Organised for performance

32. So, two main questioning themes emerge for a council when framing its local constitutional settlement:

1. Who has the role of leading on behalf of the council in co-ordinating the community strategy? What style of leadership does the council require from that role player(s)? What latitude will the council afford in admitting serious influence from other local organisations in the determination of the strategy?

2. How will focus and energy be sustained in the relentless search for improvement in the council’s own performance? And how will the executive and the scrutiny functions share accountability for the council’s effectiveness?

33. In the past, chief executives have typically been the main contact for partners with the council. New political structures increase the visibility and authority of leading members. It is likely that other players in the community will be magnetised towards such revised political leadership. Where mayors exist, they will probably assume this role. But where a council adopts a leader/cabinet model, will such a role reside exclusively with the leader or be shared with others in the cabinet, and what role will officers play? The internal workings of partnerships open up a further ‘corporate governance’ agenda, in respect of their accountability arrangements, into which councils should not enter without forethought about responsibility for the performance of the collective partnership. The new constitutional settlement needs to be clear about such accountabilities.

34. Best value is about making choices over the council’s deployment of limited resources. It is a fundamentally ‘executive’ function. Relevant overviews and scrutinies can contribute to the process, but they cannot substitute for it. And while officers can support the activity, it will be unusual for them to promote radical changes in council activity without encouragement and endorsement from the executive. So, the executive needs to be explicit about its responsibility for the achievement of best value [EXHIBIT 5].

35. Scrutiny and overview committees will want to play a constructive role in at least two ways:

1. In being policy pro-active, undertaking inclusive overviews of community issues which deepen understanding and proposing policy options.

2. In being evaluative and reactive, not only ensuring openness by scrutinising the executive’s performance in delivering the community and best value plans, but also in holding other local agencies, such as the health authority, to account for their role in improving local community performance (Ref. 20).

36. So, councils need to decide, in the local constitutional settlement, how the power of the scrutiny process will be brought to bear in contributing constructively to local partnership behaviour. Through scrutiny, the council can test the integrity of its performance, assessing whether the executive is effective in using public money or is simply paying lip service to such objectives. And the council needs to ensure that accountability within the council is clear so that local agencies do not become frustrated by a plethora of seemingly different relationships with different parts of the council.

37. Good governance needs more than a capacity to convert resources effectively into benefits for the local community. If tainted by ‘sleaze’, even a strongly performing authority can be undermined. In truth, poor standards of integrity are frequently bedfellows with low performance and inefficiency. A healthy council understands proper behaviours, and feels secure and confident to focus on the achievement of outcomes. Unhealthy councils can be mired in tensions to the point that officers and members feel insecure, with their attention distracted from service to the community. Mercifully, severely unhealthy councils are rare. But no council can be complacent. While outright corruption is unusual, inappropriate political pressure, perhaps with implied intimidation, can occur not only towards officers but also between members. And just as the rapid turnover of members and officers in some authorities can undermine a healthy culture, often through genuine misunderstanding of appropriate conduct, so too, in stagnant councils, a closed culture can perpetuate old behaviours, long after they have been abandoned elsewhere. Councils that suffer reputational damage on propriety grounds will face a steep, up-hill struggle to secure wholehearted participation by other local organisations.

Organised for propriety

38. So, every council needs a constitutional settlement that ensures that a culture of integrity, accountability, openness and inclusivity are lived out in day-to-day activities. The scrutiny function is an important guarantor of openness into the role of the executive. It would be failing in its role if it was never challenging of the executive, but it should never be dysfunctionally obstructive.

"Poor standards of integrity are frequently bedfellows with low performance and inefficiency."

39. As well as the two roles previously described – policy pro-active; evaluative and reactive – members in the scrutiny function should contribute to a further function – as stewards for financial accountability and ethical probity.The Audit Commission has previously advocated the role of audit committees in councils (Ref. 21). Monitoring proper oversight of the use of money is a task that requires constant vigilance, as is ensuring that financial reports are accurate. These are not the most exciting roles for councillors, but they are important in the stewardship of integrity. The rise of the ‘executive’ will oblige members to give more attention to financial viability; in parallel, the case for an active audit committee to monitor the financial practices of the executive is strengthened. Within local constitutional settlements, councils should ensure that the function of audit committees continues. The scrutiny function will want to ensure that the executive gives proper attention to audit arrangements.

40. An additional, up-to-date, function is the local standards committee. It provides a reference point for the determination of local codes of conduct, overseeing local compliance. As such, it is critical for establishing the right tone for the conduct of officers and members under the local constitutional settlement. Such committees need to develop a rolling programme of examinations giving attention to areas of risk in member and officer behaviour, ensuring that the council avoids problems, rather than faces the embarrassment of resolving them. Indeed, throughout the council’s proceedings governing propriety, a clear respect for the benefits of party political differences and openness before the press and public creates a situation in which problems are reduced and political differences over policy, rather than behaviour, dominate local debates.

41. So, further critical questions that need to be answered in each local constitutional settlement include – how will the role of the audit committee be fitted into the new settlement? How will the council constitute and locate the role of the standards committee to ensure that it has a beneficial effect across the whole council – executive, representative, officer and partnership functions? How will transparency before the public and press reinforce defences against covert or questionable behaviour? How can party political rivalry be harnessed in the council’s probity functions to ensure that attention to high standards never wanes? How will the council give relentless attention to the promotion of equality?

42. Current officer structures have largely been inherited unchanged from the post-Bains settlement. There have been innovations such as the executive director, perhaps with a flexible portfolio, and a number of councils have added specialist functions outside of the main directorates. However, for the most part, an officer of 1980 would feel at home in the departmental structures of 2001. But for how much longer? As councils devise their new constitutional arrangements at a political level, the consequences for officer structures, roles and accountabilities must be recognised. Legislation obliges a re-adjustment in member accountabilities, but imposes few new obligations on officer accountabilities. Nevertheless, as member changes feed through, it is probable that there will be consequential adjustments among officers, which will need to be defined locally. Councils remain single entities. Unlike the Greater London Authority, where the Mayor and the Assembly have separate identities, councils remain unitary institutions.

43. Legally, officers serve the whole council, with the exception of a limited dispensation for officer support for political parties. But the distinction between the executive and scrutiny roles of members obliges a re-think of the operational accountabilities of key officers. The capacity of senior officers to be flexible and diplomatic enough to cope with service in a multi-party council, as well as advising and supporting the ruling group or coalition, has always been impressive. But it has been stressful and occasionally intolerable. There have been troubling reports of inappropriate pressure being put on the three statutory officers to validate actions for which they hold serious doubts as to the legality or financial sustainability. The recent strengthening of the role of the monitoring officer responds to this situation, but in doing so opens the question of the relationship of that officer to other officers and to the different parts of the political structure.

44. The revision of council political structures with a more acute distinction between the executive and scrutiny functions must lead to key questions about officer roles [EXHIBIT 6]. It is clear that the roles of leading officers need to be kept up to date within new local constitutional settlements. It is not clear to what degree this will lead to change. Where there is radical change in political structures, more radical consequences for officer structures are likely to be felt. For example, a directly elected executive mayor facing strong political opposition from the council may lead to more radical readjustments in officer arrangements than a council adopting the leader/cabinet model in a climate of reasonable harmony between the executive and scrutiny roles.

Cultural change

45. A council’s constitutional settlement needs to ensure that it has strong, convincing answers, in terms of structure, roles, responsibilities, style and culture, to such questions. As each feature of the new settlement is devised, it needs to be tested against the criteria of accountability, integrity, openness and inclusivity. Expediency is relevant, but never to the point of compromising the principles of good corporate governance. There are always ways of circumventing the letter of the principles, but not if the council respects the spirit of those principles. All of these considerations can be enveloped into the question of the council’s style and culture. To those outside of local government, councils probably appear fairly uniform, but insiders are very conscious of the huge diversity of style and culture among UK councils.

46. Considerations of style and culture lead to subtle questions [EXHIBIT 7, overleaf]. Is the culture of this council one in which denial is the dominant feature? Does it believe that improvement is necessary for other councils, but not for itself? Is it ambitious for itself and its community? Does it subscribe to the view that the solution to every problem is simply spending more money? Does it go through the appearance of best value processes, without addressing the substance? Has it convinced itself of the possibility of self-improvement or is it intrinsically defensive?

47. Instead of a culture of begrudged, beholden compliance with central government’s guidance on process, councils need a culture of confident self-selection among the range of models available. The law sets the boundaries within which choice can be made and it ensures that no change is not a choice. As well as the choice of political structure, councils should review their cultures, internally and externally. 

48. The moment of political restructuring will be busy. But it should not be so busy that opportunity is missed to frame a new constitutional settlement that aspires to positive behaviours, both within the council and beyond. Large metropolitan, unitary and county councils may have more scope to adopt innovative structures than district councils but, whatever their size, unfreezing traditional ways of doing things is a key moment to reframe the council around a new culture. Realising a new culture will result in change, and change is usually painful. One purpose of political restructuring is to accelerate the change process in local government, so absorbing its effect through modest incremental adjustments is unlikely to succeed. But radical change may involve changing people. Political and democratic processes will achieve this among councillors; councils will need to consider whether new officers are also needed in order to achieve cultural change.

49. And if the implications of change provoke unease, what is the council going to do about it? Who has responsibility in the council to move this agenda forward? And are others prepared to respect that role, protecting the members and officers concerned from intimidation, when they ask challenging questions? How can the council change its mindset so that initial challenging leadership progressively infects the whole culture of the council to believe in its capacity to improve its performance within the community?

Where do we go from here?

50. Local government is at a turning point. How far it will turn, and how fast it will turn, are unknown. Local government has new opportunities and new obligations. Only by understanding the choices that are available and by asking explicit questions in each local constitutional settlement, before its agreement, will councils ensure that they arrive consciously at conclusions that suit their circumstances. A failure to address such questions explicitly will not stop change, but such change as occurs may be more stumbling, more painful, with greater collateral damage to officer and member experiences, than is necessary. Councils should make clear choices about their future structure, roles and style.

51. It is easy to pay lip-service to words like ‘accountability’, ‘integrity’, ‘openness’, ‘inclusivity’, ‘effective’ and ‘up-to-date’, and it can be quite easy for councils to convince themselves that the meaning of these words is vibrant locally, when in practice it is weak. These may be self-evident truths, but are they evident in the structures, roles, style and culture of councils’ new constitutional settlements? Are members establishing local structures and processes designed to realise the full potential of the new constitutional settlement? Have members embraced the changes in accountability arising from the executive/scrutiny split? And do new arrangements score well on the criteria of good corporate governance? Are the consequences of changes in member accountability leading to a review of officer accountabilities?

52. If councils start from the position of their old settlements, they are unlikely to realise the possibilities of the new models. The danger of simply adapting the new vocabulary to describe old practices will be significant. Ideally, councils should undertake a ‘root and branch’ review of their roles, accountabilities, objectives and processes. Councillors could start by being clear about the pattern of accountabilities between the council and its external environment – its communities, interest groups, partners and neighbours – and its internal structures – relationships among members and with different categories of officer. New patterns of working may expose or create conflicts of interest that were absent or latent under old ways of working. Armed with such key points of reference, probing questions need to be asked, as the council re-settles itself around its new constitution.

53. The reality of daily life in councils is always more complex than can be described in a national discussion paper. A focus on principles can seem naïve in comparison with the complex interplay of real-world pressures in a local civic community, when those principles need to be balanced against each other and action taken to get things done. All organisations have informal decision-making systems that lie behind their formal processes, but in public life that informality should not dominate at the expense of the principles of corporate governance. Matters of local political chemistry, the traditions of individual councils and their personalities will be very important. However, even though reality is always more complex and confused, the importance of navigating with vigilant reference to guiding principles remains.

54. The opportunity of a new local constitutional settlement is a prime moment for councils to review their past approach and to re-design their future, being candidly open about their scope for improvement. This paper does not attempt to review all of the relevant considerations. Further questions relating to officer structures and roles will be explored in a companion to this discussion paper, May You Live in Interesting Times (Ref. 2). Another companion paper, To Whom Much Is Given (Ref. 1), unpacks the role and culture of members in the new local government to a more detailed degree than this paper [EXHIBIT 8]. A further diagnostic, Modernisation Through the Prism, collects and structures all of the questions in the three papers so that councils can test their local constitutional protocols against the principles of good corporate governance.

 References

1. To Whom Much Is Given, Audit Commission, October 2001.

2. May You Live in Interesting Times, Audit Commission, October 2001.

3. The Competitive Council, Audit Commission, 1988 (out of print).

4. More Equal than Others, Audit Commission, 1989 (out of print).

5. We Can’t Go on Meeting Like This, Audit Commission, 1990 (out of print).

6. Managing Services Effectively, Audit Commission, 1989 (out of print).

7. Community Leadership and Representation: Unlocking The Potential, Report of the Internal Management Working Party, Department of the Environment, 1993.

8. The New Local Authorities: Management and Structures, Report of the Working Group on Local Authority Management Structures, Department of the Environment, 1972 (out of print).

9. Corporate Governance in Local Government: Keystone for Community Governance, CIPFA/SOLACE, 2001.

10. Best Value Inspectorate Approach to Corporate Governance, Audit Commission, 2001.

11. DETR Circular 10/99, Local Government Act: Part 1 Best Value.

12. DETR – Local Strategic Partnerships; Government Guidance, 2001.

13. DETR – Preparing Community Strategies; Government Guidance, 2001.

14. DETR – Standards Committees: Appointments and Procedures, 2001.

15. DETR – Local Public Services Agreements: A Prospectus for Pilot Authorities, 2001.

16. DETR – Working with Others to Achieve Best Value, 2001.

17. DETR – Local Government Act 2000: New Council Constitutions – Guidance Pack, 2000.

18. The Welsh Assembly has its own suite of guidance material on the distinctive agenda in Wales.

19. "Exit Survey of Local Authority Councillors, 2000 Survey" – IDeA, 2001.

20. A Healthy Outlook: Local Authority Overview and Scrutiny of Health, Audit Commission, 2001.

21. Called to Account: The Role of Audit Committees in Local Government – Audit Commission, 1996.

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