the extra administrative costs of negotiating the involvement of districts.

In chapter 5 we encourage district councils to make use of the Improvement and Development Agency LocalGovernment Improvement Programme before they have their comprehensive performance assessments. This will helpthem make more effective use of their resources for support by identifying and targeting weaknesses.

We will also make council tax bills more transparent, so that taxpayers can see by how much different authorities (e.g.county, district and parish) are increasing their council tax.

Parish and town councils

Town and parish councils have an important contribution to make to local well-being. That is why the recent RuralWhite Paper1 and subsequent consultation document2 does much to augment the position of town and parish councils, through initiatives such as:

• a Town and Parish Council Charter;

• the Quality Parish scheme which will allow qualifying town and parish councils to take on new and widerresponsibilities; and

• new funding to assist town and parish councils to play a fuller role in their communities.

In addition to these measures, this white paper proposes:

• separate guidance for town and parish councils which will include the streamlining measures set out elsewhere inthis white paper;

• guidance to principal authorities advising them to include in their Best Value Performance Plans their arrangementsfor working in partnership with parishes on neighbourhood service delivery;

• when legislation permits, a grant of £30,000 each year to best value parishes to cover the costs of audit and carryingout best value related work such as the preparation of performance plans and the management of reviews; and

• a package of finance measures for parishes, some aimed at all parishes and a few intended specifically to meet the needs of the larger ones. The key measures include:

– improving the borrowing approval system by removing the annual fixed limit, streamlining the application process and by clarifying and advertising the criteria more widely;

– increasing the ceiling on ‘section 137’ expenditure (expenditure of general benefit to the area, on activities forwhich specific powers do not exist) to £5 per elector and then raising it annually in line with inflation; and

– encouraging good practice in establishing funding arrangements when parishes work in partnership with principalauthorities (for example by taking on responsibility for providing some local services). We are working to produce a set of guidelines with the National Association of Local Councils and the Local Government Association.

1 Our Countryside: The Future A Fair Deal for Rural England – DETR, MAFF, November 2000, Cm 4909, ISBN 0101490925.http://www.defra.gov.uk/erdp/erdpfrm.htm

2 Quality Parish and Town Councils: A Consultation Paper, DEFRA, DTLR, NALC, LGA, Countryside Agency, November 2001http://www.defra.gov.uk/wildlife-countryside/consult/qtpc/index.htm

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7.5 As we said in our manifesto, we alsobelieve that there can be an important role fordirectly elected assemblies for the Englishregions. Regional assemblies would be strategic,help join-up strategies and policies at regionallevel and give the regions a new political voiceand a stronger identity. They would work closelywith local authorities and complement theirroles. The Government’s proposals for regionalgovernment will be set out in a white paper to bepublished next year.

The future of the CentralLocal Partnership7.6 In November 1997 the Government andthe newly-formed Local GovernmentAssociation (LGA) signed a Framework forPartnership. This was a significant step forwardfrom the ad hoc and unsatisfactory arrangementsthat had existed previously. The Frameworkprovided the basis for an effective and practicalCentral Local Partnership (CLP).

7.7 Through the CLP, central and localgovernment have been able to develop a soundunderstanding of each other’s position across thewhole range of domestic policy issues. Moreimportantly, the CLP has been the platform onwhich real joint work has taken place – to helpto tackle social exclusion, address the challengesof rural areas and help the country to preparebetter for incidents of severe weather, to nameonly a few activities.

7.8 The CLP will continue to be thecentrepiece of national relations betweencentral and local government. The FrameworkAgreement signed in 1997 by the Deputy PrimeMinister and the Chairman of the LGA providesthe basis for the overall conduct of central local

relations. It will be revised and updated toreflect developments since 1997, including theprinciples set out in this white paper.

Setting priorities7.9 Chapter 3 describes our proposal toidentify priorities for local government throughthe CLP framework. As the LGA has suggested3,these priorities will draw on the Government’stop priorities and incorporate wider prioritiesidentified by local government such as theLGA’s six priorities for public service delivery.The priorities will be endorsed at a meeting ofthe CLP. They will inform the national PSA forlocal government and be used by each council inthe development of their local PSA to marrynationally-agreed priorities with locallyidentified ones.

7.10 The Secretary of State for Transport,Local Government and the Regions will makethe priorities for local government available toParliament as soon as possible. It will, of course,be a matter for Parliament itself to decide whatfurther scrutiny should be given to them. SelectCommittees of the House of Commons maywish to look at elements of the priorities relatingto policy areas within their own remit, or towork together in scrutinising cross-cuttingcommitments.

Delivering and evaluatingprogress7.11 Implementing the proposals in this whitepaper requires a corporate approach byGovernment in support of the new performanceframework. We need to ensure that there is thenecessary co-ordination and capacity within and

3 Partnership for Ambition: councils and government working together LGA Paper, November 2001.http://www.lga.gov.uk/lga/clp/ambition.htm

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between Departments, the inspectorates, andthe agencies which support the modernisation oflocal government. Reporting to the Secretary ofState, the Department for Transport, LocalGovernment and the Regions (DTLR) and theOffice of Public Services Reform will worktogether to develop an implementation plan andsuitable monitoring arrangements to deliver thisnew approach.

7.12 We will monitor and evaluate theeffectiveness and impact of the policies andprogrammes set out in this white paper as partof our commitment to evaluation of the overalllocal government modernisation agenda.Information about policy evaluations, alongwith other local government researchcommissioned by the DTLR, can be found onthe website at:http://www.local.dtlr.gov.uk/research/index.htm.

A practical partnership forchange7.13 A new, more mature partnership betweencentral and local government must have at itsheart a single aim – to give people everywherethe opportunities they need to make their livesbetter. This white paper sets out a radical agendafor doing this. People will benefit from theassurance that all services will improve and bedelivered to acceptable standards. They willbenefit from a focus on what really matters tothem. And they will benefit from having theircouncil listen to, and stand up for, their needsand aspirations. Together, local and centralgovernment can help achieve better outcomesfor everyone. The people we serve expect anddeserve no less.