White Paper - Strong local leadership - quality public services

Report: 9
Date: 17 January 2002
By: Clerk and Treasurer

Summary

This report summarises the recently published DTLR white paper: Strong Local Leadership - Quality Public Services. It also proposes feedback to be provided to the APA for inclusion in the Association’s feedback to DTLR and the Home Office.

A. Recommendations

1. That members note the proposals in the white paper as summarised at Appendix 1;
2. That members endorse the views at Appendix 2 for forwarding to the Association of Police Authorities.
3. That a further report is brought to the Committee following confirmation of whether the proposals on the financial system will apply to police authorities;
4. That the MPA liaise with the GLA on pan London issues.

B. Supporting information

Overview of the white paper

1. In December 2001 the Department of Transport, Local Government and the Regions (DTLR) published a white paper setting out its vision for stronger local government with new freedoms to deliver better quality services:

• Part 1 of the white paper describes a new vision for local government and seeks to establish a national framework of standards and accountability;
• Part 2 of the white paper sets out proposals for the reform of the local government finance system, providing the Government’s answers to the questions raised in the local government finance green paper of 2000. The Committee was informed of the green paper on modernising local government finance (FPBV/00/48) in November 2000.

2. The white paper has previously been made available to MPA members and can be accessed on the Internet (see External links). A DTLR summary is attached for members only at Appendix 1. Copies can also be obtained from the Secretariat.

3. The main proposals include easing financial restrictions to provide greater freedom to invest and borrow, restricting ring fencing and abolishing the council tax benefit subsidy limitation scheme. The paper also gives councils wider powers to provide services to others and encourages partnership working. The paper also proposes a new performance framework based on comprehensive assessments of all authorities and this framework will be used as part of an exercise to streamline the best value regime.

Implications for police authorities

4. The white paper is aimed primarily at local authorities. It states that some elements will apply to police authorities but does not specify which. Accordingly, and responding to the government’s desire to introduce some changes for the financial year commencing April 2002, the APA has requested urgent feedback on the proposals in the white paper to streamline the best value regime.

5. Attached at Appendix 2 is a proposed response to the questions and issues raised by the APA for consideration and approval by members. The feedback will assist the APA in its discussions with the Home Office and DTLR on the extent to which the proposals should apply to, or be adapted for, police authorities.

Proposals for the finance system

6. The Government wants a sound local government finance system that promotes local financial freedom and responsibility, addresses and minimises unfairness and is readily understood. The white paper does not explicitly set out the extent to which the various proposals will relate to police authorities, and therefore some of the points set out in the following paragraphs may prove to be of less relevance in practice.

7. The Association of Police Authorities (APA) has written to all police authorities highlighting this uncertainty over the application to police authorities. The APA is seeking urgent clarification from the Home Office and will circulate further advice to, and seek comments from, police authorities on specific issues; it is recommended that a further report is brought to Committee at this time.

8. There is also uncertainty about how the new proposals will affect the GLA and the group of functional bodies as a whole. We will therefore need to liaise closely with the GLA who will also be seeking to submit a response to Government.

9. The white paper stresses that good financial management will be one of the keys to success. Legislation is proposed which will reinforce the role of members in setting and monitoring budgets, creating new duties to maintain adequate reserves and to keep finances under review during the financial year. This could be of particular relevance to the MPA where the general reserve currently stands at less than 1% of the total budget, although it is not absolutely clear if it will apply to police authorities.

10. There will be a requirement to publish annual accounts by 30 June, rather than the current requirement of 30 September, to coincide with the publication of the Best Value Performance Plan.

Ring-fenced grants

11. The proportion of grant to local authorities which is ring-fenced has been growing in recent years, causing concern that authorities’ discretion to vary spending priorities to fit local circumstances has been eroded. In future ring-fencing will be restricted to cases that are genuinely high priorities for Government. However, as the funding arrangements for the police are rather different any specific funding issues for police authorities are to be dealt with outside the white paper arrangements.

General grant

12. General grant is currently distributed using a complex set of formulae, based on the standard spending assessment (SSA). The policing SSA reflects the policing responsibilities of the Home Office. The underlying aims of the formulae are to reflect variations in the cost of providing services and variations in the amount of council tax that different authorities can raise. There are however a number of weaknesses with the SSA formulae.

13. It was concluded that:

• The distribution of the majority of general grant shall continue to be formula based. New grant formulae will be introduced from 2003-04 and will move away from replicating past spending patterns towards allocating grant according to where it is most needed and will do most good. Although work is on-going to review the police funding formula, significant changes to the formula are unlikely,
• Floors and ceilings will continue, to provide some stability to funding allocation,
• Following the introduction of the revised formulae in 2003-04, there will be a freeze on changes for 2004-05 and 2005-06,
• The formulae need to be supplemented by other mechanisms, such as targeted grants and public service agreements.

Targeted grant

14. Targeted grants (such as the Neighbourhood Renewal Fund), which are paid to selected authorities, rather than to all authorities, will continue. These are named grants intended for a specific purpose but with no prescription on how the funding should be used.

Local Public Service Agreements (PSA)

15. PSAs plug a gap in the local government finance system and best value by creating a link between funding and performance; providing financial incentives to achieve stretching targets on a range of outcomes that matter to the local community and to Government.

Capital financing

16. The current system controls capital expenditure by setting the scope and limits for financing capital expenditure through borrowing. Central to this are Government issued credit approvals, which, allied to useable capital receipts, specific capital grants and revenue contributions, define the funding available for capital purposes.

17. The Government feels that the current system blurs accountability, limits local financial freedom and has become an obstacle to effective capital investment. Credit approvals will therefore be abolished and replaced with a new “local prudential regime”. Under the prudential regime individual authorities will be responsible for deciding how much they can afford to borrow, in accordance with the code that the Chartered Institute of Public Finance and Accountancy (CIPFA) is developing. The amount of borrowing that an authority can afford will depend on the revenue income available to service debt after meeting other spending commitments. The Government will seek reserve powers to set a national borrowing limit or to intervene where an individual authority shows it is unable to discharge the responsibility itself.

18. The new borrowing freedoms will require all authorities to undertake effective forward planning, including preparing revenue forecasts to set alongside forward capital strategies. Authorities will be encouraged to adopt a coherent budget process combining decisions on capital investment with the setting of the revenue budget and council tax decisions. The CIPFA code underpinning the new regime will introduce a requirement to prepare three-year revenue budget forecasts as authorities will need to look further ahead than one year in setting prudential limits for borrowing. Authorities will also be expected to prepare a Corporate Capital Strategy as a means of consulting and communicating with the local community on their intentions and approach to capital investment.

19. Although credit approvals will be abolished the Government will continue to provide a mixture of general and ring-fenced support for capital investment. The single capital pot will continue as the vehicle for allocating general, cross-service capital support. The basis of government support to police authorities for capital spending (i.e. outside the single capital pot arrangements for local authorities) is not made clear in the white paper.

Council Tax

20. There are a number of changes to council tax which will be of relevance to the GLA as the precepting authority:

• Properties are to be revalued every ten years, with the first revaluation being reflected in bills for 2007,
• Council tax bills are to be made more transparent so that local people can see by how much different authorities are increasing their council tax, including police authorities,
• The Council Tax Benefit Subsidy Limitation Scheme is to be abolished.

21. The Government will retain reserve powers to cap a budget increase in year, to pre-specify the maximum amount which an authority can set in subsequent years, or to set a notional budget requirement for current year against which future years’ capping decisions will be taken. These powers are to be used only in exceptional circumstances and, following the white paper, will not be used against ‘high-performing’ authorities. Again it is not yet clear how these proposals will be applied to police authorities.

C. Financial implications

None other than those identified above.

D. Background papers

• DTLR White Paper: Strong Local Leadership - Quality Public Services
• Police Authority Circular 72/2001
• FPBV Committee Report of 21 November 2000 ‘Modernising Local Government Finance: A Green Paper’ (FPBV/00/48))

E. Contact details

Report authors: Ken Hunt, Derrick Norton, Sally Palmer, Liz Turner (MPA)

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1: DTLR summary of the White Paper

Key proposals

• This is a radical programme for improving council services, enhancing local democracy and strengthening community leadership.
• Our ambition is for strong, vibrant, innovative and responsive local government.
• We will put in place a lasting framework for better council services and effective local leadership.
• And we will free councils from unnecessary red-tape and bureaucracy so they can respond to what people want locally.

Main announcements

A framework for high-quality public services

• We will build on best value and local Public Service Agreements (PSAs) to put in place a national framework to help councils deliver better services for their communities including:
  • clear priorities and exacting standards, agreed with local government;
  • comprehensive performance assessments for all councils - for the first time, councils will be classified as high-performing, striving, coasting and poor-performing;
  • clear and concise public information about councils' performance, including a 'scorecard' available to the public so they can see how well their council is performing;
  • targeted support and inspection resources according to councils' strengths, weaknesses and needs;
  • extra freedoms, over and above universal deregulation, for high-performing councils that can use them to make a real difference for their communities;
  • local PSAs to deliver accelerated improvements in priority services supported by additional freedoms;
  • a streamlined and reformed best value framework to help councils manage improvement across all services; and
  • tough and early action to tackle failing councils or services.
• Drawing together performance indicator data, inspection and audit reports and using a corporate governance assessment of each council, the independent Audit Commission will classify each council as:
  • high-performing - near the top of the performance spectrum, with high performance in priority services, no poorly performing services and with proven capacity to improve;
  • striving - not necessarily at the top of the performance spectrum but with proven capacity to improve;
  • coasting - not at the top of the performance spectrum and with limited or no proven capacity to improve; or
  • poor-performing - consistently near the bottom of the performance spectrum with limited or no capacity to improve.
• High performing councils will receive extra freedoms to lead the way to further service improvements including:
  • reducing revenue ring-fencing - except in respect of grants which have to be passed to schools;
  • reducing ring-fencing of support for capital investment;
  • ending the use of the reserve powers to cap council tax increases;
  • more freedom to use income from fines;
  • further reductions in plan requirements from Government;
  • freedom to trade more widely across the range of their services;
  • more discretion over their best value review programmes; and
  • a much lighter touch inspection regime.
• Further freedoms will be available to striving councils, including access to a package approaching that available to high-performers.
• Coasting and poor-performing councils will have their performance monitored against the action plan agreed after their comprehensive performance assessment.
• Where a council is failing with little or no prospect of improvement we will apply early intervention measures. Which measures are used will depend on the specific circumstances of the authority and the nature of the failure. They could include:
  • transferring functions to other providers;
  • placing the council into administration; and
  • giving stronger councils (or other public bodies) a role in running failing councils.
• All councils will be expected to address the extent to which greater diversity of service provision would improve performance. We will consider urgently the recommendations of the review of best value on ways in which a level playing field can be established for local government services.

Deregulation for all councils

• We will give councils more space to innovate, to respond in ways that are appropriate to local circumstances by removing unnecessary burdens for all councils. The white paper sets out a substantial package of deregulation including:
  • abolishing the Council Tax Benefit Subsidy Limitation Scheme;
  • providing greater freedom for all councils to decide council tax discounts and exemptions (subject to the results of the current consultation exercise);
  • restricting ring-fencing to cases which are genuine high priorities for Government and where we cannot achieve our policy goal by specifying outcome targets;
  • making councils themselves responsible for deciding how much they can prudently borrow;
  • providing greater freedom for councils to invest;
  • significantly reducing the numbers of plans and strategies that Government requires councils to produce - we will cut the 66 plans that councils are currently required to produce by around one-third - and our target is for an ultimate reduction of at least 50% following a joint review of remaining plans with the LGA;
  • scaling back on area-based initiatives and giving local strategic partnerships greater scope to rationalise partnerships;
  • removing unnecessary red tape and bureaucracy including many requirements for councils to have Government's consent before acting - 52 consent regime powers will be repealed and decisions on a further 30 will be taken shortly;
  • providing councils with wider powers to provide services to others and to work in partnership;
  • allowing councils to charge for the discretionary services they provide.
• We will put in place effective mechanisms to prevent the imposition of unnecessary new burdens.

Enhancing local democracy and community leadership

• To help councils succeed as community leaders we will:
  • allow councils to introduce Business Improvement Districts, where businesses want them, to promote partnership with local businesses;
  • encourage other local public sector partners to work effectively with councils, other local organisations and communities themselves to tackle local problems and exploit local opportunities;
  • provide councils with more powers to serve their communities, including reviewing the range of regulatory powers currently available, for example to tackle social nuisances;
  • promote further community engagement; and
  • enhance the democratic legitimacy and sound governance by implementing and building on the reforms in the Local Government Act 2000.

Appendix 2: Proposed response to APA

Introduction

This appendix proposes responses to the questions and issues raised by the APA in Circular 72/2001 (dated 18 December 2001).

Q1: What are authorities’ views on removing the requirement to review all functions over 5 years?

Strongly supported with one major caveat. The requirement overlooks the fact there are many other statutory and non-statutory audit, inspection and review (AIR) functions. The best value review process is resource intensive and so should be limited in application to key business areas where the authority decides that a fundamental and strategic review is required. Even so, the process of best value review remains a critically important tool that the authority can use to bring about step changes in operational, managerial and/or financial performance.

The MPA would emphatically resist any suggestion that such a relaxation implies that there may be areas of operational policing business which may be exempt from review. The implication of placing the best value duty on police authorities rather than chief officers established the principle that police authorities have a legitimate role in respect of achieving best value in every aspect of the force it maintains.

Q2: Authorities would no doubt wish to resist any Government prescription of the content or timetable of their reviews but could authorities benefit from moving to a more rounded, integrated approach to audit and inspection of the sort proposed for local authorities. How could this best be achieved in a police authority context?

The MPA would benefit greatly from introducing a ‘rounded, integrated approach to audit, inspection [and review]’. Current AIR activity includes:

• day-to-day managerial action;
• project-based reviews initiated by senior managers;
• internal inspections and audits by MPS Inspectorate and by MPA Internal Audit;
• scrutinies initiated by PSPM Committee;
• efficiency and effectiveness review programme (MPA, MPS and Mayor);
• statutory MPA best value review programme (and subsequent HMIC inspection);
• external inspections and audits by HMIC, District Audit and Audit Commission.

This activity is relatively uncoordinated and, as such, leads to duplication of effort as well as ‘change fatigue’. It also risks using personnel to deliver change at the expense of service delivery.

The proposal that the type and degree of AIR work should follow a comprehensive and fair assessment of performance is supported. There would be a real incentive for an authority to be assessed as ‘top-performing’ or ‘striving’ given the proposed relaxation of the AIR regime plus other constraints. The assessment might be useful

in terms of enhancing status and reassuring communities and partners. In any event, the impact of the assessment would need to be managed in the media.

The respective role of all the reviewing bodies would need to be clarified prior to agreeing a programme of AIR activities. The cost and benefits from undertaking AIR activities should be identified and monitored to ensure that all AIR work delivers results commensurate with the effort expended.

Q3: Police authorities would, no doubt, support moving away from the current regime of HMIC inspecting each and every best value review. However, authorities views on how a risk assessment process might operate in respect of Best Value would be welcomed given that HMIC can only inspect police authorities best value functions and that all other inspections relate to the police force? What should the role of the Audit Commission/local auditors be in any new approach?

HMIC could inspect the extent to which (in any one year) a police authority has fulfilled its duty to secure continuous improvement with respect to effectiveness, efficiency and economy (since this is a function of the authority). Best value reviews are one way of bringing about improvement and, as per Q1, if there are fewer reviews then there may be scope for HMIC inspection and validation of each.

On the basis that HMIC would concentrate on matters related to operational policing other representatives of the best value inspectorate could conduct the inspection of best value reviews in non-operational areas. There would also be a role for the inspectorate to develop and implement a common BVR inspection process.

Q4: Should the proposals to encourage auditors and inspectors to play a role in the early, scoping stages of reviews be welcomed?

Yes: this duplicates the approach taken by best value reviews within the MPA/MPS. Under a two-stage review process (‘broad and shallow’ leading to ‘narrow and deep’) the auditor/inspector would confirm that the right ‘narrow and deep’ areas have been selected for the right reasons. In any event the views of auditors/inspectors ought to be made available as guidelines to help ensure consistency in interpretation.

Q5: What are authorities’ views on the proposals to reinforce the challenge element of reviews?

Strongly supported. The MPA/MPS have typically and effectively used the benefits of independent challenge in early best value reviews. The use of ‘third-parties’ in this way increases the need to focus on fundamental and strategic issues (to gain full value from the experience of others gained in non-police organisations). The role of third-party participants in challenge will need to be clearly set out to minimise the risk of conflict with the authority as the decision-making body.

Q6: What help do police authorities need to engage in more effective cross-cutting reviews?

Cross-cutting reviews are inherently more difficult to undertake and therefore require more and better resources in terms of project management, project staffing and/or consultancy. They also require greater and longer involvement from members. The extent to which any additional resources should be under the control of the authority will need to be determined since it may not always be appropriate for members of the police service to represent the views of the police authority.

Q7: What are the implications for police authorities review timetables of proposals to prescribe cross-cutting reviews in poor-performing councils e.g. in areas such as community-safety?

With 32 boroughs in London there is an increased statistical likelihood that the MPA’s review programme will be affected by a need to participate in one or more reviews prescribed for poorly-performing councils. As described in Q6 these reviews would probably require greater resources (perhaps to the extent of leading the review depending on the nature of the prescription).

Q8: Police authorities annual policing/best value performance plans have traditionally served two purposes: to act as an agreement between the police authority and the force about the service to be delivered in the year ahead and to provide local communities with information about what they can expect to receive from local policing services. How do the proposals to reform BVPPs for local government fit with this rather different picture? (In considering this issue authorities may also wish to bear in mind the various proposals in the Police Reform White Paper for additional information to be included in policing plans.)

The proposal to rationalise plans around the authority’s annual BVPP is supported. However, a police authority also requires a medium to long term service strategy plus supporting financial strategy. The annual plan and budget would then act as milestones for the delivery of both strategies and would promote the accountability of:

• the police authority to the public;
• the chief officer to the police authority;
• senior managers to the chief officer;
• staff to managers.

The circumstances of the MPA/MPS are such that the annual planning and budgeting cycle must address the requirements of the Mayor and GLA. The need to present a costed business plan (itself based on consultation with communities and partners) to the Mayor in October of each year increases the need to have medium-term strategies in place rather than plan and budget afresh from April of each year.

Q9: Are there aspects of the proposed changes to BVPPs that would be welcome in a police authority context?

As per Q2, use of the proposed corporate assessment process to develop a proportionate (and relevant) AIR regime is supported. The explicit recognition that the full plan is not a suitable vehicle for meeting the needs of government, partners, managers, public, auditors and inspectors is welcomed. Reducing the number of BVPIs is supported.

Q10: What do police authorities think of the move to a 30 June publication date for the best value performance plan? How would this fit with existing requirements in relation to the annual policing plan (which must be approved by 31 March but can be published anytime thereafter)?

The BVPP and policing plan are linked by statute, purpose and content. Producing a policing plan (by 31 March) and best value performance plan (by 30 June) would not be supported. In any event, publication is distinct from approval so the need to decide on the content of the plan (e.g. priorities, objectives, targets and resources) by 31 March remains unchanged (otherwise a summary of the information could not be prepared). Formal publication by 30 June allows more time before 31 March to address the content rather than the format of the plan.

Q11: Authorities will presumably welcome the move away from compliance auditing of the BVPP but would a move to a broader audit assessment of the plan duplicate current HMIC inspection work?

Only if HMIC continued to operate unchanged once the new corporate performance assessment regime was introduced.

Q12: What are authorities’ views on the proposed changes to requirements for summary information?

A summary targeted at service users and taxpayers is supported. It seems possible (as well as desirable) that ‘targeted’ will mean that information should be supplied on a borough-by-borough basis.

Q13: Should police authority summary information be integrated with council tax bills/leaflets or would police authorities prefer the freedom to publish and distribute summary information in a way which best meets local needs?

There are particular difficulties in London arising from the established curiosity that that the MPA is not itself a precepting body. The principle that any precepting body should explain and justify the tax required is reasonable and use of the council tax leaflet to distribute summary information may outside London be the best way of meeting local needs.

However, with 32 boroughs to co-ordinate with, the MPA would need to resolve a number of logistic issues if information was to be included in tax leaflets. Summary information would have to be provided on a borough basis (e.g. absolute and relative performance, resources, priorities, objectives and targets).

The MPA currently contributes to a joint summary with the GLA and other functional bodies that is sent to 80% of households in London (circulated as part of a Mayoral and GLA-family newsletter).

Q14: Are there any specific police authority work-force issues that need to be taken into account?

Best value reviews of operational areas typically raise the issue of police vs. civil staff use for particular roles. With a fixed target on overall number of police officers (as opposed to ‘available police time’) there may be reduced scope for reviews to deliver savings (either to be ‘cashed’ or to be redeployed).

Q15: Are there any other proposals for streamlining best value, not covered above, which police authorities would wish to see incorporated in any changes to guidance?

Overall, the focus on securing ‘best value’ should move to delivering significant improvement rather than (as present) the narrower interpretation of undertaking best value reviews. However, as described under Q1, the best value review process (owned and monitored by members) should be marketed as a critically important tool for police authorities.

The future guidelines relating to police authorities will need to reflect the differences between police authorities and local authorities with respect to the relationship between authority members / officers and officers of the police service.

Guidelines relating to the MPA will also be needed to reflect the differences between the MPA and other police authorities (especially with respect to the governance arrangements for London and to its role with respect to the national and international functions of the MPS).

Finally, see Q8 and the comments made on the need for police authorities to have a service strategy and finance strategy (in addition to the annual plan and budget).

Q16: What are authorities views on how best value is working? Is it delivering outcomes that improve policing for local people?

The programme of best value reviews is delivering improvements but at a relatively slow rate. This is partly a consequence of the decision to structure MPA/MPS reviews around large business areas. It would be better for there to be fewer reviews, finishing more quickly and delivering clear improvements sooner rather than later. The type and scale of improvements generated by the best value review process has generally increased with each review undertaken.

In terms of best value in its widest sense (and as described at Q2) the statutory and non-statutory activities related to audit, inspection and review (AIR) are relatively uncoordinated and cannot be regarded as a ‘regime’ or ‘framework’ as such. The proposal to integrate/coordinate these activities has clear potential to reduce the amount of AIR work and, on a consistent basis, deliver clear improvements to service users, taxpayers and/or service providers.

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