News analysis How contractors slip through accountability gap

2 Nov 06
'We will step back and allow more freedom and flexibility at the local level. In exchange, we expect to see more accountability to local citizens, stronger local leadership, better and more efficient services and a readiness to support tougher intervention when things go wrong.'

03 November 2006

'We will step back and allow more freedom and flexibility at the local level. In exchange we expect to see more accountability to local citizens, stronger local leadership, better and more efficient services and a readiness to support tougher intervention when things go wrong.'

With those words, local government secretary Ruth Kelly published her local government white paper last week, packaged as the most radical devolution of powers to town halls and residents for fifty years.

Many practitioners have cast doubt on that final claim, but most believe that Kelly's weighty tome is a sizeable step in the direction of new localism, giving residents and councillors a bigger say over how their public services are configured, managed and delivered.

Kelly has, for example, proposed scrapping hundreds of the Whitehall-led targets and performance indicators which the Local Government Association has long claimed stymie service innovation. Perhaps gearing himself for November 5, one town hall leader described Kelly's target cull as 'the bonfire of the insanities.'

But the white paper contains an inconsistency that, while not threatening to undermine the localist tone, has left some practitioners and commentators scratching their heads.

While on the one hand Kelly has floated new forms of neighbourhood involvement in public services and improved town hall scrutiny of service providers, she has simultaneously extended the influence of two groups that will be not be subject to new forms of accountability: private contractors and “third sector” bodies, such as charities.

Councils, Kelly warns, must introduce greater contestability through open competition for services and a diversity of suppliers. Twenty years on from compulsory competitive tendering, few council leaders oppose such moves. Kelly also plans to give town hall overview and scrutiny (O&S) committees, made up of backbench councillors, powers similar to Parliament's select committees.

They will have statutory powers to call all local public bodies delivering services to appear before them, in public, to account for their activities. In the event of poor performance, it will allow ward councillors to challenge service providers that they previously had little control over: including primary care trust executives, senior police officers and registered social landlords. The proposals will also require councils and the bodies being scrutinised to publish improvement plans.

Sir Jeremy Beecham, leader of the Labour Group at the LGA, told Public Finance that the omission of private and third sector contractors from this additional scrutiny is a 'mysterious' oversight.

'If you're empowered to scrutinise services on behalf of your residents, you would want to call in providers from the private sector, albeit not in an adversarial way,' he said.

'Whether you need a statutory power to do it is another matter – some individual contractors appear at existing O&S committees on a voluntary basis. But if such contractors refuse to appear before committees, such powers should be available.'

Dick Sorabji, head of policy at the New Local Government Network, concurs that for Kelly's accountability system to work effectively, 'eventually, local authorities may require a level playing field in terms of their scrutiny powers.' But Sorabji argued that the plans unveiled on October 26 still represent 'a wholly sensible advance.'

'They empower town halls to scrutinise the commissioners of services, such as PCTs, and I think that's the most important aspect,' he said. 'When something goes wrong with a service, a good commissioning system should be able to zero-in on it and eliminate the problem,' he argues.

'Commissioners…should be able to explain poor performance anywhere in their system.'

Sorabji also argues that, before backbench councillors could be empowered to scrutinise individual contractors, town halls must focus on developing their members' scrutiny skills.

That's a view shared by the CBI business lobby, which represents local government's largest contractors.

A CBI spokeswoman said that its members would eventually welcome increased public scrutiny 'providing that councils had the skills to assess contractors fairly and effectively.' This, the CBI says, requires ward level councillors to develop a better understanding of the delivery function of contractors.

The CBI has expressed concerns that some councillors still oppose contracting on an ideological level. 'But discussing that issue publicly would miss the point of the scrutiny system – any extension of scrutiny to include individual contractors should focus on assessments of service delivery,' the CBI spokeswoman added.

Contractors contacted by PF were quick to point out that their performance is scrutinised through the Local Area Agreement process, which is developed through local strategic partnerships.

'LAAs and LSPs ensure that council leaders and the executive have their service delivery partners around the table regularly, so [scrutiny] is a constant process,' Beecham said.

However, Beecham stresses that private discussions may not be sufficient to placate residents who, under Kelly's proposals, will be empowered to take direct action when they experience poor services – using a Community Call to Action.

'So I think the government might have to move towards full scrutiny of all providers in future,' Beecham concluded.

Town halls may not wait too long. DCLG sources this week told PF that an extension of O&S committee statutory powers to include private and third sector providers is under consideration.

Officials could include public scrutiny clauses in future contracts. But one source said 'the idea is embryonic and we're a long way from formalising any system.'

Ruth Kelly has initiated a brave new world of public service involvement, scrutiny and intervention. But town halls must shortly familiarise themselves with a system that will deny residents public access to the organisations emptying their bins and cleaning their streets. One wonders whether it will be enough.


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