The campaign for ‘new localism’ to allow councils to take a more strategic view and give them greater discretion in how resources are used has taken a major step forward with the roll out of new funding arrangements. Over 20 councils piloted Local Area Agreements from July last year and demonstrated that the new arrangements can successfully bring together local priorities with those of the Government. The Agreements simplify the number of funding streams from central government. By focusing on a core set of outcomes for an area, they significantly simplify the arrangements which have previously been in place, and give councils much greater freedom to spend on local priorities. The success of the pilot has resulted in a nationwide roll out of Agreements with 66 councils being brought into the scheme this year and the remaining larger councils by 2007.Each Local Area Agreement will be negotiated with the Office of the Deputy Prime Minister and it will be focused around the four blocks of children and young people, safer and stronger communities, healthier communities and older people and economic development and enterprise. The remaining 13 areas will be structured around a single pot. The effect of this will be to reduce bureaucracy by bringing together over 100 different funding streams. On average councils will report on 64 targets instead of several hundred and this will allow them to focus on meeting local community needs. Each Agreement will have a three year life span.

Local Area Agreements will be integrated with Local Public Service Agreements which cover additional service targets agreed between central and local government, with the incentive of additional financial rewards if these targets are met. The incentives for councils to perform well are being steadily increased and they now include greater freedom to concentrate on local priorities, increased funding for achieving targets and less frequent inspections by the Audit Commission.