01 December 2006
One of the proposals in the local government white paper that has attracted little comment is to reform Best Value. The government is putting a renewed emphasis on competition – and this time it's serious
The local government white paper, Strong and prosperous communities, includes proposals for changing the Best Value improvement regime. Although many of these will need to be implemented in a new Act of Parliament, the regime's unique legal framework makes revisions easy.
Best Value was introduced in the Local Government Act 1999, which was deliberately drafted as a framework or enabling statute. This means that while it contained certain specific provisions, such as the repeal of the former Compulsory Competitive Tendering regime, much of the detail was left to statutory instrument.
This is a form of subsidiary legislation that can be introduced quickly and without the debate and discussion of a full Act. For example, the Best Value Performance Indicators are detailed in a statutory instrument while the power to issue those indicators is contained in Section 4 of the 1999 Act.
The whole of the Act is underpinned by 'guidance', which allows the government to assist authorities by clarifying some of the obligations.
The white paper's proposals are designed to 'streamline and update' Best Value, which for these purposes includes the Comprehensive Performance Assessment.
The government intends to relax the more prescriptive process requirements, while sharpening the focus on two areas — citizen engagement and competition — where 'Best Value has not had the impact envisaged'.
The provisions regarding citizen engagement are less controversial than those relating to competition. All public bodies have taken huge steps to keep the public more directly informed about their activities, and the level of information provided through websites, local newspapers and government reviews is greater than it has ever been.
The main change in that area has been to make real-time information available on service performance. Several authorities have done this already and there are pilots that can be evaluated and copied where appropriate.
The potentially controversial area is the suggestion that a sharper focus on competition is needed. The white paper acknowledges the potential concerns: 'This is not a simplistic approach to outsourcing or a return to Compulsory Competitive Tendering.' It should not be forgotten that one of Labour's pledges when it came to government in 1997 was to repeal CCT; and subsequent guidance on Best Value has ruled out routine market testing (Circular 03/03).
Chapter six of the white paper, 'A new performance framework', seeks to explain the government's proposals in terms of a holistic approach to commissioning, developing markets and supporting new providers.
The government is clearly between a rock and a hard place on 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.
In terms of specifics, the paper indicates that revised guidance will be issued for local authorities to 'regularly test the competitiveness of their performance in comparison with others'.
However, both the original and current Best Value guidance have emphasised the need for 'competition'. This has been supported by guidance on procurement and shared services as well as financial support via Regional Centres of Excellence and the e-government programme running up to 2005.
If this is one of the areas where Best Value has consistently encouraged authorities to act without success, what more can be done? Presumably, there needs to be a carrot or a stick — or, more likely, a package of measures — to provide the necessary incentive.
Some idea of this is provided in the paper, which lists six elements. The one with the most teeth is probably the statement: 'requiring ambitious efficiency gains to be achieved by local authorities over the next few years as part of the 2007 Comprehensive Spending Review'.
This suggests that the carrot will be replaced by guidance on how to save money by better procurement practices, such as aggregating demand across authorities, and the stick will be replaced with such a tight funding regime that there will be no option but to comply.
Perhaps more ominously, the government has summarised the 1999 Act's provisions in relation to enforcing performance of the Best Value regime, including the most extreme sanction of removal of functions. This has never been used formally, although the government has come close to it.
Are we moving into an era where this stick will finally be used?
Stephen Cirell is head of local government and Professor John Bennett is a consultant solicitor with Eversheds. They are authors of Best Value Law and Practice, published by Sweet and Maxwell
PFdec2006
