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Paper 18 - 29 May 1998 Meeting 


29 May 1998


Report of the Association's "Best Value" Network


That the Association's response be noted.

1. The Association at its last meeting asked the Chief Executives' Group to make a joint submission on behalf of HIOW in response to the Government consultation paper.

2. The Chief Executives' Group has established a "Best Value" Officers' Network, chaired by Peter Giddings, Director of Resources at Test Valley Borough Council. Their joint response was considered by the Chief Executives' Group on 1 May, in time to meet the consultation deadline.

3. The resulting Association response is attached.

Policy Officer





1. Introduction

'Best Value was developed by the Local Authority Associations in 1995 and 1996 and then proposed to the Labour Party before the 1997 general election. The Associations proposed a new statutory duty, which would replace CCT, on all councils to pursue Best Value for the public. This new duty would apply to all services and activities of all councils and was fully endorsed by the LGA.

It is important, therefore, that local governments enthusiasm for Best Value is not dampened by over regulation and prescription.

The consultation paper states "The Governments proposals for Best Value will require councils to meet the aspirations of local people for the highest quality and most efficient services that are possible at a price that people are willing to pay."

It is the local people and stakeholders that should be driving Best Value not Government regulation.

We welcome the statement that "CCT will therefore be abolished" and are concerned that any statutory guidance regarding competitiveness which suggests compulsion will act as a barrier to the willingness to share comparative information with others.

We will expect to agree our Performance Management framework and local performance plans with our auditor and for the auditor to monitor our performance and achievements against the wishes of our stakeholders with Government intervention limited to compliance with National Standards.

2. Duty of Best Value

3.12 The Government would welcome views on the proposed form of the duty of best value, and also on whether:

I. the duty should apply only to authorities with tax raising, precepting and levying powers (para 3.7;)

II. the duty to consult should include those who use services and the local business community (para 3.8);

III. the duty to consult should be drafted in general terms only, leaving authorities free to decide how consultation should be conducted in the light of local circumstances (para 3.11).

I. We agree the duty should apply only to those authorities with tax raising, precepting and levying powers including parish and town councils with an appropriate 'de minimis' provision.

II. The duty to consult should include those who use services, the local business community, employees, those who benefit from services and those who pay. The hallmark of CCT has been better value for the taxpayer at the expense of employee wages and conditions. Best Value should aim to involve employees in a partnership with the authority.

III. We welcome flexibility over the forms of consultation and their frequency and agree that the duty to consult should be drafted in general terms only. However there should be a reference to the elected members' role in facilitating public consultation.

3. Improving Performance - Best Value in practice.

4.28 The Government would welcome comments on the performance management framework for best value as outlined in this chapter, and in particular whether:

I. the system of fundamental performance reviews should be phased so as to ensure that 20/25% of local authorities expenditure is covered annually (para 4.6);

II. the extent to which the potential links between best value and quality initiatives such as The Charter Mark might be taken forward (para 4.9);

III. The approach of prescribing a set of key service indicators which must be used in Local Performance Plans to assist rigorous comparison of performance strikes the right balance between national and local interests, and provides a possible way of rationalising the requirements placed on authorities to publish performance information (para 4.12 and 4.13);

IV. there are functions and services which currently cannot be contracted out, or provided through partnerships, but which might be in order to widen the delivery options available and facilitate partnerships (para 4.18);

V. the approach to setting performance targets for efficiency and quality provides a realistic challenge for all authorities whilst sufficiently respecting local discretion, and in particular whether the benchmark for performance improvement might be that of the top 50% of authorities or that of the top 25% (para 4.19)

I. It is our view that Best Value must be demonstrated to the public and the role of the Government and the auditor should be to ensure that the public can decide whether it is receiving Best Value - not to substitute their judgements for that of the public. It may be appropriate to review a mixture of good, mediocre and poor services at any one time - concentrating on the worst performing services first may detrimentally impact on staff morale. We believe we could achieve more by determining for ourselves what to review first. Reviewing 20/25 per cent of an authoritys budget per year is too mechanistic and so long as the auditor is satisfied that all services will be reviewed over five years the way in which this is achieved should be for local discretion. The work currently being carried out in the pilot authorities should give experience in this area.

Also the Association considers that there should be a duty to consult other authorities serving the same communities about the proposed programmes of Best Value reviews. This is because of the increasing degree to which authorities are working in partnership to deliver services and also the degree to which current legislation means that particular services can be carried out by more than one authority. From the customers perspective, it is the totality of what is provided by all authorities which counts. It will be very difficult for any authority to really deliver 'Best Value' unless it is able to take account of the services being provided by or in partnership with others. Also a joint 'Best Value' review would allow the degree of duplication, or gaps, between the work of the authorities to be considered - surely vital if 'Best Value' is to be demonstrated. It could also prove a more cost effective approach, especially where some smaller Parish Council services are involved which may not justify a 'Best Value' review on their own.

Discretion is also needed so that 'Best Value' reviews can be tied into contract renewal dates. There is no point in carrying out reviews on contracted out services until the contract review dates are within sight.

II. Quality awards such as Charter Marks have a valuable role as a guide to the public that the Council is performing to high standards and we believe that the Government should consider endorsing certain awards as appropriate in local government.

III. Outside of a few national core indicators the Government should avoid as far as possible, any requirement that prescribes indicators and targets to be set, on the basis that Councils should be able to set targets in the light of what the local people in their area see as most important. It is reasonable to require that Councils set relevant targets for every service and there could be best practice on what these are, but there should not be prescription.

A small number of National core indicators, supplemented by a more comprehensive menu of local indicators would be our preferred option to reflect adequately the diversity of an individual authoritys roles and services. The core indicators should be a measure of an authoritys general "management health", with the local indicators avoiding the temptation to divert resources towards performing as well as possible on a small number of factors.

We welcome the recognition that social conditions do affect how easy it is to perform well and that key performance indicators only provide a general health warning. Both these points need recognition in the sections that deal with auditors certification and the response to service failure.

We would support initiatives to collect consistent, comparable information, including promoting voluntary codes of practice and standards, eg to facilitate comparability between results of opinion surveys.

The challenge of developing taxpayers' and user interest in setting performance indicators will require innovative and creative change to current consultative methodologies. It could be that only an interested and unrepresentative few will want to do this and authorities should be allowed to propose standards in the light of consultation, without having to try to entice users to understand the pros and cons of particular settings for an indicator.

If targets are to be set they should be against performance within the Audit Commission family to councils with similar needs or an alternative grouping agreed with local auditors as appropriate to a particular service.

IV. We would welcome changes to the legislation on local authority companies to enable local authorities to consider appropriate partnership options and the use of the Deregulation and Contracting Out Act 1994 to give more flexibility in areas such as Housing Benefit approvals.

We also suggest that in establishing a regime for seeking comparison through tendering processes, the Government should recognise that many components of every service are bought in from the private sector and that it may be inappropriate to put a whole service out to tender, but that markets could exist for certain parts of the service and that this purchasing should be subject to good practice procurement processes.

Para 4.16 - 4.18 refers to Competition.

Best Value will bring about a whole new culture change to the provision of local government services compared to the previous eighteen years. Prior to CCT local authorities were very good at sharing ideas and information which is fundamental to the success of Best Value. The advent of CCT brought about a reluctance to complete statistical returns evidenced by the marked reduction in the number of councils completing CIPFA statistical returns. This attitude will not change if there is any element of compulsion of competition in Best Value legislation. Best Value requires complete freedom and willingness to share information with all stakeholders, both public and private sector.

The Government can contribute more through trust, encouragement and support than the design of a regulatory regime and a system of sanctions.

V. The setting of performance targets should not be too rigid. Some services might already be performing at the top 50% level and could plan to move towards the top 25%, whereas others may have a long way to go. What is important is continuous improvement and it should be for each authority to agree with its auditor a performance programme for each service.

4. Auditing Performance: Best Value Assessed

5.21 The Government attaches great importance to the arrangements for audit which are proposed in this chapter. It would welcome views on these arrangements generally, and in particular on:

I. the joint audit/inspection process, and ways in which the Audit Commission, external auditors and Inspectorates might work in tandem, or whether more far reaching changes are needed (paras 5.2 - 5.6);

II. the certification arrangements proposed in respect of Local Performance Plans (paras 5.8 - 5.10);

III. the need for a fast track notification system in case of service failure (para 5.15);

IV. the approach of distinguishing between failures of substance and process (para 5.16);

V. the requirement that authorities should consult the Audit Commission and, where appropriate, Inspectorates on their proposals to put right serious service failure (para 5.19);

VI. the extent to which local government itself might exercise constructive influence on individual authorities whose performance is inadequate (para 5.20).

I. We do not think it would be constructive to extend the powers and duties of auditors or the Audit Commission in the ways suggested. Both parties contribute a great deal to value for money already, through the exercise of their present powers and duties. Auditors communicate directly with members, through management letters; and if necessary with local electors, through public reports. The more persuasive their letters and reports, the more effective they are and the more trust and co-operation they earn from both members and officers.

Enforcement is, however, a different role from persuasion. The best enforcers may earn respect, but all enforcers engender wariness rather than co-operation. Whatever Ministers think they will get out of the proposed system of enforcement would be bought at the price of much of the trust and co-operation built up by the Audit Commission over the last fifteen years and by auditors over a very much longer period.

We would favour working with a local auditor to agree Performance Plans as it would be possible to back up a local understanding of the issues. Performance plans should include indicators on satisfaction with services as well as measures of cost and quality.

II. The certification arrangements suggested in para 5.9 are acceptable but we would refer to para 5.11 and remind Government of the excellent arrangements that currently exist between internal audit and the Audit Commission where, through 'managed audit a significant amount of external work is already reduced.

III. We agree that any agreed failures should be acted on as soon as possible.

IV, V and VI

Where there is failure of substance and process clearly the local authority will seek to agree with the auditor how to redress the situation. Only in cases where the auditor believes the council is not willing to co-operate should the Government need to become involved. In our view the role for the Local Government Association is to develop best practice in consultation both with local authorities and the Government. It would be quite wrong to expect the LGA to exercise a policing role.

For similar reasons, we do not think it would be helpful for any other organisation in local government to be asked to undertake to exercise influence on authorities whose performance is inadequate. We think it most unlikely that any would agree to do so and that it would not work if they did.

The best role for all such organisations is research, consultation and the dissemination of advice. Many of them are busy on these tasks already and we hope Ministers will be satisfied with this type of contribution.

5. Tackling Performance Failure and Rewarding Success

6.18 Tackling failure and rewarding success are different sides of the same coin. The Government seeks a measured approach consistent with its intention to devolve responsibility for local services and secure local accountability, but to intervene decisively in exceptional cases where services fail. It welcomes a debate on these complex issues and in particular:

I. welcomes comments on the justification for intervention by the Secretary of State (para 6.4);

II. invites comments on its approach to specifying the reserve powers available to the Secretary of State in the case of intervention, and as the end product of a graduated response (para 6.6);

III. welcomes comments on the way in which the local government finance system might seek to recognise efficient and effective councils (paras 6.12 and 6.14);

IV. invites comments on a range of other possible ways by which best value success might be recognised, consistent with the objective of modernising local government (paras 6.16 - 6.17).

The principal of intervention will reduce authorities accountability to their electorates and should, therefore, be restricted to very serious failures and should be an absolute last resort in response to persistent failure to improve.

The paragraph as a whole puts a strong prescriptive emphasis on failure, whereas the rewards for success are very vague. The relaxation of the capping regime would be a real incentive to reluctant authorities and we would welcome any suggestion to provide indication of levels of finance over more than one year but the more recent consultation papers on finance propose only marginal improvements in local accountability.

6. Timing and Legislation

7.5 The Government wishes to lay down in primary legislation the key elements of a framework which will both challenge local authorities to achieve sustained improvements in efficiency, economy and effectiveness, whilst encouraging local accountability and discretion as to how it is put into effect. It would welcome views as to:

I. whether the legislation framework is likely to achieve this balance.

II. how far best value should be phased in following the enactment of the legislation; and whether in particular 12 months is considered sufficient (para 7.4) .

The legislation framework should only describe general powers and duties, it cannot ensure that authorities will be successful without being over prescriptive and undermining local accountability. The onus should be on local authorities to demonstrate to the local electorates and to central government that the objectives of the Best Value regime have been achieved; this cannot be achieved by reliance on a legislative framework.

In any event if full value is to be obtained from the work currently being carried out in the pilot authorities, then nothing in the legislation should restrict this.

Government Guidance, based on the pilots and other experience, will be welcome. But we would strongly oppose "statutory" guidance.

It is noted that Best Value pilot authorities are exempted from the requirements of the CCT legislation. This exemption is welcome because it enables them to concentrate on developing Best Value. The exemption should be extended to all authorities to enable them to learn from the pilots and develop Best Value within the draft legislative framework.

Given this, a twelve months lead in period should be adequate.

7. Annex - Finance and Accounting Issues

We note the Governments comments in this Annex and are concerned that the value achieved from the total costs approach should be justified by the cost involved in carrying it out. We welcome the invitation to the Local Government Association to work with the Audit Commission and CIPFA to review existing accountancy practice.

Last update: 13/09/2000
Author: Nick Goulder, Policy Manager

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