How to use 2023 Best Value Guidance as a roadmap
Paul Feild examines the draft guidance on best value issued in July 2023 and discusses how it can act as a roadmap to delivering improved governance.
In July the Secretary of State for the Department for Levelling Up, Housing and Communities published under section 26 of the Local Government Act 1999 (1999 Act) a draft Guidance Best Value Standards and Intervention - A Statutory Guidance For Best Value Authorities: Consultation - GOV.UK (www.gov.uk) (the Guidance). The draft is an excellent document to get thinking about governance, though by no means perfect[i].
In the Introduction the Secretary of State (the Right Hon Michael Gove MP) tells us:
Under the 1999 Act, local authorities must legally deliver what is termed ‘Best Value’ – a council must be able to show that it has arrangements to secure continuous improvement in how it carries out its work. This guidance provides more clarity on the use of powers under the Act where this Best Value Duty is not, or is at risk of not, being met. And where these standards are not upheld, it sets out the models of statutory and non-statutory intervention available, with stages of escalation.
Guidance p4
A key theme of the Guidance is the value placed on inspections and peer reviews. These are excellent techniques to getting objectivity about where an authority is. A proper understanding about where you are is best reached by a number of points from which to get your bearings. This can be difficult in what are after all political bodies. This matters because we need a known fixed point to know where you are before you embark on the journey to a destination of the excellence of governance target operating model. The Guidance says:
To help local authorities to achieve best value, government funds a programme of improvement support, primarily via the Local Government Association, that includes a wide range of sector-led support activities, including peer challenges, mentoring and the dissemination of best practice. Government expects local authorities to participate in the sector-led improvement initiatives available to them, to take up any offers of sector support or seek their own bespoke support if they require, and to be open to challenge. Government also expects all local authorities to have a corporate or finance peer challenge at least every five years, to publish the outcomes and deliver on the recommendations of that review, and to complete a progress review within a year.
Guidance p 6
So, the key point about the Guidance is the emphasis of being open to inspection. It is going to be de rigueur and by definition, not being open is contrary to best value delivery. It is clear too that as we will later see in this paper, effective scrutiny is a priority.
The aim of the Guidance is to establish openness about what is going on and letting both insiders and outsiders in so as to evaluate, review and compare and better inform what is the state of play.
As the theme of this supplement is governance, I shall focus on what the Guidance says on the subject which is illuminating:
this statutory guidance sets out seven overlapping themes of good practice for running an authority that meets and delivers best value. These seven best value themes build on the lessons learned from past interventions, including those which the department published in June 2020, and reflect what most local authorities already do or are striving to achieve. While these themes are all interdependent, strong governance, culture, and leadership underpin effective partnerships and community engagement, service delivery, and the use of resources. Continuous improvement is the outcome of all the themes working well together.
Para 24
The key triple themes of strong governance, culture and leadership sounds right. The recent Best Value Reviews of the “super-debt councils[ii] were certainly riddled with weak governance, dysfunctional leadership and a culture of hostility to confronting serious concerns.
Guidance p13 Diagram 1
The Underpinning Signifiers
There are seven signifiers which are represented with a 2-diamensional Venn diagram. However, there is a danger in that it oversimplifies matters as of course culture and leadership go together[iii]. If the Venn diagram was animated with the circles being globes constantly interacting like boiling water, it might be better at representing what’s going on.
Let’s look at what the Guidance identifies as the key signifiers of strong governance, culture and leadership as our starting point because these have to be right to set direction to enable the journey to commence to deliver a best value authority with sound governance and then examine continuous improvement, use of resources, service delivery and partnership and community engagement.
The Guidance is formatted with three columns. The first which tells us what a good signifier looks like, and two columns set out the tell-tale signs of good or bad then follow. It is appealing and could easily help shape a sector / peer review key lines of enquiry where time is short[iv].
First, we shall look at the three key signs of strong governance, culture, and leadership.
Strong governance
Starting with ‘strong governance’, we look for robust governance and scrutiny arrangements that are the right fit for the authority be it: a mayor; strong leader & cabinet or committee system. This must be understood by the users and so training on their authority’s constitution is essential.
The decision makers should be supported by internal guidance on how to make lawful decisions particularly when the decisions affect individuals. It is interesting that human rights and equalities are not mentioned at all. What is referred to is “evidence of the decisions following good public law decision making principles (reasonableness, proportionality, fairness, etc.)”[v].
The Guidance says there should be codes of conduct and human resources policies to “sector standard” Having said that, the Localism Act 2011 section 28 is permissive on what codes of conduct should look like as long as it incorporates the Nolan principles and members interests[vi].
While it says strong governance requires effective support for whistle-blowers, this in practice is problematic. Take as an example financial wrong-doing, local audit has been placed under so much pressure that in many councils their local audits are three years or more behind. Where the resources are to be found for such matters to investigate financial or negligence wrongdoing is a major challenge. A well-resourced internal audit is a necessity as the Monitoring Officer may not be best geared to deal with financial whistleblowing. Such matters would benefit with cross-boundary working where governance professionals could agree to look at each other’s whistleblower allegations.
We would all agree with scrutiny as an objective, yet this can vary so much according to authority to authority. I revisited the Woking Report just to see what impact scrutiny had. It was mentioned 10 times and that in the context of it getting to work better. It made a contrast with Richard Penn’s report on Croydon LBC. Here it gets mentioned 111 times and there is significant evidence that Croydon’s Scrutiny and Overview committee did try to get an accurate picture of the state of the council’s affairs, but the prevailing culture undermined their efforts. Culture was at fault according to Essex Commissioners at Thurrock Council which has six scrutiny committees each with six members. Here there was a problem with giving the committees support.
The Commissioners found that the members were finding themselves being led by officers (para 183) and the Cabinet had influence in terms of workload by the use of ‘pre-scrutiny’ of Cabinet reports often just in the day before the Cabinet meeting. This clogged up the scrutiny function. It is recommended that such matters should happen 2 to 3 weeks before Cabinet, but maybe that’s a luxury that just cannot be delivered. Which leads us on to the issue of Culture.
Culture
This is the most problematic of the foundations for governance. Culture is ‘what we do round here’. It can be very hard to define, though it is extremely powerful. ‘’Culture eats strategy for breakfast’ so the saying goes[vii]. Certainly, localism makes it difficult to establish universal good and excellent behaviours, indeed local politics are their own culture. Richard Penn observes [talking about Croydon Council]:
While the Councils governance and systems looked fit for purpose from a distance, these interviews revealed a highly dysfunctional organisation characterised by a culture of poor decision making and conduct by some of the Councils most senior managers this is evidenced among other thing in the belief that needing to be ‘fleet of foot’ meant that public money could be spent without due regard to public decision making and internal managerial and financial controls
Penn para 14.5
And
…failure to stop a corrosive top-down culture of which is commonly described by interviewees as over controlling and bullying. In this final regard the council most senior managers are depicted by interviewees as bystanders to the bullying of managers and junior staff by former leading members and the former chief executive…
Penn para 14:18
In the Croydon case, essentially it needed a third party (Local Auditor) and an independent investigator to highlight such concerns.
The Guidance observes the culture is determined by its shared values, ethics and beliefs, how decisions are made, as well as how elected members and officers behave, interact and carry out their roles. With respect, it is a great deal more than that. For example, Richard Penn spoke well of Croydon’s procedures, but it is what happens under stress that really counts. Bullying will manifest itself when people are not getting their way or not hearing what they want to hear. I carried out a word check and found 22 references to bullying at Croydon including shouting at the external auditors (Penn 6.9) - contrast that with Woking where the score was nil.
Furthermore, the Guidance flags that instances of bullying are a signifier of a poor culture i.e. “A culture of bullying, distrust and broken relationships exists”.
Yes, an agreed set of shared corporate values which are effectively implemented and modelled across the authority are essential to maintaining positive organisational culture, but the Chief Executive is inevitably the Head of the Paid Service (S.4 LGHA 1989) so their resilience and behaviour inevitably is a scene setting component. Here is what Essex Commissioners had say:
Among those officers who had a direct working relationship with the Chief Executive, there was a clear view that – at a personal level – the former Chief Executive was very supportive in dealing with individual pastoral matters. She was generally supportive of staff and accessible to them. But this supportive style was not extended to professional issues or to matters of performance and delivery. In these cases, senior officers described the former Chief Executive as having an autocratic leadership style. They described a clear command and control approach and highlighted an absence of psychological safety in their relationships with the former Chief Executive. Many felt reticent to have open and honest conversations with her for fear of being blamed or being publicly shamed. We were told that:
‘If something went wrong people were fearful that it would “hit the fan” with the Chief Executive and of her reaction. There was a blame culture… where the Chief Executive needed someone to blame. ’‘She would frequently say “who do we sack for this?”’
Thurrock Best Value report Para 116 & 117
In the case of Croydon, priorities that were harmful to the funders of public service seemed to prevail. It is settled law (Robert v Hopwood [1925] All ER 25) that there is a fiduciary duty to the rate-payer, yet the outcome of the Croydon financial governance failure was that council tax went up by 14.99% in April 2023.
Certainly, openness and willingness to respond to feedback is a mark of a learning culture, but ultimately, in a politically charged environment governed by law and as unpalatable as it may be for the statutory officers, it is their legal duty to step in and correct deviations and if necessary activate disciplinary processes. That is not going to be easy so what does the Monitoring Officer do?
The good news answer is ultimately it is all about the evidence, and on the not unreasonable presumption most of our readership are lawyers and they will know all about getting proof together. Referring back to Richard Penn, the strength of his findings and conclusions are they are based on first-hand testimony with sufficient perspectives to give accuracy in triangulation.
Furthermore, the Guidance tells us a signifier of poor culture is “Poor outcomes identified from staff surveys”[viii]. Any feedback has got to be a good thing and something like a question time for staff would certainly improve communications.
The Guidance also touches on the functionality of the internet presence by a local authority and comments a signifier of poor culture being; “A website that is difficult to navigate, where key documents are either missing or drafted in a way that information is inaccessible to the public.”. This is spot on. The reality is for a large authority, on-line access is key. The public and stakeholders particularly in a rural district can hardly travel in poor winter weather (often now without reliable public transport) to see a county council meeting but could if it were easy to view on-line. But where the links are and what taxonomy is used to describe council services can be difficult to negotiate[ix].
Leadership
To be effective the political and administrative leaders must be clear about the vision and priorities for local economic growth, social cohesion and a healthy local democracy in their area.
As part of the leadership the officers with statutory responsibility, being the Head of Paid Service, the Chief Finance Officer (s.151 LGA 1972) and the Monitoring Officers, uphold their duties to a model standard individually and collectively.
The Guidance observes that an authority that either fails to recruit to its statutory officer posts on a permanent basis over an extended period of time or has a high turnover in these roles indicates instability and potential risk. This observation was first made by Lord Pickles:
Mr Pickles: The council’s [Tower Hamlets LBC] core governance arrangements have centred on the three statutory officers: the Head of Paid Service, the Chief Financial Officer, and the Monitoring Officer. The council has failed to make permanent appointments to those key positions. Currently, all three posts are held by interim appointments. PwC[x] concludes that the governance arrangements do not appear capable of preventing or responding to the succession of failures by the mayoral administration. Executive power is unchecked and executive power has been misused.
Hansard, 4 November 2014 Column 663
What has been open to much discussion is the reporting lines. The Guidance states a negative signifier is the Section 151/ Chief Finance Officer and Monitoring Officer not report directly to the Chief Executive or are not involved in key decisions. However, as a matter of law there is no requirement for the Monitoring Officer to be qualified in any profession unlike the Chief Finance Officer who must be an accountant. Many authorities appoint their head of legal services as Monitoring Officer, indeed CIPFA is currently saying that should be the preferred operating mode. Problem is that the role is often third tier and may be reporting to the Chief Finance Officer.
While there can be the ‘dotted line’ to the Chief Executive, when the cause of problem is the S.151 officer, it puts the Monitoring Officer in an uncomfortable position. There is also the possibility that the head of legal may also be described as the “solicitor to the Council” for example. That will inevitably create a mindset of there always being a client (ultimately the council) but when acting as the Monitoring Officer that is a separate role and challenging to be the solicitor to the council whose client is themselves wearing another hat. Realpolitik is the Head of the Paid Service will be telling the Monitoring Officer what to do. In situations like that the Monitoring Officer could think about commissioning a private law firm and or counsel and at the very least would have the foresight of establishing a confidential network of other Monitoring Officers as sounding board and talking to them to get a view.
One intriguing signifier is the point about staggered election cycles. The Guidance says: “The authority has moved from multiple to all-out elections within the four-year cycle, which has enhanced stability and reduced ongoing campaigning that can hinder improvement.”
It is a good point. Lord Pickles (then as Eric Pickles) observed that the ballot box was the route to dealing with poor local politicians. However, as there is no proper recall power, then it could be several years before the electorate give their vote on poor leadership and governance. This means that in the case of a failing council, the officer Corp can be dealt with by disciplinary processes, and while commissioners can be sent in, the electorate are stuck with the miscreant politicians for maybe years. However, the benefit is one-thirds cycle gives greater accountability!
CIPFA, according to Public Finance, suggests that that poor stewardship should be a ground for complaint under the Councillors Code of Conduct. That may be right and as mentioned if there has been a breach of fiduciary duty, that could be seen as a breach. Really it needs codification, and we should not underestimate how controversial such a move would be. As discussed ad nauseam, the Government steadfastly refuses to increase sanctions available for councillor misconduct.
Furthermore, if there were to be some consequences then there would need to be an appeals tribunal, questions of indemnity, legal advice and support to the members and no doubt the likelihood of blame culture wars because the politicians would say quite reasonably, we did what we did on a bona fide basis because the officers recommended it. Finally, what about the s.265 protection under the Public Health Act 1875?
Protection of local authority and their officers from personal liability.
No matter or thing done, and no contract entered into by any local authority or joint board or port sanitary authority, and no matter or thing done by any member of any such authority or by any officer of such authority or other person whomsoever acting under the direction of such authority, shall, if the matter or thing were done or the contract were entered into bona fide for the purpose of executing this Act, subject them or any of them personally to any action liability claim or demand whatsoever; and any expense incurred by any such authority member officer or other person acting as last aforesaid shall be borne and repaid out of the fund or rate applicable by such authority to the general purposes of this Act.
Good for lawyers’ business.
Continuous improvement
The Guidance spotlights the CIPFA / Society of Local Authority Chief Executives (SOLACE) Delivering Good Governance in Local Government Framework, along with the Centre for Governance and Scrutiny and Localis Governance Risk and Resilience Framework[xi] to utilise in identifying, understand, the risks to good governance[xii]. The CIPFA / SOLACE document is now near eight years old and the Centre for Governance document was published in 2021. Certainly, the valuing of the Annual Governance Statement is an important signifier though its nature is more of a longitudinal review.
Use of resources
The guidance is pretty much just about finances. I don’t know why this has happened as there are lots of different assets which are of course resources. It states there must be sound financial management, reporting and regulation arrangements in place, in accordance with CIPFA’s Financial Management Code, to govern the strategic and operational management of its investments, funding, assets and companies.
The compliance is vital with the CIPFA Prudential Framework as is following CIPFA’s Financial Resilience Index.
Compliance with the Prudential Framework, a clearly presented Investment Strategy, Capital Strategy and Minimum Revenue Provision policy exists.
The indicators of failure are without doubt spot on and rather than list them simply invite proper note.
Service delivery
This is a short and to the point signifier. Poor services are likely to indicate a malaise of weak governance. Even if it is not the service’s fault, poor governance in the centre can drag down how services are provided at the front line.
We are advised to look at any complaints and notices or findings from bodies such as Oflog, Ofsted, the Care Quality Commission, Planning Inspectorate and the Local Government and Social Care Ombudsman. This is a long-term Department of Levelling Up, Local Government & the Communities & Housing trigger which basically means if everyone is complaining they are probably right. However, the problem with complaints is it is a slow metric and speaking directly to the users and mystery shoppers is recommended.
The Guidance points out there may be transformation in name only, and be aware of circumstances where opportunities for efficiency savings and improvements have not assessed in a meaningful way. The Guidance warns to watch out for exotic or novel solutions which are pursued but lack rigor or adequate risk appraisal. A really good way of testing the service delivery is to get a picture of the best practice of whatever the sector is you are looking at, and the staff / establishment situation. As an example, overuse of agency workers says no long-term planning and significant vulnerability and, worse too, unnecessary costs.
People who know procurement well tell me a bad signifier is the use of contract rules waivers as picked up by the Guidance.
Partnership and community engagement
Best Value expects the local authority to promote economic growth, social cohesion and pride. It should use the instrument of partnerships and collaborative working arrangements with a range of local stakeholders and service users.
Authorities should have a clear understanding of and focus on the benefits that can be gained by effective collaborative working with local partners and community engagement to achieve its strategic objectives and key outcomes for local people. Governance needs to ensure these arrangements work. This needs to be reinforced by consultation and inclusion policies which are implemented.
The key signifiers are evidence of communication and engagement with a participation that leads a response.
Summing up
The Guidance is a good document and lends itself be adapted to create a best value governance checklist and route map to transform governance. Disappointingly, the July 2023 iteration has not addressed equalities and human rights. It seems axiomatic the public sector equality duty must be part of the mix as meeting the needs of all the community must be a best value outcome. Perhaps it will be revised.
Dr Paul Feild is a Standards & Governance Solicitor working in a Local Authority’s Legal Services. His 2015 Doctor of Business Administration Thesis was ‘How does Localism for Standards Work in Practice? The Practitioner’s View of Local Standards Post Localism Act 2011’. The editorial content and opinion are his own. He researches and writes on finance and governance issues and can be contacted by email.
This email address is being protected from spambots. You need JavaScript enabled to view it.
References
Essex County Council. Best Value Inspection Commissioners Report into Thurrock Council, May 2023
Penn. R, Corporate Collective Blindness’. Croydon Council, March 2021
Taylor.J, Culley.C OBE, and Greer.M. Governance, Financial and Commercial Review of Woking Borough Council. May 2023
Secretary of State for the Department for Levelling Up, Housing and Communities draft Guidance’ Best value standards and intervention - a statutory Guidance for best value authorities: consultation’ - GOV.UK (www.gov.uk). July 2023
[i] This iteration does not mention diversity or the public sector equality duty (s.149 Equality Act 2010). I raised it in the consultation to this effect for its inclusion.
[ii] [ii] E.g., Croydon LBC, Woking BC and Thurrock BC see Article Local Government Lawyer July 2023.
[iii] Ideally, we would like a three- or four-dimension graphic but a ‘Tesseract Venn’ may be too much for the humble local government lawyer’s laptops CPU’s!
[iv] Another I’d add is to look at what the local press / journalists are saying. The fact is in recent times some local authorities’ difficulties have been highlighted by the mainstream media. The local press and their right to access is related to openness of decision making and accountability particularly when the decision making is at a delegated level.
[v] Who would have thought a Guidance on Best Value aimed at local authorities would not refer to the Human Rights Act 1998 – of course it should be considered. Raised with the consultation.
[vi] Why does the LGA Model Code of conduct for Councillors needs to be 16 pages long and its Guidance is more than double at 38 pages long?
[vii] Peter Drucker - Management Consultant.
[viii] Curiously, I can’t recall any coverage of any local authority having a negative staff attitude (or temperature) being published in recent times?
[ix] Perhaps the LGC or the MJ should have an award for the most user-friendly website?
[x] PricewaterhouseCoopers LLP (2014) Best Value Inspection of London Borough of Tower Hamlets 16 October 2014
[xi] The governance risk and resilience framework - Centre for Governance and Scrutiny (cfgs.org.uk)
[xii] Quite old now as 2016 though as typical CIPFA ‘accountants’ it’s behind a £150 paywall. See if you can cadge a copy off the S.151!
