New performance standard for councils needed

Glyn Gaskarth says the demise of the Audit Commission should make way for a more relevant measure of council performance

The Audit Commission was politically compromised and overly bureaucratic.  There is, however, value in allowing councillors and ordinary citizens to compare their council with relevant peers. We should create and administer an independent standard of council’s performance.  This has real value. To do this we need to get the assessment criteria right, so what should they be?

The American Legislative Exchange Council provides a useful example of how a privately operated standard currently operates in the United States. They publish Rich States, Poor States: ALEC-Laffer state economic competitiveness index. Our councils have considerably less powers than an American state. Some of the ALEC criteria contained below are not appropriate for a UK standard. Their criteria include:

• the top marginal personal income tax and corporate income tax rate personal income tax progressivity (the change in tax liability per $1,000 of income)
• property tax burden, sales tax burden, estate/inheritance tax levy, remaining tax burden, recently legislated tax changes, number of tax or expenditure limits imposed (0=least/worst, 3=most/best)
• debt service as a share of tax revenue, public employees per 10,000 of population, state liability system survey (tort litigation treatment)
• state minimum wage level, average workers compensation costs (per $100 of pay roll), right to work state (option to join or support a union)?
• Other featured indicators include the level of domestic migration into the state, employment growth and personal income per capita.

ALEC uses the criteria above to rank each state on its economic performance and outlook. Our local authorities do not have the right to levy income, inheritance or sales taxes. They cannot vary the minimum wage and corporate and business taxation is the preserve of central government. But some of the criteria above do have English equivalents, council tax is a property tax, local authorities do have debts and debt service costs are significant (allowances could be made for the amount of debt some councils assume when we abolish the Housing Revenue Account.) Local authorities issue rules and regulations which impose a cost on businesses and increase or decrease public expenditure.

A new private standard for authorities could include some of the following indicators:

• the level of council tax, the growth of business rate receipts,
• public employees per 10,000 of the population, the percentage of the local workforce employed by the council,
• the percentage of the local economy accounted for by council expenditure, the increase/decrease in council expenditure compared to the previous year,
• the percentage of local housing that is social housing,
• the percentage of council services that are contracted out,
• the average pay of council employees, the percentage of the council budget which is spent subsidising the local government pension scheme,
• the number of private housing units constructed in the council boundaries per annum

Councils should not fear being assessed. They need to know how efficient they are compared to their peers. Councils which have made particular progress can be recognised. Those that are failing can begin to diagnose where they are going wrong and start to put themselves right. All authorities would begin to see the benefits of implementing free market policies at a local level. There would be no need for a costly inspection process. A simple compilation of the information already publically released by the councils should be sufficient. Freedom of information requests could be useful in resolving any omissions and pressuring councils to release more data if necessary.

Rick Perry, Governor of Texas, is a leading contender for the Republican nomination to stand for President of the United States. Proponents cite his successful record of job creation and economic growth. How long will it be before a British Prime Minister touts his/her record as a successful council leader? An independent assessment of councils performance, according to set criteria, combined with increased powers for local government could contribute to making this happen.

The views expressed above are my personal views and not those of my employer or any other organisation with which I am associated.