Examination of Witnesses (Questions 580
THURSDAY 11 JULY 2002
MP, MS PAM
580. Moving to comprehensive performance assessments
and the fact that the best value system fell into disrepute, what
are you doing to ensure that the comprehensive performance assessment
does not lose credibility before we introduce it?
(Mr Raynsford) I do not think that the best value
system has fallen into disrepute: I think it has helped to achieve
a focus on improving standards of performance, but there have
been downsides that I freely shared with this Committee when I
gave evidence some time ago and we have been working to try and
tackle those. The excessive numbers of inspections, the focus
perhaps on process rather than on outcomes, have been key themes
that I have been very keen to address not just in relation to
best value but also in introducing the new comprehensive performance
assessment. The CPA will build on the existing best value regime
because it will make use of the results of best value performance
indicator information and inspections, but it will also add one
crucial missing element which was the overall assessment of the
corporate performance of an authority, because the best value
regime has focused really on individual service areas, whether
that is education, social services or other services, rather than
on the corporate performance of an authority. It has become very
clear to us, where authorities have been facing difficulties,
that it has often been a weakness of the corporate centre, either
in terms of senior management or for financial planning or human
resources planning, that has contributed to those service failures.
So that is what is the new element under the comprehensive performance
581. On the question of services and values
to local authorities, who decides the weighting given to a particular
service? How is this consistent with best value and local democracy?
Who decides, in social services, housing, highways, on the weighting?
(Mr Raynsford) In terms of the weighting to be given
in the assessment?
582. That is right.
(Mr Raynsford) We are not proposing to give a separate
weighting; we are proposing a framework in which there will be
assessments under each of the blocks and then there will be rules
that will determine how an authority's overall performance should
583. Can you explain those rules?
(Mr Raynsford) Yes. The rules are the subject of consultation
at the moment so we have not taken final decisions, but giving
weighting would have inherent difficulties, and let me give you
an illustration. The education budget is by far the largest single
one but the vast majority is spent by schools rather than by an
authority. If one were to give a weighting only on the local authority
education department's budget it would be relatively small in
relation to education as a whole. If it was based on the total
education budget, then the performance of schools could well result
in the authority benefiting disproportionately, so that is why
we believe that a weighting system is probably not the right one.
The principle of the rules is that three services in particular
are seen as so important that an authority that fails to deliver
a decent standard of service in one of those three should not
be entitled to be classified as a high performing authority, and
those three are education, social services and the financial administration
of the authority.
584. There is more worry about being in the
585. If they are cast as being weak or of poor
performance, then the whole authority has that stigma.
(Mr Raynsford) No, that is a misconception, put around
by some people in local government who have not fully understood
the proposals put forward by the Audit Commission. The proposal
is that if an authority is classified as weak or poor performing
in one of those three key areas, it would not be possible for
it to be described as a good or excellent authority but it would
not be prevented from being classified as a medium or fair authority
depending on what terminology is used.
586. Do you think there should be an appeals
system, then? If it should not apply to the whole authority and
this is happening and the Audit Commission are the people who
make the recommendations, should there be an appeals system to
ensure that an authority is not given a stigma if it gets a weak
(Mr Raynsford) Let me take that stage by stage. There
is a system for moderation in the case of each of those service
assessments, so it is possible for an authority to challenge an
assessment of its social service performance or its education
performance and that is part of the system.
587. What happens if an authority challenges?
(Mr Raynsford) That is considered by the Audit Commission
and that is then determined and forms part of the assessment of
588. And if the local authority agreed with
that and wishes to present a case, who is the referee?
(Mr Raynsford) The Audit Commission itself has a procedure
for moderation but that involves a different assessment to the
one that has been made by people who form the initial assessment,
so it is within the same body but it is not the same people who
have carried it out.
589. If one officer of the Audit Commission
presents a report and the local authority are wanting to question
it and it goes to another officer of the Audit Commission, where
will the support be given?
(Mr Raynsford) This is wider than just the Audit Commission
because part of the whole process is that the inspection team
should comprise a senior councillor and senior official from another
local authority, so it is not just the Audit Commission; there
are other peers of the local authority forming part of that assessment.
They will be involved obviously in consideration of the assessment.
When those assessments have been made for each of the service
areas under the proposals the Audit Commission has put forward,
the final assessment is based very rigorously on putting together
all of those assessments. If you were to have an appeal system
on that final assessment, what you would be doing is appealing
against the earlier decisions on the individual service blocks
that have already been subject to a moderation, so it would be
undermining possibly the outcome of the earlier appeal system.
That is why it would not in our judgment be sensible to have a
final appeal procedure.
590. You have not mentioned anywhere in that
comment the political influence? The officers of the local authority,
the Audit Commission, that the people who have to take the lead
in this are the councillors?
(Mr Raynsford) We have taken the view, and I think
it is the correct one, that the assessment should be carried out
by a team of people including a politician and a senior officer
from another authority but that it should not be an independent
assessment by the Audit Commission. It should not be subject to
political decision either by ministers or by councillors because
we believe otherwise there is a danger that the process will be
contaminated, frankly, by political manoeuvring.
591. I know this from a specific first hand
example but you could have a situation where a council may be
facing as part of the assessment team a politician who represents
politically its principal opposition.
(Mr Raynsford) That may well be the case and that
applies equally across the board to all parties. One could have
a system whereby only politicians from the party that happens
to be the majority party in a particular authority could be carrying
out the peer role in the inspection team, but if you think about
the logic of that that equally is open to a degree of suspicion,
that they might be inclined to be more favourably disposed. Our
view is that it should not be a key determinant as to which political
party they come from. Our view is the key determinant should be
their ability as respected senior counsellor in local government
to be able to look at the performance of another authority with
both the insight of an experienced counsellor and with the degree
of impartiality that one would expect from someone in that position.
592. I was going to ask also, in relation to
this issue of the single judgment, you are going to get cases,
particularly apparent now given the process of restructuring of
the grant systems that are taking place, where you either have
today or potentially will have in the future councils that are
under significant financial pressure either because government
has chosen to restructure financing away from them, or because
particular circumstances which could well be shortages of key
workers, which could be, for example, in Kent the influx of asylum
seekers, have put very substantial pressures which are largely
beyond the control of the council on to the ability to deliver
services. How would you reflect that in assessing the performance
of a council?
(Mr Raynsford) The first issue to cover is the change
to the grant distribution formula which we have announced for
consultation. When announcing that I made it clear that there
would be a floor introduced so no authority would suffer a loss
of grant. I cannot say at this stage what the level of the floor
would be but it is our intention to avoid a position where any
authority faces a reduction in its grant as a result of the change.
Secondly, concerning special pressures which create very real
difficulties for authorities, that is something we are looking
at at all timeswhether they be the example of asylum seekers
or social service pressures or other particular service pressures.
Our objective is to ensure that authorities do have adequate resources
to cope with the pressures they face: that is a constant subject
of discussion between us and the Local Government Association
and individual authorities, but certainly in the case of assessing
the performance of an authority an experienced inspection team
would have regard to unforeseen pressurse that that authority
faced for which there was inadequate provision, and that is something
I know that the Audit Commission will want to ensure that its
inspectors are sensitive to. That is not the same as saying one
has to make allowances all the time; that would be a mistake.
We want the system to be rigorous and demanding because it is
about raising standards but it is also about common sense in assessing
the performance of an authority and understanding the context
in which they are operating.
593. Going back to the financial point, the
structure of the different options you have presentedand
I take your point about the floorleads to a number of authorities
losing up to 5 or 6 per cent of their budget nominally through
the formulae you are adopting. Even if you put in a floor to say
those will not change you are still nonetheless implying a number
of years of at least frozen grant otherwise you never build the
restructuring in that you are aspiring towards. That means there
will be authorities dealing with extreme financial pressures in
the next few years. Will the comprehensive performance assessment
take that into account or will an authority that finds itself
at a disadvantage of this restructuring also find itself at a
disadvantage of the future assessments of its performance?
(Mr Raynsford) The difficulty with this issue about
the revenue grant formula is that every authority sees the need
for increased grant. No authority willingly says, "Actually
the grant level has been pitched too high", but logically,
if you think about this, the arrangements that came into place
10-12 years ago with the SSA formula are out-dated. We all recognise
there has been a need to update that. Some of the indicators were
perverse; some of the measures were not appropriate. As a result
of those changes some authorities are going to do better than
others. It is slightly difficult to believe that only those authorities
that have got too little will be affected: that there will not
be any authorities that have done rather well under the previous
formula that will not do quite as well now under the new arrangements,
but if you think about this logically that must be the consequence.
Chairman: Unless there has been underfunding
594. I have a specific examplemy own
County Council in Surrey. Surrey social services are already under
very high pressure because of shortage of carers, high cost of
living, etc, and the formulae options would mean Surrey losing
anything between £10 and £25 million a year. Even if
you put in a floor to say they do not actually lose cash, nonetheless
you have a redistribution mechanism there that will move funding
from Surrey to other authorities over time. However you do it,
the reality is that the relative position of Surrey compared with
other authorities will change as a result of what you are doing.
Will that be reflected in the comprehensive performance assessment,
for example, in the area of social services?
(Mr Raynsford) My recollection of the social service
exemplifications in the case of Surrey is that Surrey did rather
well in the proposed changes, and rather than facing the prospect
of loss it faced the prospect of
595. What we are really interested is in the
principle: that in a sense managing contraction in a local authority
is a rather different skill than managing expansion. How far will
that be taken into account in the comprehensive assessments? In
other words, money does have some influence on assessments, does
(Mr Raynsford) Our endeavour is to try and ensure
that the financial assessment through the grant distribution formula
does provide for the authority's needs in as accurate a way as
possible, and I have to some extent to guard against being too
precise because everyone here knows the difficulty of a formula
applying. Having done that, we expect authorities to work within
their budgets: we expect them to manage, whether they are facing
problems of growth or contraction, efficiently and well. The comprehensive
performance assessment will gauge their management performance.
No authority is going to be free from pressures: all authorities
will in certain areas face pressures. Whether those pressures
increase demand for service or whether it is declining population
needing contraction, those are pressures authorities will inevitably
face like any other organisation managing its affairs, but we
expect authorities to do that efficiently and the comprehensive
performance assessment is about measuring whether they do or not.
596. So is it measuring management or service?
If you are in a tight financial position and you are contracting
services and able to deliver less to your communities, will that
be reflected as a negative, or does the ability of a council to
manage that situation effectively leave them as a high performer
regardless of the consequence of the services?
(Mr Raynsford) As I explained earlier, the existing
best value indicators and the inspections are measuring the performance
of individual services. The new ingredient in the comprehensive
performance assessment is the corporate assessment of the management
of the authority as a whole. Both are taken into account in the
assessment, and what the grid which the Audit Commission is developing
is seeking to do is to measure both the level of service delivered,
the performance of that service delivery on the one side, but
also the ability of the authority to manage its affairs efficiently
and improve and deliver a better service in the future.
597. It is easy to see all the good things about
inspecting and assessing individual services and so on but what
I am not sure about is why you have a desperate need to add these
numbers up and give the same label to everything the authority
does when, if social services or education are weak or failing
that may lead to a very low grade for that authority but if the
architects and the building surveyors are actually doing a very
good job they get the same label stuck on them because that is
what the public will remember. Is that a bit unfair?
(Mr Raynsford) I do not agree. I think it is right
that there should be both an assessment of the overall performance
but also of the individual components. If I can be slightly flippant,
as and when the Audit Commission's report on Walsall was published,
the local newspaper recognised very clearly the Audit Commission's
conclusions. It invited its readers to respond; on the basis of
those responses they warmly endorsed the Audit Commission's conclusions
with a headline which I remember to this day which was, "The
bin men are wonderful but the rest are rubbish". But that
identified both successes in the authority and overall weaknesses
and that is what we are seeking to do.
598. But the weaknesses which could be severe
in some areas could lead to an overall categorisation in the way
the points are scored. Would that not merely mean that labelling
might be stuck on some bits of the services which were very good
but that those bits of the services that are very good, say, like
architecture or building surveyors or legal could not make some
of the freedoms which would be of benefit to the authority and
community by trading? Even though they are very good, if the authority
gets a low score overall they will not get those freedoms?
(Mr Raynsford) That is not the case. Again, there
has been some misunderstanding on this. There will be some additional
freedoms that will be only available to those authorities that
(Mr Raynsford) If I can come on to trading in a moment,
there will be some additional freedoms such as light touch inspection
and greater freedom over plans that will be available to authorities
that achieve the highest standards overall. There will be areas
such as trading where we want to extend freedoms to those authorities
who demonstrate a high performance in that particular area, so
the fact that an authority is not overall doing that well would
not preclude a high performing department within the authority
from getting greater trading freedom.