Recently we discovered the LGA were commencing a piece of work about reinvigorating robust debate inside local authorities. A timely reminder that scrutiny and accountability are at the heart of good governance. From the outside, it’s easy to forget that a community ‘consultation culture’ needs to level-up with the driving forces of democracy at the inner workings of our public institutions. In other words, being open to external challenges is highly desirable and should form part of a healthy organisation. For us that also means good financial transparency, financial literacy and plenty of meaningful consultation about public finances.
Regrettably, while annual budget consultations are plentiful, there are often too many pain points. Not least, it’s easy to get distracted by the shape versus the substance of a budget. Consequently, budget consultations are fraught with problems around articulating impacts or making unintended ones. We are inclined to think that local authority budget consultations serve more of an educational function and avoid tradeoffs – which should be the crux of the exercise. Our biggest thorn has been about the lack of historic consultation about investments and large spending decisions. For example, over investment decisions taken by local authorities who have gone bust as a result of commercial property investment – or putting money in insolvent Icelandic banks.
The 1999 Best Value regulations offer some relief. They refer to the Local Government Act 1999, which imposed a statutory duty on local authorities to achieve “Best Value” in service delivery and delivering value for money, replacing older systems like Compulsory Competitive Tendering. To be more precise, local authorities must “make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness”.
Section 3 of the 1999 Act sets out a requirement to consult on the purpose of deciding how to fulfil the Best Value Duty. The annual process of setting the authority’s budget, the corporate plan and the medium-term financial plan provides a key opportunity to conduct such consultation. This is the stage at which consultation will best assist the authority in deciding how to make arrangements to secure continuous improvement.
MHCLG published guidance in 2024 that gives more clarity on the use of powers under the Local Government Act where this Best Value Duty is not, or is at risk of not, being met. Where these standards are not upheld, it sets out the models of statutory and non-statutory intervention available, with stages of escalation. It even goes as far as to say that local authorities should not be practicing four day working weeks! Of particular note for us is the following paragraph “Services should take account of feedback from citizens and service users, and be scrutinised by a transparent and robust performance framework”.
In this guidance, a ‘well working authority’ is defined by its performance in a number of areas. For example, in terms of resident engagement and learning from complaints when it comes to continual improvement. Failure is also defined, such as ‘decisions that are perceived as being difficult are avoided or deferred’. In terms of governance, there should be evidence of the decisions following good public law decision making principles (reasonableness, rationality, proportionality, legality, fairness etc).
The guidance even has a section on partnerships and community engagement, in recognition that communities are increasingly invested in delivery. It states that there should be “..early and meaningful engagement and effective collaboration with communities to identify and understand local needs and assets, and in decisions that affect the planning and delivery of services. In some cases, this involves the co-design and/or co-production of services.”
In terms of a more tangible and recent example, we were delighted to read that a consultation will take place over Tamar Tag, which runs between Cornwall and Devon. The bridge and ferries are operated and maintained jointly by Plymouth City Council and Cornwall Council) and therefore it’s fitting with the best value regulations
We are less impressed by changes to Humber Bridge crossings, due to be enacted from February this year. The Humber Bridge is owned by the Humber Bridge Board, a statutory body composed of representatives from local authorities in Hull, East Riding, North Lincolnshire, and North East Lincolnshire, plus members from the Local Enterprise Partnership. As far as we can tell, there has been a purely comms exercise and the changes are not insignificant when it comes to the manner in which the bridge will operate – with local road users wondering why there is no subsidy for those in close proximity to the city of Hull.
Our point is this: inflationary pressures are creating budget shortfalls on a bigger scale than we’ve ever witnessed. Price increases are seen as one way out of the problem (even though they compound it!). The pressures exist where authorities are just trying to maintain the status-quo but also when existing facilities need repairs which exceed fiscal limits, resulting in temporary closures. Section 114 (bankruptcy) notices are another unfortunate moment for our trade.
Public engagement is necessary to ensure that there are no better solutions and to ensure that solutions are not excessive or at the detriment to certain types of people (i.e. unfair in some way). Ultimately, to bring people together by debating the issues at hand. The best value regulations are the best reason why this must happen but a fear of external challenge is stopping some organisations from complying, especially at the periphery such as in the examples here of publicly managed infrastructure.
Next time the price must increase, ask yourself if you have considered public input in relation to the combination of economy, efficiency and effectiveness but also how citizens can be part of the solution. You have the mandate in the regulations but if the debate doesn’t happen we’re going to be stuck in an affordability spiral for quite some time.