Best value – the fundamental duty

In the 1980’s the Conservative Government at the time introduced Compulsory Competitive tendering (CCT) for construction, maintenance and highways work under the Local Government, Planning and Land Act 1980 with the rationale that the private sector would deliver services more efficiently and cost-effectively than in-house services. As the years went on more and more services were subject to the compulsory regime enabling private companies to bid for contracts.

In 1997 Labour replaced CCT with a new duty of Best Value which came into force on 1 April 2000 with the Local Government Act 1999. This Act established every English local authority (not including parish councils) as a best value authority and created a statutory duty under section 3 to;

‘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.’

The Act included a statutory duty to consult in certain circumstances and a requirement to have regard to any guidance issued by the Secretary of State.

The measurement of whether there was compliance with the best value duty was then overseen by a system of audit and performance monitoring through best value performance plans, indicators and reviews, with the Secretary of State having the power to intervene when there was evidence that a local authority was failing to comply with the requirements.

The concept of best value extended the desire to achieve the best outcome by aligning itself with the functions of the local authority rather than categories of services being delivered as CCT had done.

This provided the prospect of embedding a new culture at the heart of each council. The focus changed from externalising services to a more holistic approach observed by Underhill LJ in R (Nash) v Barnet LBC [2013] EWHC 1067 (Admin), [2013] LGR 515, at paragraph 69(1), that the core subject matter of the substantive best value duty is ‘the way in which’ the authority’s functions are exercised.

The performance framework that was created to evaluate a local authority’s effectiveness however was removed in 2008 leaving councils to make their own arrangements relying on statutory guidance.
The Labour Government 2008 ‘Creating Strong, Safe and Prosperous Communities’ guidance advocated a community focus, achieved through commissioning and taking appropriate measures to support and incentivise service providers including small and medium enterprises. There was no focus here on how the authority’s functions were to be exercised. The commissioning of services was still seen as the place where best value was to be delivered.

In 2011 the Conservatives’ best value guidance asked local authorities to look at the overall value when reviewing service provision. The focus on commissioning was replaced by the idea of collaboration to increase the involvement of voluntary and community organisations, all in the context of austerity and the Big Society agenda, coinciding with plans to repeal the power of councils to promote well-being under the Local Government Act 2000. The guidance reintroduced the concept of well-being to best value but again, there was not a focus on the internal workings of the council and how the authority’s functions were exercised.

The next iteration of guidance in 2015 did not provide any more advice on best value but focussed on funding for voluntary and community groups and ensuring funding was not given to extremist groups. The three pages demonstrate a continued disinterest in the detail of how councils operate and discharge their functions.

However the draft 2023 guidance returns to detail and is to be read alongside the 2015 guidance that still stands. It firmly repositions best value as the core duty in local government that permeates all that councils do.

The focus is now more on all the systems in a council. It lists indicators to identify where there are characteristics of a well-functioning authority and the potential for failure. The guidance has a clear emphasis on the intervention powers of the Secretary of State which is understandable given the absence of clarity and understanding up until now of how that works in practice. At the same time this is unfortunate because, to the extent that interventions are no longer a rare occurrence, it is still a small percentage of councils who find themselves in such circumstances.

The indicators are clearly taken from recent public interest reports, best value reports and interventions and although cannot simply be treated as a questionnaire that elicits a yes or no answer provide a useful health check tool considering all parts of how a council operates. Councils with a desire to show they are continually improving will be able to use the guidance to assess, as part of their annual governance statement, their compliance with the best value duty. It cements the holistic approach that was first introduced in 1999 and evidences how fundamental it is in the way a council performs.

For more information, please contact Claire Ward.

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