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8 May 2001 : Column 46WH

Best Value (Local Government)

12.30 pm

Mr. Christopher Gill (Ludlow): In the Ludlow constituency there are two district councils, six town councils and dozens of parish councils. To put that in context, in the area of Bridgnorth district council there is a population of more than 50,000 and in the area of South Shropshire district council there is a population of more than 40,000. However, in terms of best value, both those district councils must work to the same yardstick as the city of Birmingham, which is not far away, where the population is more than 1 million. Leaving aside the principle, which I shall come to presently, the cost of best value to my constituents is wholly disproportionate. On the basis of the figures available, far from saving council tax payers' money, it causes the council tax to be higher than it need otherwise be.

For example, Bridgnorth town council's budgeting expenditure for the current year is £436,468. The town clerk, Mrs. Kathy James, says that the estimated cost of best value to the town council for 2001 is between £10,000 and £15,000, which is between 2 per cent. and 3.5 per cent. of its total budget. The town clerk also says that no overall savings have been identified. The entire process of operating best value has involved only expenditure and a vast amount of time. The town clerk referred me to a magazine entitled Shropshire Review, in which Councillor Ed Shirley, who is chairman of the town council's best value committee, stated:


What that means at district council level is illustrated by Councillor Michael Williams, the chairman of South Shropshire district council, who advises me that the cost of implementing best value is £243,560, the equivalent of no less than 5 per cent. of the £4.8 million total annual budget for that authority. The total savings of £97,264 were gained at a cost of close to £250,000, which is bad business and not cost-effective. However, that is what the Government oblige the local authority to do. Furthermore, local householders pick up the tab in the shape of unnecessarily inflated council tax demands.

Councillor Williams also took the opportunity to point out that another unwarranted and unwanted impost of central Government--I refer to the new political structures--will add a further £60,000 cost to council tax bills for South Shropshire district council, expenditure which will inevitably be at the expense of first-line services.

Mr. Owen Paterson (North Shropshire): Will my hon. Friend give way?

Mr. Gill : I gladly give way to another Shropshire Member.

Mr. Paterson : My hon. Friend mentioned services. Is he aware that today the Shropshire and Wrekin fire

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authority is putting in a section 19 application to reduce Whitchurch, Market Drayton, Ludlow, Bridgnorth and Newport fire stations from two pumps to one to save £90,000? The chief fire officer told me in February that best value cost £66,000 and that that, plus the cost of a performance and quality manager and best value support office, is almost certainly more than the cost savings of the two fire engines. He said that the best value process has not, as yet, yielded any savings for the fire authority. The document is costing services in Shropshire.

Mr. Gill : I am grateful to my hon. Friend for that contribution. He has mentioned the point that I want to make to the Minister: as far as small local authorities are concerned--I think that one can generalise and extend that to all those in Shropshire--the savings are far outweighed by the cost of best value. I talked to Bridgnorth district council and received a letter from it that said:


I also talked to an experienced and dedicated councillor, Michael Wood, who, having previously served on county and county borough councils, now sits on the best value steering group at Bridgnorth district council. He told me that there are no savings, no benefit and very little change in practice as a consequence of implementing best value procedures. He also pointed out that the cost to council tax payers is bound to rise when the Government's subsidisation of the district auditor ends and when, in 12 months' time, the real cost of the district auditor are charged in full. Apart from the directly attributable and identifiable costs of implementing best value procedure, there are the additional costs of senior officers' time spent as monitoring officers of best value study teams, and the consequential, but largely unquantifiable, costs of such officers' being taken off the duties that they were appointed to perform.

The story does not end there. I am reliably informed that in the central region--one of five regions in England--the Government are recruiting up to 80 people at a basic salary of £30,000 per annum to staff a best value inspectorate. To supervise a project the cost-

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effectiveness of which is already a proven negative, there will now be a whole hierarchy ranging from internal auditors directly employed by the local authorities, to district auditors employed by Government, and the best value inspectorate, which will cost upwards of £12.5 million per annum in salaries alone, will be superimposed on top.

The nub of the question is, why have the Government imposed the new requirements? Is it because there have previously been no controls? The answer to that is, most emphatically, no. With internal and external audits and a whole range of performance indicators in place, it would be spurious for Ministers to argue that spending, especially in small local authorities such as the Bridgnorth and South Shropshire district councils, was out of control.

Is it because the Government are determined to clamp down on bureaucracy and public spending? Clearly not, when the consequence of best value, as I have illustrated, is at least 400 additional civil service posts in the best value inspectorate and additional, unwarranted and unnecessary expenditure at national and local level. Have the Government identified some significant, specific on-going abuse in local authority spending that comes anywhere near to rivalling their own crass incompetence over, for example, the dome at Greenwich? I think not.

We have here a deliberate assault on the fundamentals of local democracy. We elect our councillors to carry out certain functions and, through the ballot box, have the ultimate sanction, if we wish to exercise it, of getting rid of them if they fail. If it is thought that our councillors are not achieving best value on our behalf, we can remove them. That is how democracy works.

The imposition of best value regulations on local authorities is only one part of the Government's assault on local democracy and accountability. The Government have decreed that the political structures that have served local government so well for so long must be abandoned in favour of structures that are barely comprehensible to the general public.

As if that were not bad enough, the long-suffering council tax payers, having been required to express their views on the new political structures, are now requested to give their views on the annual best performance plans. They are expected to do that not just once, but three times in the questionnaires sent to them by the town council, district council and county council. If, perchance, the councils do not get the requisite number of returns, they must send out the forms again until they do. What a ridiculous waste of time and money.

Such things are not about improving accountability or strengthening local government, but about negating local democracy and imposing the will of an increasingly bureaucratic and authoritarian Government. I suggest that the commissars in the Government--I use that term advisedly, knowing that several members of the Cabinet had links with communism--get their tanks off the lawns at Stonehouse, Westgate and the Shirehall and concentrate their fire on getting best value in Whitehall.

As a minimum, the Government should immediately take local authorities where the population is lower than 250,000 out of the requirements altogether and save us all a huge amount of cash. For the small local authorities

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in my constituency, the requirements are unnecessary, unwanted and totally disproportionate. I trust that the Minister will recognise the strength of that argument and take the necessary action.

Before I sit down, I should like to show the Chamber the collection of papers and publications to do with best value that have accumulated on my desk during the past few weeks, and began to do so before I thought of applying for an Adjournment debate on the topic. Does anyone actually read publications such as the one that I have in my hand--the best value performance plan for Shropshire county council? Is it reasonable to expect councillors to go through such lengthy documents when they know that, at the end of the day, the plans will cost more than the amount that is saved?

12.44 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes) : I found it very interesting to listen to the points made by the hon. Member for Ludlow (Mr. Gill). Although I did not agree with a word that he said, I am grateful for the opportunity to put a different perspective on best value and the wider local government reforms that we are trying to achieve. We must see best value as part of that wider reform. We want to make councils more accessible and more demonstrably accountable to local people. If the hon. Gentleman does not think that that is necessary, I must disagree with him.

Mr. Gill : I hope that the Minister recognises that I speak not just personally, but on behalf of all the people whom I represent. If she thinks that the councillors in my constituency are not worried about these measures, she has misunderstood everything that I have said.

Ms Hughes : In the course of my reply, I will tell the hon. Gentleman why I think that he is wrong about that and is not representing the generality of local people's views about their local councils. I make no apology for the fact that the Government are determined to bring the highest standards of excellence and accountability to local government and the services on which local people depend. Best value is at the heart of that. It provides the basis for making local councils more efficient and effective organisations, where performance counts, and they must be accountable for that performance.

Performance plans--which the hon. Gentleman derided--play a central role in delivering best value. They are there to put key performance data and information into the public domain and, partly in that way, to drive up standards. That is why they are so important.

I want to say a little about performance plans. A performance plan is an important feature of any performance-related organisation. In local government, it benefits both the council and local people. First, it enables the council to bring together in one place important corporate information about what has been achieved against the previous year's targets, the future targets that the council is setting itself and the action that it intends to take to try to achieve those targets.

Mr. Gill : Will the Minister give way?

Ms Hughes : No; I shall just finish this point.

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That information is not bogged down in excessive detail, but it is critical for the effective management of performance in areas that matter.

Secondly, a performance plan is important for local people. They have a stake in all this--they pay for their services with their taxes, so they should know how good or not so good those services are, and should be able to influence the way that the council is going. They can do so only if the information is easily available.

That is what a performance plan does. It is not rocket science. I am stunned that the hon. Gentleman can talk in such a way about the kind of routine practice that any small business with a much smaller turnover than that of either of these two district councils would have to adopt to look to its costs and its quality and to seek continually to drive up its performance standards. That is what best value is about.

Mr. Gill : Does not the Minister recognise that many of the people who sit on local authorities are business people? Is not the arrogance of the Government revealed by their belief that those people, when left to their own devices, cannot get it right? Does not that demonstrate the philosophy of a Labour Government who always believe that the man in Whitehall is right and who always want to override local democracy?

Ms Hughes : I say two things in response to that. First, across the board, local councils have not got it right. If they had, we would not see, before best value, such a huge variability in the standards of service that different councils achieve and in the unit costs of providing those services. There is great variability, which cannot be explained by local circumstances. It is explained by the fact that some councils can provide services well and with good value for money, but others, I am afraid, do not.

Secondly, best value is not about telling councils what they should do, but about requiring them to perform their functions within a framework that ensures that they themselves have continually to look to what they are doing, account for what they are doing, try to drive down costs and try to drive up standards of service. What they choose to do, the priorities that they set and the way that they choose to go about it--

Mr. Gill : Will the Minister give way?

Ms Hughes : No. I have given way enough and I need to make these points.

The way in which councils choose to go about it is for them to determine. The only non-negotiable points are that they seek best value, produce a performance plan that sets down their priorities and targets, review their services periodically and demonstrate that they are achieving best value over a period.

Mr. Gill : Will the Minister give way?

Ms Hughes : No; I will continue because the hon. Gentleman has made his points, and I must make mine.

8 May 2001 : Column 51WH

I am surprised that the hon. Gentleman does not want to require of district councils, whose turnover greatly exceeds that of most small businesses, practices that small businesses, if they are worth their salt, would regard as routine.

Mr. Gill : Will the Minister give way?

Ms Hughes : No; I will not give way.

Mr. Gill : It is not a debate, then.

Ms Hughes : I have given way twice, but the hon. Gentleman keeps coming back with the same point. I understand the points that he is making, but I disagree with him and I need the time to explain why.

We are now in the second year of best value. Leaving aside Bridgnorth and South Shropshire, which I shall come to in a minute, what is the record so far? Last year, every authority produced a best value performance plan, of which only 6 per cent. received an adverse audit opinion. That, to my mind, is some achievement. Most local authorities got stuck in and did their plan well, although the plans were all different because one size does not fit all. They adapted the process of producing the plan to their local circumstances; there were some imaginative approaches. Councils also put a great deal of effort into getting the necessary information out. Bridgnorth was part of the 6 per cent. of councils that had an adverse report on their best value performance plan because its plan, which was not good, did not approach the exercise in the right way.

Councils said that focusing on and preparing for the performance plan helped them to look closely at their performance. Some 87 per cent. of chief executives said that they would produce a similar plan again, even if they were not required to do so. They found the plan to be an enabling process, which helped them to think more robustly and rigorously about what they were spending their money on and what their priorities should be.

The issue of costs has been an important feature of the hon. Gentleman's complaints. There are concerns, which I acknowledge, but they must be seen in the context of the benefits of best value. There are costs--in terms of time and money--of producing the plan, of carrying out best value reviews, of introducing performance information systems if local councils do not have them in place already and of consulting the community, which is an essential feature of best value.

First, some of those costs are one-off and, if an authority has not been operating in the way that is now proposed, its one-off costs will be frontloaded as it sets up those systems. If a council did not have a proper performance information system, it should have had one. That is a cost to any effective organisation and most in the private sector will already be familiar with that.

Secondly, some of those early costs were self-imposed. Some of the best performance plans--I have already remarked on the great variety--were the simplest and least expensive. They were more focused and had been designed to fit their purpose, rather than being driven by a fear of audit. For many councils, there

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is great scope for reducing costs. For example, Wiltshire county council, Wiltshire police authority and the associated district councils saved £35,000 by coming together to produce a joint summary of their performance plan in an attractive newspaper format.

Mr. Gill : Will the Minister give way?

Ms Hughes : No; I shall finish shortly.

Thirdly, there have been costs of audit and inspection. To offset those costs, the Government have provided grant to the Audit Commission and increased the revenue support grant to councils. The year one audit of the performance plan inevitably had to go into more depth to check on the underlying systems; the year two audit will be integrated with the financial audit and I expect costs to reduce significantly.

Similarly, we are examining inspection. Rather than having a "one size fits all" approach, it is possible to move towards a risk-based approach to inspection. If we can do so, it will bring the cost of inspection down for authorities that perform well and it will be an incentive for those that do not.

However, the costs are only one side of the coin. There are benefits, as some small district councils--although perhaps not Bridgnorth and South Shropshire--are demonstrating: working in partnership with others, involving the public through the consultation process, and delivering economies of scale that are producing savings as well as improved standards of service. I wonder to what extent the two district councils to which the hon. Gentleman referred have seriously considered using the potential of best value to demonstrate and deliver new approaches to services. Have they developed a cost-effective arrangement with Shropshire county council, for example, which is doing very well in terms of best value? Have they been willing to work with it to achieve cost savings and improved services?

Mr. Gill : The short answer to the Minister's question is yes, of course there is co-operation. However, does she accept the central point that it is not good business to allow such savings to be far outweighed by the cost of achieving them? I represent not only councillors but council tax payers, and the inevitable result of such measures is that charges will rise. Council tax payers will not be happy to discover that their bills have been needlessly inflated.

Ms Hughes : What is putting up the cost to council tax payers is not investment in best value and a culture that seeks simultaneously to drive down costs and to improve and increase the standard of service, but councils that are running their services inefficiently and ineffectively. Councils must regard best value as an investment and enter into it in that spirit--indeed, many small councils have done so. Tandrige district council and Reigate and Banstead district council, for example, have jointly tendered their audit services. By issuing a joint contract, they will achieve a 15 per cent. cost saving. Hampshire county council has entered into a countywide waste management partnership with Portsmouth unitary council, Southampton unitary council and 11 district councils. That will not only drive

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up rapidly the proportion of recycled waste, but achieve a significant reduction in cost. Small councils such as South Norfolk district council and Burgess Hill town council--I could continue with a long list--have approached best value in the spirit in which it is meant to be approached. They are achieving higher standards of services, and cost savings that outweigh the cost of the best value regime.

The hon. Gentleman asked why we are doing all this. The answer is that we want services to improve, we want council tax payers to have better value for their money, and we certainly want more accountability to local people. The hon. Gentleman talked about local democracy. There is nothing democratic about a council that does not open its doors, or involve local people in decisions on the services that it provides and their cost. Nor is there anything democratic in the turnouts for some of our local elections.

Mr. Paterson : Will the Minister give way?

Ms Hughes : No, I will not.

Some people are so turned off by their local council that they do not even bother to vote.

At the heart of the best value process is the principle that local people must be involved. They must be consulted on the priorities that councils set and on the way in which councils achieve their objectives; hence the duty in the best value process to consult local people.

Mr. Paterson : Will the Minister give way on that very point?

Ms Hughes : I will not give way to the hon. Gentleman. I have only two minutes and I intend to use them myself.

We are not talking about an item on a wish list. When a council publishes its performance plan or implements the recommendations of a best value review, it will need to be able to show that it has taken the views of local people and local stakeholders into account. That will give local people the information that they need to vote in elections in the way that the hon. Member for Ludlow wants, and to say what they think about how their council is performing. Given the matter that the hon. Gentleman was decrying earlier, I was surprised to learn that he regards as a complete waste of money the requirement for councils to produce, and to provide public access to, information. Unless the public have information, they cannot take action, whether in local elections or in other forums.

In conclusion, best value has been accepted within councils right across the country. We are beginning to see significant changes in service delivery. Best value is beginning to make a real difference on the ground. Quite simply, there are better services for local people, more widespread engagement and lower costs.


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