14 December 2001
Local Government Secretary Stephen Byers heralded the paper, published on December 11, as historic, 'reversing the centralising trend of the past 20 years'.
But the proposals contain few surprises. The big idea is a new performance management system designed to push the numerous reform initiatives into one 'framework'.
Under the plans, councils will be categorised into one of four groups: high-performing, striving, coasting and poor-performing. The Audit Commission will review authorities, using performance indicators, inspections and a new corporate governance assessment. The commission will produce a 'scorecard' – or league table – allowing the public to assess how their authority is performing.
High-performing authorities have been promised 'significant incentives', including the removal of any reserve capping – ostensibly allowing councils to set their own council tax levels – and with ring-fenced funds replaced by targeted grant.
In contrast, poor performers have been threatened with more intervention. Byers made it clear that he would hive off any failing services to other providers – including the private sector.
The paper promises to pilot the new system for 18 months before deciding on any institutional changes. This could lead to a merger of watchdogs such as Ofsted and the Best Value Inspectorate.
Local public service agreements will play a more prominent role, while Best Value looks likely to take more of a back seat with a pledge to streamline reviews.
On the finance front, Byers will introduce a more transparent grant distribution system. This will take effect from 2003 and will be supplemented by targeted grants and local PSAs.
A review of the balance of funding – 75% of budgets come directly from Whitehall – has also been pledged, as has a top limit in the level of ring-fenced funding.
The deeply unpopular council tax benefit subsidy limitation scheme will be abolished, saving £80m a year.
The government will also try to cut bureaucracy. The 66 plans councils are required to produce will be cut by a third and 52 areas where councils need consent from ministers will be repealed.
The reaction to the paper was lukewarm, with the Local Government Association saying the government could have gone further. Officials were sceptical on the performance framework. Neil Kinghan, its director of finance, was unconvinced whether some of the Audit Commission's mechanisms would be robust enough.
LGA chair Sir Jeremy Beecham said the white paper would only succeed if other government departments took the decentralising theme on board. The New Local Government Network dubbed the paper 'a managerial agenda that tinkers on the edges', while the GMB union said it was in danger of creating two-tier local authorities.
CIPFA said it was less convinced by the proposals to grade authorities into four categories. 'The inspection agencies need to ensure that these do not represent unhelpfully simplistic views of the complex, multi-service organisations that councils are,' said chief executive Steve Freer.
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