Targets give councils taste of freedom

27 Jul 00
Local government leaders are savouring a small but significant victory in their long-running turf war with Westminster over control of frontline services.

28 July 2000

After 20 years in which power has shifted relentlessly from town halls to Whitehall, there are at last faint signs that councils are beginning to win their battle to retain responsibility for key local functions such as education.

The Treasury published its Public Service Agreement white paper on July 28, a week after Chancellor Gordon Brown unveiled the results of the Spending Review, and for once local government likes what it sees. As well as setting targets for each government department, the paper also details the government's plans to extend Public Service Agreements to local authorities and identifies the 20 pilot programmes to be launched next April.

Each authority selected for the pilot will negotiate a PSA with the Treasury over the coming months, with targets being linked to a performance reward fund that gives extra cash to the councils that meet them. Authorities are also being tantalised with the prospect of extra 'freedoms and flexibilities', if they prove themselves equal to the new challenges.

The Local Government Association, which first posited the idea of local PSAs last year in its submission to the Spending Review consultation exercise, has welcomed this evidence of the government's apparent new-found faith in authorities' ability to improve service standards.

Neil Kinghan, LGA director of local government finance, says the agreements have the potential to transform the relationship between local and central government and will encourage Whitehall to see councils as a solution to the problem of poor services rather than one of the causes.

'Hopefully they will show government that they do not have to tell authorities what to do in increasing detail and with increasing frequency,' he says. 'This should mean authorities can have a discussion with the government about service delivery instead of just being on the receiving end of instructions – and that will mean they perform better.'

The pilot schemes set roughly 12 targets, reflecting a mix of national and local priorities, for each participating authority. Some of these will raise existing standards, such as increasing the requirement that 80% of 11-year-olds have to meet the expected level in numeracy and literacy.

Other examples cited in the Spending Review document, published on July 18, include a 2% annual improvement in cost effectiveness, and achieving 100% on-line service delivery by 2005.

The pilots are restricted to top-tier authorities, in part because they provide many of the services likely to be covered by the new agreements. If they prove successful, local PSAs will be rolled out in April 2002.

But even as it appears that Whitehall, and the Treasury in particular, is demonstrating a new willingness to entrust service delivery to those at the coalface, warnings are being sounded that the partnership arrangements are just a temporary hiatus in the downward slide of local government's power.

Tony Travers, director of the Greater London Group at the London School of Economics, says analysis of the chancellor's hand-outs reveals a deep-seated scepticism about the ability of local government to deliver service improvements. He cites education as a case in point.

'There is a mistrust of public spending institutions,' he said. 'Department of Education spending is up by double the amount of local government education spending. Schools will, over time, find that their resources are coming less from local government and more and more from central government. There is no doubt that David Blunkett will control which school gets what.'

A glance at the new funding arrangements would seem to bear this out. While schools and universities are undoubtedly among the biggest winners in the Spending Review, much of the extra money will be distributed directly to institutions by the Department for Education and Employment. The Standard Spending Assessments for local authorities will rise from £21.3bn this year to £25.3bn in 2004, a 6% increase, but funding channelled through the DfEE will go up from £17.5bn to £23.9bn – a 12% rise – over the same period.

Travers argues that this shift towards direct funding is born of Labour's desire to tackle the deep-rooted social problems that successive governments have failed to solve.

'There is a quiet desperation to find a way of doing something about the inter-generational endemic poverty that has been with us since the earliest studies of deprivation were carried out,' he explains.

'There is a shift away from allocating money through SSAs and a strong desire to allocate more money through the DfEE. The obvious implication is that they want to direct money to the types of schools they consider to need it. The government is involved in an heroic effort to target money at the most deprived authorities.'

But accepting this analysis inevitably means a diminution of local authorities' role as the principal providers and managers of services. The LGA acknowledges this risk but is taking a determinedly upbeat view of the government's willingness to try PSAs.

'They will demonstrate to everyone that local authorities can and will deliver on outcomes, that we can make major improvements to services,' says Kinghan.


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