Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence


Memorandum by the Institute of Value Management (LGR 04)

SUMMARY

  1.  The Institute has no views as to the balance, sources, collection methods, absolute level or purpose of local government funding.

  2.  We do believe, however, that for given units of local government activity a ceiling relative to inflation should be set such that unit costs do not rise above inflation, if at all. We believe this is quite feasible and that central government should exercise greater influence to ensure that it is achieved.

  3.  We believe that if council costs are allowed to rise faster than inflation it will cause insoluble problems for whatever form of revenue is decided upon. Put quite simply taxpayers will not tolerate unending demands for more revenue when there is limited evidence of effective action to contain costs and improve services. Accordingly, any new tax/revenue arrangements should be accompanied by the requirement that all best value authorities have an effective value programme in place so that expenditure is contained within inflation limits.

THE INSTITUTE

  4.  The Institute of Value Management is the representative and qualifying body for value management in the UK. We were established as the Value Engineering Association in 1966 with the assistance of the Ministry of Technology to encourage and develop good value practice. The Institute's current name was adopted in 1972 to reflect the growing use of value methods outside of industry and construction.

  5.  Value management is about the programmed review of products and services and their means of production to secure and sustain best value for customer and stakeholders. The term best value has long been used in value management, with the same meaning as for the best value policy for local government. In value management there is a heavy focus on teamwork, staff involvement, empowerment, creativity and innovation. To give further information on value management copies of a DTI booklet on the topic were sent by post.

YOUR TERMS OF REFERENCE

  6.  Your terms of reference comprise seven points. The first five relate to the balance of funding, forms of taxation, etc: areas about which the Institute has no views. It is the last two questions that concern us. They comprise:

    —  Should there be a ceiling on local government expenditure and taxation, and if so how should controls operate?

    —  To what extent does central government control or influence contribute to local government expenditure and taxation?

  7.  In respect of the first point we believe that the unit costs of councils should not rise above inflation—indeed, we would expect unit costs to reduce in absolute terms. Of course, if Ministers want councils to take on more duties then these will need to be paid for, but the same principle should apply—unit costs should not rise above inflation, if at all.

  8.  To secure this we would expect all best value authorities to have an effective value programme. If these programmes are to be monitored, then any assessors should be suitably trained in such regimes. Their role should be to disseminate good practice not apply a bureaucratic audit regime that strangles innovation and encourages box ticking. There are key benchmarks that could usefully be taken on board. They comprise:

    —  Outcomes—a well run value programme normally delivers benefit, in cash and/or kind, worth 10 times the cost of the programme.

    —  Practice—there is a BS EN 12973: 2000 standard that delineates good value programme practice, and which facilitates the audit of programmes.

    —  Skills—there is a well established European system of training and certification for practitioners available to secure best practice.

  9.  The Institute believes that such regimes are provided for in the 1999 Local Government Act—the best value legislation. Sadly this was not implemented as effectively as it might have been. This is particularly disappointing given that the linkage between best value and value management was noted in the Environment, Transport and Regional Affairs Committee's eleventh report Implementation of the Best Value Framework of 22 July 1998 (Ref 705-1).

  10.  The Institute respectfully invites the ODPM Select Committee to examine paragraphs 8 and 9 of the above DETR Select Committee report and the evidence to which it relates. Also, paragraph 103 under Conclusions and Recommendations. Had timely action been taken in respect of these paragraphs the best value policy would have been significantly more effective and local government costs kept within inflation. It does not follow that had costs been kept within inflation council tax would not have gone up faster than inflation. That is a matter of grants and their distribution, a topic on which we have no views.

  11.  In respect of the ODPM Select Committee's last question relating to "central government's control or influence" the Institute believes that central government needs to be much firmer and more decisive when asking councils to improve performance. The scale of performance improvement required, inevitably means changing both what and how work is undertaken. This requires not only a vision of what is possible but an understanding of the means to achieve it. Councils, like all our public services, are run by hard working, intelligent and conscientious men and women. They, however, lack exposure to world-class performance improvement practice to know what works and what can be achieved and they are unlikely to find adequate guidance from within public services. They need guidance and practical support as to what does work rather than what does not.

  12.  For example, the Cabinet Office/DETR publication Guide to Quality Schemes and Best Value noted in February 2000, the "Quality schemes will not in themselves guarantee Best Value". These topics do not lie at the heart of improving productivity to the degree that value management does and indeed they have a different role and are not alternatives to value management. In fact value management is not included in the quality schemes, yet it is from this topic that the best value policy borrows its core principles.

  13.  We believe that all public services should run a value programme that is subject to stringent audit. Ministers may feel that to advocate value management is "prescriptive", but the consequences of not being prescriptive have contributed to unacceptable council tax increases. We are not aware of an alternative to value management that is equally effective in respect of public services, and value management does fill in the gaps of the best value policy. In the final analysis, widespread application of value management will prevent the continuous rise of council costs above inflation that would undermine whatever system of taxation is decided upon.



 
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