5 February 2002

Speech by the Chief secretary to the Treasury, Andrew Smith MP, on Developing Local Public Service Agreements

What is the Government Seeking from Local PSAs?

1. We all recognise that delivering high quality public services is crucially important. We have worked hard to develop the tools and expertise to improve our performance and it is one of these tools - the Public Service Agreements - that I want especially to talk to you about today.

2. We are committed to a programme of sustained and affordable investment in our public services. Alongside investment must come reform - to ensure our money is spent wisely and the taxpayer receives a return on their social investment.

3. The quality of services does not just depend on how much Government spends, and how much you in local government spend: it depends on how effectively we deploy our resources.

4. We all know that there are schools in the same type of area with vastly different results. We all know hospitals that, with the same type of patients and the same level of resources perform well or not so well. These disparities are not the result of a lack of resources; they can be the result of the inefficient use of resources.

5. Local PSAs are a mechanism to reward those who strive for and achieve high performance as well as to encourage poorer performers to do better - ensuring a return on our social investment.

National PSAs

6. Back in 1998 the original national PSAs set explicit goals across the whole of Government: the first attempt by a British Government to set out the standards against which it would be judged.

7. In the 2000 Spending Review we improved the PSA structure:

Setting out more streamlined PSAs;
Trying to focus harder on the things that really matter and aligning PSAs with public priorities; and
Making the PSA targets sharper, concentrating more on the outcomes: how much crime is reduced, rather than how many extra police officers there are; real improvements in people's health, rather than simply how many extra nurses and doctors there are.

8. In the 2002 Spending Review we aim to carry forward the process of continual improvement. The new PSAs will be an even more effective tool for raising performance, and they will benefit a far wider range of services now we are extending them to local government.

Local PSAs

9. Raising performance across Government means working closely with you, our partners in the local authorities. Local councils are responsible for key public services: schools, local transport, housing, street cleaning, planning and care for the elderly, all playing a vital role in improving the lives of local communities.

10. You control more than £60 billion of taxpayers? money and we have a joint interest in ensuring it is spent effectively. We are committed to working in partnership with you to ensure that high quality, cost-efficient services are provided throughout the country.

11. Our approach, developed in partnership with the LGA and rolled out to authorities across the land, is based on agreeing testing but tailored targets, and supporting delivery with the relaxation of controls and the introduction of new flexibilities.

12. Central government must put in place a better performance management framework for local government. We set out our vision in the Local Government White Paper just before Christmas. It establishes a framework that I hope you will agree gives you the freedoms, flexibilities, incentives and capacity needed to deliver top quality services. It establishes a partnership for reform.

13. The framework acknowledges the true nature of local government and the different functions it carries out:

Sometimes acting as an agent of central government - for example administering housing benefit.
Sometimes, exercising local judgment within a set of national standards - providing social services, and education; and
In many cases, acting with wide discretion to choose how to meet local priorities.

14. The framework flows from the Prime Minister's plans for a public sector held together by national standards, with power devolved to local authorities and frontline professionals ?enabling you to deliver public services around the needs of users.

15. We expect local authorities to share our key national targets - education, health, crime and transport - and help us work towards them. The White Paper made clear that we do expect particular issues to be addressed in those priority areas. Of course, in many cases local authorities are already more than keen to tackle those priorities: one of the latest authorities to sign up to Local PSAs, Manchester, have devoted a third of their local PSA to education targets.

16. Local PSAs will continue to include a balance of local as well as national priorities. By getting the balance of competencies right and stripping away unnecessary bureaucracy we will free local authorities to deliver on the frontline services that really matter.

17. There are wider potential benefits. By publicising our targets we will reform the relationship between local authorities and the communities they serve - increasing accountability and enhancing the public's ability to engage with their council. And by encouraging partnership working the agreements will help ensure that all levels of local government work together - joining up services across communities.

Pilot scheme

18. Local PSAs, when we brought them in, were a radical departure from traditional ways of working. The 20 pilot schemes we ran were very well received, and so we decided to roll them out to all upper tier local authorities. Already a further 16 authorities have agreed local PSAs with us, a dozen more are in negotiations, and another twelve will be sending us their proposals in a few weeks time. I am confident that within eighteen months all the upper tier authorities in England will have had the opportunity to negotiate a local PSA.

19. As we go through this, it is a learning process for all of us. Important lessons were learned from the pilot scheme - in a number of areas:

For councils: lessons in framing stretching targets and identifying the freedoms and flexibilities needed to deliver them;
For Government: lessons learned on handling negotiations, but also how to follow through on the flexibilities we have offered to councils;
For all of us: lessons on identifying common freedoms, which could - in the future - be made available to other councils entering into a local PSA.

20. In the dialogue between government and local authorities, therefore, many important lessons were learned. It was an ideal opportunity to listen to the people at the sharp end of public service delivery. Concerns were raised with us about the number of different plans authorities had to produce, and the multiplication of inspection regimes. We listened to those concerns and addressed them both in the White Paper: we are aiming to reduce by half the burden of planning; and to introduce a coordinated, proportionate inspection regime - focusing our efforts where they are most needed and rewarding successful authorities with fewer inspections.

21. For the Local PSAs - the negotiations go on. Of 150 top tier authorities, 141 have either already signed a local PSA or expressed their intention to participate. That is an overwhelming response to what is a voluntary programme - and it speaks volumes for the extent to which you and others in local government share our aspirations.

22. The agreements reached in the pilot schemes covered the full range of local authority activities:

Liverpool - agreed challenging targets on unemployment;
Kent are examining how local authority action can help people off welfare and into work;
The London Borough of Southwark - have focused their agreement on young people;
Buckinghamshire are working with District Councils to meet housing targets.

23. These are all concrete, targeted measures, designed by people who understand about the needs of their community, and focused on the steps they know will make a difference

Funding and Flexibility

24. We want to see these local PSAs succeed - and we are putting our money where our mouth is by making extra funding available:

£400million has been set aside for local PSAs and will enable the roll out of the scheme nation wide;
pump priming grants are available at the outset to help you achieve your targets - a maximum of £750,000 plus £1 per head of population may be given;
there are Performance Reward Grants for achieving targets - so we will be rewarding successful local authorities and creating incentives to raise the standard. These grants will give up to 2 ½ percent of an authority's net budget requirement if all targets are met.
and an extra £300million in Unsupported Credit Approvals for capital projects was announced in June 2001 also to support the Local PSA process.

25. We know that funding alone is not enough. So alongside extra resources we are delivering on our promise of greater flexibility - enabling you to develop services around the needs of users. There are a number of examples of how we brought in these flexibilities: we agreed Camden and Middlesbrough's proposals for piloting a lane rental scheme for utilities that dig up the roads. And in Derbyshire we agreed greater flexibility in the provision of local bus services. These are initiatives that the local authorities themselves saw as important for their communities, so we allowed them the flexibility to take them forward.

26. The flexibility to innovate, to deliver responsive local services around the needs of your communities, really is at the heart of the PSA reform agenda. The responsibility to work with us in the renewal of the public sector goes hand in hand with the right to deliver those objectives in the way that is right for your areas. Local PSAs provide a win, win situation, delivery of national objectives, greater flexibility for local authorities, and improved services for local residents.

27. Successful local authorities will secure significant financial rewards, but the real winners will be local residents who will see genuine improvements in the services they receive.

Conclusion

28. In Local PSAs we are aiming to reform the relationship between central and local government - agreeing common priorities, enhancing accountability, and providing the funds and the flexibility to enable your authorities to deliver on the frontline services that matter to the communities you serve. I firmly believe that Local PSAs are the right tools for improving performance - enabling local authorities to do even more to improve quality of life for their residents. So my message today really is very simple: Local PSAs are about partnership, performance and flexibility, a chance to show the difference we can make when central and local government work well together.

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