Local Government
15 February 2007
Contacts
For further information,
please contact your usual
Eversheds contact or
Stephen Cirell
Partner
Tel from UK: 0845 498 4430
International: +44 20 7497 9797
[email protected]
John Bennett
Consultant
Tel from UK: 0845 498 4460
International: +44 20 7497 9797
[email protected]
For a full list of our offices and
contact details please visit
www.eversheds.com
Best Value, The White
Paper and the New
Local Government Bill
By Stephen Cirell and John Bennett
February 2007
1
Introduction
The Office of the Deputy Prime Minister was reorganised into the Department
for Communities and Local Government after the Cabinet reshuffle that led to
John Prescott relinquishing responsibility for local government. The pace of
reform in local government has not, however, lessened and despite a short
delay with the premature departure to DEFRA of David Miliband, Prescott’s
successor Minister and his replacement by Ruth Kelly. The White Paper
Strong and Prosperous Communities was published by the DCLG in October
2006 and represents the fourth, and probably final, phase of the
Modernisation Agenda for Local Government during this Parliamentary term.
It could have been suggested that as Tony Blair reaches the end of his
premiership some form of consolidation would be in order; instead, quite to
the contrary, the government presses on with its public sector reforms and is
building on the momentum gained over past years.
The White Paper is an interesting document and is considered further below.
It was followed in January 2007 by the publication of the Local Government
and Public Involvement in Health Bill, which seeks to implement most of its
recommendations. The Bill will progress through its various parliamentary
stages between January 2007 and the autumn, by which time it should have
become law. Many of the provisions in the Bill will not come into effect,
however, before 2008 or 2009, hence the comment above that this package
of measures probably represents the final phase of the Modernisation Agenda
for local government before the next General Election.
The White Paper
The White Paper was published towards the end of 2006 and at a time when
the various elements of the policy agenda were visibly starting to knit
together in a more comprehensive fashion. The combination of efficiency
savings under Gershon, and enhanced Comprehensive Performance
Assessments, an even tighter settlement under the Comprehensive Spending
Review 2007, and more movement towards transformational government
meant that local authorities were facing a difficult future in terms of
enhancing and improving service delivery, whilst maintaining current cost
levels. The Government had already floated the notion that joint working
and shared services would be the norm moving forwards, but the White
Paper gives this further bite. The idea of shared services also appears to be
removing the need for reorganisation into unitary local authorities, although
this prospect is available to a few by a parallel initiative inviting bids for
unitary status. For the ones who are not in a position to proceed with a full
blown reorganisation bid, the Government’s solution is much closer working
whereby the boundaries between authorities in two tier areas become much
less relevant.
In many ways, the White Paper can be seen either in a positive or a negative
light. The negative light would be continuing central government regulation
via much tighter restraint on finance by the CSR, more regulation via CPA
and inspection as to how local authorities are delivering services and
generally more hurdles to jump. However, it can also be looked at in a very
positive light, having a positive, devolutionist tone, exhibiting a new found
respect for local government and offering a wealth of opportunity to govern a
locality on behalf of its inhabitants.
Best Value remains central to the Government’s proposals.
Since its
inception in 1999, Best Value has had a chequered history. It started as the
successor to the Compulsory Competitive Tendering regime but was very
soon seen as a foundation for the Modernisation Agenda and how local
authorities should be developing in the post-Conservative government era.
Notwithstanding this early promise, Best Value did not succeed in delivering
the outcomes planned by the Government. The reason for this may well be
the way Best Value was introduced, meaning that a procedural “machinery”
of Best Value grew up which distracted from the main aim. As a result of
this, the Government overlaid the Best Value regime with the Comprehensive
Performance Assessment, with the latter relying upon the statutory
framework of the former and the two working together to deliver shared
2
goals. Best Value has therefore endured and remains an important part of
the legal framework on which local government currently operates.
It is interesting to note that the role for Best Value is likely to continue under
the proposals in the White Paper. The Government proposes to remove
much of the procedural “machinery” of Best Value mentioned above, but the
basic duty to make arrangements to secure continuous improvement in the
performance of functions will endure as a foundation for many other aspects
of the policy agenda. As such, Best Value will continue to play a pivotal role
in the this fourth phase of public service reform.
The Proposals on Best Value
Right at the start of the White Paper, in the introduction, the Government
makes it clear that it proposes to amend the Best Value duty. It is clear from
both the introduction and Chapter 2 on responsive services and empowered
communities that the primary aim is to give local people more of a say in
running local services and the DCLG believe that amending the Best Value
duty is necessary to accommodate this.
Details are given in paragraphs 2.17 to 2.21 of the White Paper which set out
the proposals in this area. The first point to note is that the Government
makes clear that whilst it wants to reform aspects of the Best Value regime,
it does not want to squeeze out innovation or cause difficulties for
arrangements that are working well. Accordingly, it is indicated that the
“proposals provide lots of room for local flexibility.” This is to be welcomed.
Paragraph 2.18 explains that, whilst the current Best Value duty requires
authorities to make arrangements to secure continuous improvement in the
exercise of their functions, having regard to efficiency, effectiveness and
economy (under s3 of the Local Government Act 1999) it is the 4Cs that are
the basic foundation of the Best Value approach. According to the White
Paper, the new “proposals will build on this approach, so that authorities will
be required to take steps, where appropriate, to ensure the participation of
local citizens in their activities.”
This is clearly seeking to take Best Value to a new level, whereby local
authorities do not just consult inhabitants and other service users about the
services they receive; it actively takes steps to involve them in those
activities. The new mantra is:
inform, consult, involve and devolve
Paragraph 2.20 makes this clear as follows:
“It will be for the authorities working with their partners to decide how
best to discharge this duty to inform, consult, involve and devolve, taking
into account factors such as the cost effectiveness of engagement
activities, the amount of discretion they have over the service, and the
differing needs and requirements of the different communities within their
area. In many cases, Best Value authorities will want to work together in
partnership to deliver this duty.”
It is not clear to what extent the old 4Cs remain and it would certainly seem
as though they have been overtaken by this emphasis. The 4Cs of challenge,
consult, compare and compete have been overlaid by the new duty to inform,
consult, involve and devolve, in keeping with the further development of the
policy agenda. In this way, the C for consult has evolved into consult and
involve; the C of challenge has evolved into challenge yourself as to whether
you should be doing something and if not devolve it, and so on. These
amendments are in keeping with the general concept of Best Value but move
its implementation by local authorities to a higher plane.
This section of the White Paper also makes clear that a further circular on
Best Value will be issued to give guidance in relation to these matters, as well
as other areas such as commissioning and competition, as discussed below.
3
It is a particularly positive development that it will be up to local authorities
to determine how best to discharge the new duty of Best Value, in keeping
with the promise of retaining flexibility.
The Government also makes clear that it will continue with its pledge to
dismantle much of the “procedural machinery” operated as part of Best
Value, which should have the effect of giving even greater flexibility to
authorities. This is summarised in Chapter 9 of the White Paper follows:
We will:
•
revise the duty of Best Value authorities (except police authorities) to
require them to secure the participation of local people;
•
deregulate and simplify Best Value by removing the requirements on
English Best Value authorities to prepare an annual Best Value
Performance Plan and conduct Best Value Reviews;
•
exempt parishes from Best Value;
•
delete provisions which enable the Secretary of State to specify, by
order, Best Value Performance Indicators and Best Value Performance
Standards, so that they no longer apply to England.
Three other areas that are mentioned in the White Paper and are relevant to
Best Value are commissioning, competition and performance indicators.
These are dealt with below.
Performance Indicators
In relation to performance indicators, the Government accepts that there are
too many indicators by which local government is judged, thereby removing
the focus from service delivery. Accordingly, Chapter 6 of the White Paper
makes clear that the Government will set out:
“a single set of national priority outcomes for local authorities
working alone or in partnership, reflecting decisions in the
Comprehensive Spending Review 2007. They will be measured by a
single set of national indicators against which all relevant partners
will report ….”
As there are currently between 600 and 1200 indicators against which local
authorities have to report to central government, the proposal to radically
reduce the number of these to around 200, which will be based on outcomes,
is welcome. However, there will still be those in local government who see
this as unnecessary interference and still an onerous burden.
Commissioning
The notion of commissioning services in local government is not new and has
been examined in depth. The Government has made strides to try and
persuade local authorities to accept the distinction between strategic planning
in relation to services and their actual delivery. The idea behind this initiative
is that it is very much a role of local authorities to engage in the strategic
planning but the delivery of services on the ground should be left to those
best placed to provide them, which will not necessarily be local authorities
themselves but might include the private sector or the voluntary sector.
This notion is continued in the White Paper in Chapter 5 looking at local
government as a strategic leader and place shaper. Paragraphs 5.67 to 5.71
deal with the role of commissioning which, “will mean local authorities
continuing to move away from a narrowly defined approach to service
delivery towards a ‘commissioning’ role - being open to use the best possible
ways of securing service outcomes.” (at para 5.67). The language used in
this section confirms the Government’s view that local authorities are often
too deeply rooted in traditional service delivery channels and talks of
authorities achieving economies of scale, “rather than being restricted by
4
local authority spatial boundaries and direct responsibilities….” This agenda
also moves towards joint or shared services, ie local authorities accepting
loss of control over services that they might currently provide.
The
Government sees greater opportunities for joint commissioning and
procurement with other statutory bodies, which might contribute towards
further efficiency savings and it is likely that this route will be the subject of
considerable pressure via the Comprehensive Spending Review, targets and
inspection.
As mentioned above, the Best Value Guidance that the Government proposes
to issue will support this commissioning role and explain how the proposals
can be implemented in practice.
Finally on competition, Chapter 7 of the White Paper on efficiency transforming local services, confirms that “the introduction of greater
competition and the availability of a diverse and innovative supply base
supports the delivery of better services.” Paragraph 7.43 comments:
“Best Value will continue to underpin the use of competition in local
authority services. The Best Value authorities are required to secure
continuous improvement in the way in which functions are exercised. We
will issue one piece of revised guidance which will strengthen the key
principles of Best Value. This will cover the commissioning role of
councils, community participation and provide that local authorities
regularly test the competitiveness of their performance in comparison
with others. When services are found to be underperforming, where
practical, they should introduce fair and open competition.”
Competition has always been something of an issue in relation to Best Value,
bearing in mind its genesis from CCT. Under the former CCT regime, local
authorities were forced to seek competitive tenders in relation to their
defined activities. Abolishing CCT was a major plank of Labour’s platform
upon which it was elected in 1997.
The Government is therefore in
difficulties in relation to this issue. Any return to enforced competition, such
as an obligation to spend a certain percentage of a budget with third parties
rather than in house, is likely to be fiercely resisted. Instead, therefore, the
Government has chosen to provide fairly bland advice, which in the main
appears to have been largely disregarded in the past. The paper The Long
Term Evaluation of the Best Value Regime - Final Report published by the
DCLG and written by academics from the Centre for Local and Regional
Government Research at Cardiff University (October 2006) comments at
paragraph 5 that:
“The evidence suggests that from 2003 onwards authorities interpreted
the 4Cs more flexibly, and in many cases overlooked the requirement for
competition altogether.”
Interestingly enough, the conclusions drawn by the team who wrote that
report were that “continuous improvement requires a combination of effective
leadership and performance management at the corporate level and good
planning and service delivery at local level.” In other words, competition was
not essential. There can be no doubt that this issue will rumble on for many
years to come yet but the focus may be dissipated by other aspects of the
Agenda coming into play, such as joint delivery of services by more than one
local authority.
Chapter 9 of the White Paper indicated that the Government would bring
forward legislation, where it was necessary to implement change.
It
specifically recounted the proposed changes to Best Value in relation to the
duty, securing participation, removing the procedural “machinery” and
exempting parishes. The proposal was for legislation to be introduced in the
2007 Parliamentary term.
The Local Government and Public Involvement in Health Bill
The Bill received its first reading in December and last month reached its
second reading stage and proceeded into Committee. Over the course of
5
coming months, the Bill will be vigorously debated and amended as part of
the parliamentary process.
Part 7 of the Bill concerns Best Value (Clauses 104 to 108). Clause 104
exempts parish and community councils from Best Value; clause 105 amends
the basic Best Value duty; clause 106 introduces new measures in relation to
community participation; clause 107 abolishes Best Value Performance
Indicators for English local authorities; and clause 108 abolishes Best Value
Performance Reviews.
Most of these changes are merely drafting amendments, such as the
amendment of Section 1 of the Local Government Act 1999 to remove the
reference to parish councils. However, clause 106 does include a new section
3A on Involvement of local representatives and this merits further scrutiny.
Clause 3A implements the proposals in the White Paper mentioned above. In
effect, it requires local authorities to achieve participation in the process.
However, the manner in which this has been drafted is of interest.
Effectively, Section 3A(1) indicates that, “where a Best Value authority
considers it appropriate for representatives of local persons …. to be involved
in the exercise of any of its functions … it must take such steps as it
considers appropriate to secure that such representatives are involved in the
exercise of the function in that way.” This seems to be in two stages, with
the first being subjective and the second stage only applying if the first is
satisfied. Effectively, a local authority has to “consider” it is appropriate to
involve people before the duty (must take such steps) bites. Perhaps the
Government takes the view that it is so obvious that any local authority that
properly addressed its mind to the issue would have to consider it
appropriate to involve people that it is written in this way. However, there
would appear to be a loophole in that if the local authority considers it is not
appropriate for representatives to be involved then it would not have to take
the steps to achieve that. There are other usual provisions included too, such
as the necessity to have regard to guidance issued by the Secretary of State.
There is no doubt that this clause will receive extensive scrutiny and debate
as the Bill passes through Parliament.
The DCLG Implementation Plan
In January 2007 the Department of Communities and Local Government
published an Implementation Plan (Strong and Prosperous Communities The Local Government White Paper - Making It Happen: the Implementation
Plan). This document is intended to put meat on the bones of the White
Paper and the Bill and give firm commitments on the part of the Government
to a timetable of implementation, together with nominated civil servants with
responsibility for the various areas included.
The White Paper proposals are split into 5 major work streams, namely: Local
Government and Public Involvement in Health Bill; Performance; Governance
and Empowerment; Cities and Regions; and Community Cohesion. The
implementation of the proposals will be overseen by the Central-Local
Partnership and the DCLG has committed to set up independent Sounding
Boards to generate further ideas.
The two work streams most relevant to Best Value are the Bill and
Performance.
Turning to the Bill first, the lead director on this area is David Prout of DCLG.
It indicates that the Bill covers the reform of Best Value and that it is due to
go into Committee stage at the end of January 2007 and Royal Assent is
anticipated in the autumn.
The second work stream on Performance gives more detail about Best Value
and the timescales in which the amendments will come into effect. The
streamlined Best Value arrangements are planned to come into effect in April
2008 at the same time as the Audit Commission gets the new Local Services
Inspectorate up and running. Full implementation of the new performance
6
framework will coincide with the implementation of the new duty on Best
Value authorities to involve local people in April 2009. As mentioned above,
the Government has proposed issuing new guidance on Best Value, probably
in the form of a Circular. The DCLG will consult on the Best Value Guidance
in the summer/autumn of 2007 and it is anticipated that it will be
implemented in late 2007/early 2008. This means that some of the changes
will barely have taken effect before the next General Election.
Will Best Value be better for the Changes?
Generally it is welcome that Best Value will continue to play a pivotal role
supporting the Modernisation Agenda. It is also welcome that the basic duty
of Best Value endures and that changes are not in relation to its concept which remains strong - but in how it works in practice. Looked at in this
context, the proposals to amend Best Value are good.
The authors have commented on numerous occasions that any difficulties in
relation to Best Value have been caused by the procedural “machinery” that
accompanied it. In other words, whilst the context of making arrangements
to secure continuous improvement is very sound, the Government required
under the Local Government Act 1999 the conduct of Best Value Reviews,
leading to the drafting of the Best Value Performance Plan and subject to
extensive inspection, all in conformance with a pre determined timetable. It
was these requirements that led Best Value astray, as authorities focused
more on the procedural requirements (as they had done under CCT) than on
the basic outcome of better services. In many ways this translated into
needlessly small reviews of areas that were non-core, leading to little change.
The fact that the Government now wants to remove much of the remaining
procedural “machinery” is therefore to be welcomed. It is interesting to note
that after 5 years of operation, the Government has come round to the view
expressed by the authors that to make Best Value work, it is not necessary to
require them to have specific Best Value reviews, within a prescribed
timescale and published in an annual plan. Instead, the concept of Best Value
should underpin everything that a local authority does and it should use the
ability to review sparingly and linked to its community strategy and other
corporate goals.
Looked at in this light, it is therefore surprising that as the Government
removes bureaucracy with one hand, it replaces it with another. This is a
reference to the new duty to obtain participation in the Best Value process.
In many ways, the question has to be asked as to why the Government has
felt it necessary to include this in the Bill and prescribe exactly how this
should take place. Why could this not be simply another paragraph in the
proposed Circular? By making it legislative, it means that the exact words
used in the Bill and ultimately forming the Act will be scrutinised, rather than
the underlying aim, and this requirement may well go the same way in due
course as Best Value Reviews and Performance Plans did.
The fact the Government proposes new guidance is also welcome, particularly
as it has mentioned that this will be ‘light touch’ and minimalist in nature.
This lesson was learned under CCT where copious amounts of guidance was
issued, to the extent that no-one could see the wood for the trees. The
Government has kept its pledge to keep guidance on Best Value short and it
is anticipated that this new Circular will continue that trend.
Best Value is definitely becoming more ingrained in other aspects of the
Modernisation Agenda. Examples are Gershon efficiency savings, which could
often be linked to a review process; the Comprehensive Spending Review, in
relation to how services are funded; transformational government, looking at
business process re-engineering and new ways of working; joint service
delivery, to deliver any of the foregoing and so on. It is also apparent that
the emphasis is moving away from the local authority itself to the local
authority as part of its wider community. This brings in the Local Strategic
Partnership, the Local Area Agreement, the proposed new Comprehensive
Area Agreement (to take over from the CPA) thereby introducing a range of
other public sector stakeholders. Whilst this approach has its difficulties, it
7
confirms that the local authority is seen by the Government as the centre of
the community and the body most likely to engage with others to lead proper
governance at local level.
The proposed commissioning role for local authorities may yet be problematic
and the role of competition in all this is still unclear. There will certainly be
much debate about this area. In some ways it could be said that the new
flexible duty of Best Value makes a requirement for competition unnecessary,
particularly bearing in mind benchmarks against other authorities via the CPA
and CAA and much greater transparency. The local authority view of the
private sector has been transformed over the last ten years in any event and
many authorities will gladly embrace private sector innovation in assisting to
achieve the new outcome based targets.
The sanction provisions in section 15 of the Local Government Act 1999
remain but it really is very difficult to see how these would be brought into
effect except in truly exceptional circumstances. The Government learned a
long time ago the lesson that taking on someone else’s problem merely
presents you with a problem and that addressing these issues has to be
within the ownership of the authorities concerned. Using intervention powers
would therefore be seen as a direct failure on the part of the Government and
it seems unlikely that they would be used. More likely is the continuous
pulling of local government services upwards via comparison, published
costings and indicators and inspection.
Conclusions
The Bill has only just reached the Committee Stage of its progress through
Parliament, so there is a long way to go yet. Generally, the amendments to
the Best Value regime seem to be supported by officers and members across
local government, although there is scepticism of the need for further
regulation in the new Clause 3A, accompanying welcome for the removal of
other procedural requirements. The timescales are relatively relaxed too,
meaning that local authorities will have some time to prepare for the changes
before they come into effect, even assuming the Bill becomes law on time.
As usual, it is unlikely to be Best Value that authorities are worrying about in
this package of reforms, more likely the Comprehensive Spending Review,
introduction of the CAA and the reform of targets. In this way, Best Value is
likely to continue in its supporting role, but nonetheless providing an
important legislative foundation for the other elements of the jigsaw.
Stephen Cirell and John Bennett are authors of Best Value: Law and Practice
published by Sweet & Maxwell.
If you wish to be removed from our mailing list, or if you have colleagues
who you think would like to receive future Local Government updates from
Eversheds, please e-mail us at the address below.
© Eversheds 2007.
This update is intended as general guidance and is not a substitute
for detailed advice on specific circumstances.
This briefing is intended as general guidance and is not a substitute for detailed advice in specific circumstances.
Data protection: Your information will be held by Eversheds LLP (“Eversheds”), in accordance with the Data Protection Act
1998, and added to our marketing databases. It may be used for internal statistical analysis, to fulfil any requests from you for
further information and services and, unless you have asked us not to, to contact you about other services or events offered by
Eversheds or our associated offices. We may pass your details to our associated offices (some of which are outside the EEA),
but we will only allow their use for the purposes mentioned above. We may also transfer your details to any successor to our
business (or a relevant part of it). An up to date list of our associated offices and their locations can be found on our website at
www.eversheds.com. This privacy statement applies to all information that we hold about you.
If you do not want your information to be used in this way or your information is incorrect, please contact Renu Chandnani by
writing to Eversheds LLP, Cloth Hall Court, Infirmary Street, Leeds LS1 2JB or send an e-mail to
[email protected]. Alternatively call +44 20 7497 9797 and we will assist you with your queries.
8
© EVERSHEDS LLP 2006. Eversheds LLP is a limited liability partnership.