Features: May 2nd, 2003

Inspecting Local Government: An Agent of Public Service Improvement?

By Howard Davis and Steve Martin

Reproduced by permission of the Public Management and Policy Association.

The external inspection of local government is nothing new. But it has expanded rapidly in recent years to the point where it has become one of main planks of the Government’s drive for public service improvement.

Prior to April 2000 inspection of local government focused on a relatively small range of services – social care, benefit administration, education and emergency services. Many local authority functions were exempt from any form of external inspection and shire district councils in particular were barely touched by it. The introduction in April 2000 of the statutory Best Value regime changed all this. The creation, under the terms of the 1999 Local Government Act, of what has become the Audit Commission Inspection Service has pushed inspection into all areas of local government activity.

‘Risk-based’ regulation

The local government white paper Strong Local Leadership – Quality Public Services published in December 2001 tightened the screw still further. Reiterating its commitment to the principle of external inspection the government argued controversially, that ‘there is broad consensus amongst all concerned on its potential for delivering improved outcomes’ and announced moves to strengthen inspection of local authorities. Acknowledging the widespread resentment of the increased costs imposed on authorities by new inspection activity, the government proposed the introduction of a more ‘risk-based’ approach to inspection which it said was designed to ensure:

    • more effective co-ordination of the different inspectorates covering local authority functions
    • the amount and intensity of inspection an authority receives reflects its performance profile, and
    • inspection becomes a central component of intervention measures where services are deemed to be failing.

The centrepiece of this emerging inspection regime is a ‘Comprehensive Performance Assessment’ (CPA) of an authority’s current performance and its capacity to improve. The CPA includes an element of self-assessment but is based primarily on external inspectors’ judgements of its corporate capacity and the quality and cost effectiveness of its services. The outcome for each council is a composite score which determines their position on a scale ranging from high performing to ‘poor’. Authorities that are deemed to be performing well have been promised a substantial reduction in inspection activity and new flexibilities and freedoms. Authorities that are deemed to be poor performers will, though, be subject to intense supervision and, in many cases, direct intervention. Often this will include replacing senior management and imposing new approaches to the running of ‘failing’ services.

Stepping up the pace of change?

CPA is widely seen as the high-water mark of external inspection in local government. It is designed specifically to ensure that improvement steps up a gear and stems from the Government’s growing frustration with what is perceived to be the slow pace of change. In his July 2001 ‘reform or bust’ speech the Prime Minister signalled his impatience giving both ‘a commitment and a warning’, saying ‘My commitment is that I will not flinch from the decisions and changes to deliver better public services, no matter how much opposition. If the changes are right, they will be done’. At this year’s Labour Party conference the Chancellor of the Exchequer reinforced the message: ‘ Our mission is not just better public services, but the best public services’.

The limits to centralisation

The CPA is not though without its problems. Notwithstanding the agreement between ministers and the Local Government Association on a set of shared central-local priorities, the current improvement agenda is being imposed ‘top-down’. The model of improvement that underpins it – with its emphasis on strategic leadership, performance management and public-private partnership – is not one to which all authorities would ascribe, and there is a very real danger that local priorities will be squeezed out by national targets. Willingness to experiment with new forms of service delivery could be stifled by a fear of failure and the now very public naming and shaming associated with poor performance. Authorities’ complaints about what they regard as the excessive bureaucratic burden associated with the new inspection regime have been echoed by a number of recent studies – not least the Treasury’s Public Services Productivity Panel. There is a danger that inspections focus more on processes than outcomes and style rather than substance. And many fear that the public humiliation of authorities that are already struggling could make things worse, damaging staff morale and making it more difficult for them to recruit and retain talented managers.

External inspection can bring benefits

In our recent paper External Inspection of Local Government: Driving Improvement or Drowning in Detail? we catalogued a range of important roles that external inspection could play. These included:

    • acting as a catalyst for improvement
    • increasing public accountability
    • acting as an early warning system in cases of potential failure
    • enabling more accurate diagnosis of the determinants of success and failure
    • encouraging a greater capacity for self-evaluation and inter and intra-organisational learning within the local government community.

The full impacts of the current regime will, of course, only be apparent over the medium term. It does, though, appear to derive more from a distrust of any of the available alternatives rather than from compelling evidence of its capacity to deliver the improvement that the present government so desperately desires. Moreover, whilst the present system provides a fairly effective means of central surveillance of local councils, it does not appear to be well placed to offer some of the potential benefits we have identified above.

It would be entirely wrong to imply that the inspection services are unaware of these dangers or entirely unresponsive to criticism. Their approaches to inspection continue to evolve rapidly and there are strong a priori arguments for external scrutiny. Nevertheless there is an urgent need for a better understanding of –

    • how service improvements are actually achieved in practice (and the circumstances and manner in which inspection activity can contribute to this)
    • which approaches work best in which circumstances, and
    • how effectively inspection regimes interact with each other and with other policy instruments.

It is also clear that inspection still needs to be more widely ‘owned’. There has to be greater clarity about its purpose and the ways in which it is seeking to help to promote change. Until, though, we have a much better understanding of what it is that actually drives service improvement in different local contexts, we would argue that there needs to be an openness to a wider range of change strategies than the rather rigid model currently being promulgated.

Howard Davis is Principal Research Fellow and Research Manager at the Local Government Centre, Warwick Business School. Professor Steve Martin is Director of the Local and Regional Government Research Unit at Cardiff Business School. They are currently undertaking a study of the impact of national inspection regimes on local government with funding from the Joseph Rowntree Foundation.