Local Government (Best Value) Performance Indicators and Performance Standards Order 2002

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The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): Thank you, Mr. Atkinson, for calling me to speak today. I am a little taken aback by the penultimate sentence of the hon. Member for Mole Valley (Sir P. Beresford) about Stalinism. That is overkill and I urge him to reflect on it.

Before I try to tackle the many questions that hon. Members have raised—the order is manna from heaven for those who wish to make long speeches—I want to define best value and to whom it applies. Best value requires all local authorities in England and Wales to secure continuous improvement when exercising their functions. They must have special regard to the economy, efficiency and effectiveness of the services that they provide for their communities.

Sir Paul Beresford: Would the Minister let me intervene?

Mr. Leslie: I want to make some progress, but I shall give way.

Sir Paul Beresford: That is kind. I ask the Minister to turn to page 15 and indicator 1 of schedule 5, which is:

    ''The proportion of unfit private sector dwellings made fit or demolished as a direct result of action by the local authority.''

When the Chairman and I served on a local authority in south London we targeted such dwellings. Therefore, the proportion available to carry out the indicator is exceptionally small. Like it or lump it, that particular local authority cannot meet that target.

Mr. Leslie: I am surprised at the hon. Gentleman thinking that having a target of continuous improvement in—

Sir Paul Beresford: I did not say that.

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Mr. Leslie: The hon. Gentleman says that he did not say that, but that is the essence of best value. If he is suggesting that the aim of continuous improvement in performance is somehow wrong or misguided, then I will have to disagree with him fundamentally. It is extremely sound to have a target of increasing the proportion of unfit private sector dwellings made fit or demolished as a direct result of action by the local authority. It is a target worth having. We must consider how and why certain services are undertaken by local authorities, how we challenge them, how we compare their performance against other providers, how they consult with their stakeholders, community members and so on, and how we test the competitiveness of service delivery within the wider marketplace.

In practice, best value as applied in England requires authorities to review services on a regular basis and report their performance to stakeholders, including local people, via the best value performance plan each year. They need to have accurate performance data, be prepared to set themselves challenging yet realistic targets and be able to measure their progress against them. If authorities are to secure best value, they need to know where they are and where they are going.

The purpose of the order today—it is the third to be laid before Parliament—sets out the statutory best-value performance indicators which authorities are required to report against and any standards to which they need to aspire. The order sets out measures for all the key services delivered by local authorities, which include education, social services, transport, housing, environment and others, and provides a rounded view of this performance by focusing on outcomes and outputs.

The indicators we have selected are good predictors of local government performance, so enabling all stakeholders, local people and the Government to see that they are getting good value for money. We could not, nor would we want to, set indicators that measure performance across every service for which local government is responsible. We developed a set of indicators, including corporate health indicators, which seek to show how authorities measure up as good democratic institutions, but also service delivery indicators covering the broad range of services for which local government is responsible, both on their own and in partnership with other bodies. Local people have a right to receive high-quality services in whatever region or locality they reside. By knowing what the levels of performance are, we hope to be able to drive up performance standards for all to those of the best.

Before setting the indicators, extensive consultation is conducted not only with the representatives of ''best value authorities'' in general, but also with the whole local government community. All ''best value authorities'' have an opportunity to express their views on the proposed sets of indicators and targets and these views are taken closely into account.

An effective organisation, and the best councils, show that lasting and relevant service improvement is rooted in dialogue, not just with service users but with

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the community at large. To ensure that such dialogue is meaningful, any organisation relies on having hard data on which to inform their decisions. Performance indicators that are easy to understand and provide key information for local people are an essential element, therefore, in the two-way exchange with local people.

Mr. Foster: I agree with the Minister that there must be a two-way dialogue, but if that is so, why does the order drop indicators that are about two-way dialogue? For example, why does an order about dialogue drop customer satisfaction indicators on public transport information, local bus services, planning application services, litter-cleaning services, recycling, waste disposal facilities and others? I entirely agree with the Minister on the need for dialogue and communication, but the measure removes the very indicators that cover such issues.

Mr. Leslie: I heard the hon. Gentleman the first time that he raised that matter and I had intended to return to it. The survey of satisfaction indicators that he is talking about are not necessarily undertaken every year, but sometimes over a three-year cycle, so some of these matters may be returned to in the financial year 2003–04. I will discuss later the principle of not over-egging the requirements to make returns, but ensuring that we get the balance right. We do not necessarily need them every year. I shall return to the rationale, but the Government do not believe that it will be necessary every year. However, local authorities are perfectly free to undertake whatever performance indicators they wish to set, and many do that.

Mr. Clifton-Brown: This is the first review of the best value regime since the Local Government Act 2000. Will there be any further reviews and when are they likely to be conducted? Will the Minister ensure that the performance indicators are as objective as possible? Many of the indicators are subjective and do not give an absolute and accurate measure of one council against another. It is the judgment of one person against another.

Mr. Leslie: My understanding is that central Government tend to examine the performance indicators and required returns each year. That is why the order is before us today and, as I will come on to in a moment, we have managed to reduce the numbers of required performance indicators. I am always open to suggestions about clarification and simplification of the language and terminology used in the indicators and I accept that the process is continuous. However, I do not agree that the set is over-subjective. As far as statistical requirements can ever be, this is a methodologically robust series of indicators.

Mr. Clifton-Brown: The Minister has not quite answered the question. Will he tell us whether we should expect an annual, biennial or quinquennial order?

Mr. Leslie: No, I will not. I shall review progress as it occurs and hold a dialogue with local government and other stakeholders involved in the best value system. The Government will examine that dialogue and make changes as and when they are necessary.

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I was discussing best value performance indicators in general and wanted to set out the principle that they provide the basis for accountability for the communities and stakeholders concerned. Demonstrating outputs and outcomes achieved for communities enables communities to hold local authorities to account. The indicators are also important as a key management tool, while information for organisations, whether they are in the public, voluntary or private sector, helps support and focus their planning and management capabilities. Performance management and, therefore, performance indictors are integral to the delivery of high quality public services and to their continuous improvement.

Sir Paul Beresford: I appreciate what the Minister is saying and why he is saying it, but at least under compulsory competitive tendering, one could compare a local authority with another authority or the private sector. However, in many areas, particularly in London, we are comparing the dreadful with the awful. There is no incentive to move forward because private sector competition has been deliberately cut out.

Mr. Leslie: Comparative performance is always a difficult subject and requires a lot of attention. Best value indicators allow people to judge comparative performance between local authorities as well as an individual authority's comparative improvements from one year to the next. It does not preclude attention to improvements in efficiency, effectiveness or economy of services, but allows comparisons in questioning services and whether they are best provided by a particular means. Best value does not preclude performance comparisons of local authorities with other forms of service delivery. However, we are examining the outcomes for service users, because that is what matters most. The issue is not only the structural mechanisms of service delivery, with which I know that the hon. Gentleman is concerned.

Sir Paul Beresford: Will the Minister give way?

Mr. Leslie: I should like to make some progress, as the hon. Gentleman has raised other points and I want to respond to them.

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Prepared 19 June 2002