Contact: Jenny Heath or Ian Howell, Ext 7402 or 7540

1. Summary

1.1. This paper outlines the impact of the Local Government White Paper, in terms of financial and non-financial issues. Appendix one is the DTLR summary document.

1.2. A detailed summary and commentary is contained in Appendix two, while overall conclusions are made within the body of the report. Attention is drawn to the wider context of other Government proposals and the need for Members to consider the overall impact, as soon as all the information is available.

1.3. A similar paper was taken to Cabinet on 25 February 2002, when the precise responses to be made to Government were decided.

2. The White Paper

2.1. The white paper `Strong Local Leadership - Quality Public Services' was issued on 11 December 2001, following:

· the green paper `Modernising Local Government Finance' published in September 2001

· DETR consultation on `Working with others to achieve Best Value - June 2001

· LGA consultation on `Streamlining Best Value', July 2001

The DTLR summary document provides a useful background to the key issues and is attached at appendix one.

2.2. The white paper is not a consultation document - although views have been sought on one or two areas, including specifically, Support for Councils, covered in chapter five. Chapter five and the response are attached at Appendix three.

2.3. The white paper is split into two parts. Part One covers a wide range of non-financial proposals, aimed at reforming council services, to enhance local democracy and community leadership. Part Two sets out proposals for modernising the local government finance system

2.4. The Government intends to implement its proposals as and when the legislative timetable allows:

· Statutory Instrument 2002/35 was published on 14 February 2002 to give effect to the proposals for changes to Best Value Performance Plans and Best Value Reviews. It is the Government's intention to bring together all changes to Best Value in a more comprehensive revision to its original circular in the summer.

· The Government's priority is to replace the existing revenue grant distribution system in 2003/04. Many of its other proposals require primary legislation and the Government intends to introduce a Bill in this Parliament. As that could stretch to June 2006, some proposals may be delayed for some time.

3. The Wider Picture

3.1. There is a raft of Government proposals currently being published, which are likely to have significant impact on local government. This paper considers the Local Government White Paper but recognises that it would be prudent to reconsider it with the following papers once they have all been received and digested, to consider the overall messages they convey:

· The Government's review of Best Value - publication anticipated soon, having slipped from the target date of 31 December 2001

· The Planning Green Paper - see sister paper on this agenda

· The White Paper on the Regions - publication anticipated near Easter, having slipped from the end of January.

3.2. In the meantime, the Leader has responded to the Commission on Local Governance, on some of the wider issues raised by the white paper. The response, attached at appendix four, has focused on three key principles:

· The need to make a direct link between local taxation and services provided, in order to stimulate community interest in local government

· The tension between nationally set targets and the need to deliver customer-focused services that meet local needs

· The avoidance of a `one size fits all' framework for all models of local government.

4. Non-financial implications

4.1. Part One of the white paper outlines changes under the following headings:

· Strengthening local government

· Leading and empowering communities

· Quality public services

· Freedom to deliver

· Support for councils

· Investing for improvement

· Working together for better outcome

4.2. Many of the proposals are already being taken forward by the County Council as it works to develop the e-government programme, the local PSA, community strategies and the Local Strategic Partnerships, an improved performance management framework and streamlining of the Best Value programme and review process.

4.3. A key and immediate change is the proposal to publish the full Best Value Performance Plan on 30 June each year, which has since been given statutory force with the issue of SI 2002/35. There are some logistical problems with the change of date, particularly surrounding publication of actual performance information, given the lead in time required prior to the final date. Nevertheless the principles of this change are welcomed as the aim is to ensure these statutory documents have the appropriate content for the audiences they are now intended to inform.

4.4. A differentiated approach to Government intervention or inspection is welcomed but there are considerable difficulties to overcome in establishing a credible performance assessment framework. Since the `carrots and sticks' of financial benefit and freedoms or intervention are attached to this approach, there is natural concern about how the evidence is collected, weighted and reported, in arriving at the overall conclusion. It is doubtful whether the freedoms mentioned will generate substantial changes.

4.5. The implications for Best Value are a move towards a more streamlined approach that recognises the bureaucratic impact of some of the original guidance and inspection regime. The proposals mirror the council's own moves towards an integrated performance management system, focusing resources on those areas where most improvement can be made. There will, however, be some difficulties in meeting the changes to reporting cycles, which demand actual data earlier in the year.

5. Financial implications

5.1. Part Two of the white paper is devoted to finance but the Government emphasises that it sees a good finance system as a means to an end, not an end in its own right. The proposals for finance need to be seen in the context of its overall agenda for modernising local government to secure improvements in the delivery of public services.

5.2. The Government has described the financial sections of the white paper as a route-map for reforming local government finance. It argues that a good finance system should:

· fund all authorities adequately

· promote continuous improvement in service quality and efficiency

· provide a reasonable degree of predictability and stability

· balance delivery of national priorities and targets with local financial freedom and responsibility

· be fair to those who use and pay for local authority services

· clarify accountability for financial decisions

· be intelligible and transparent to all stakeholders

· facilitate partnership working

· encourage consultation.

5.3. The Government has reaffirmed these aims in the white paper and proposes changes to reform the system so that, in the Government's view, it meets all of them better. Its criticisms of the existing system include the "unfair" allocation of revenue grant, too many Government controls and too much complexity that is not understood by people in local government.

5.4. The Government claims that the white paper proposals are more radical and more discriminating than those in the green paper, in terms of financial freedom, with changes carefully managed and doing more to promote good local financial management in which councillors are fully involved. Although the proposals are a collection of disparate changes, the Government is keen for them to be seen as part of a considered package.

5.5. The white paper draws attention to the steps that the Government has already taken since it came to power in 1997 as they provide the context for the white paper proposals. These steps include the increased provision for local government services in its public spending plans, the increased certainty from three-year spending plans and the freeze on methodology changes in the formulae for revenue grant distribution which the Government believes have both made it easier for local authorities to plan ahead, and the replacement of universal capping of budgets with reserve powers.

5.6. Some of the proposals in the white paper are very welcome, including the prudential system of capital controls and the abolitions of the receipts taken into account mechanism and the council tax benefit limitation scheme.

5.7. The major change in the immediate future is the replacement of SSAs with a new formula for revenue grant distribution in 2003/04. Unfortunately, there is no description of how this formula will work even though it will be in operation in less than 15 months time, and despite a review lasting more than three years. The risk that the new formula will be disadvantageous to the County Council is high, with the area cost adjustment again under threat.

5.8. Many of the other changes require legislation and the Government should be encouraged to bring forward the Bill to implement the changes to the capital control regime, in particular, as soon as possible.

5.9. The Government considers that there is little hard evidence that the current balance of funding between central and local taxpayers has had an adverse impact on local authorities' autonomy. It proposes a further review of the issue. In the meantime, the white paper does not examine the scope for introducing any additional taxes, such as local income tax, as a means of widening the local tax base and increasing local accountability. This represents another missed opportunity.

6. Conclusions

6.1. The language of the white paper is strong on intent, acknowledging the valuable role of local government in community leadership and sets out principles that the council can broadly welcome. However, there are some contradictory statements and the devil may be in the detail, yet to emerge in the final guidance. In particular the council rejects any framework based on a `one size fits all' approach, especially if there is a lack of consultation on the models that work within a county council.

6.2. The whole of the white paper majors on community engagement, yet there are inconsistent messages about setting national standards and targets, which are at variance with setting local priorities in response to local community needs.

6.3. Overall, the proposals are far from radical and do little to give local government the autonomy it needs to deliver services effectively. The word "freedom" is used frequently in the white paper. Freedoms will be extended in some cases to those local authorities considered to be high performing and which deserve "a special measure of trust". This concept of doling out small rewards of "freedoms" to local authorities illustrates the fundamental shift that central Government still needs to make in its thinking if it is to enter fully into a partnership with local government. And in many cases, local authorities already have these freedoms.

6.4. The so-called freedoms largely involve replacing one type of Government control with another, moving from controls over inputs and how money is spent to control over priorities and outcomes enforced by an inspection and performance measurement regime. The effect is still to impose the Government's national decision-making on local services.

6.5. The council has represented these views in a response to Government, attached at Appendix five.

Recommendations

1. That the Committee note the content of the white paper and the responses made to Government

2. That the Committee receive a further report once the outstanding Government papers have been received.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.

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