Better inspection which harnesses, rather than stymies, councils' own improvement processes is on the way.
Risk-based and corporate governance inspection are the key concepts by which this is to be achieved.
Risk-based inspection will allow resources to be targeted at the councils which need them most. Corporate governance inspection identifies underlying, or cross-cutting, issues which affect the council as a whole.
In best value, ministers are choosing to sign up to risk-based inspection. Local government minister Alan Whitehead recently announced: 'For year two, the best value inspection service is proposing to adopt a more differentiated approach proportionate to a risk assessment of authorities and services.'
In fact, the approach is on its way in all areas of inspection as a natural consequence of the acquisition of knowledge, according to Paul Kirby, head of inspection at the Audit Commission.
He says: 'There's nothing to stop people being risk based currently. The only thing that's holding us back today is lack of knowledge. It's been fairly virgin territory.
'Ofsted and the Social Services Inspectorate have had longer. Ofsted has reached the end of its first cycle [of inspecting education departments] and is moving to a risk-based improvement system.'
A risk-based approach inevitably requires a risk-assessment procedure. This will mean some kind of corporate, or overview evaluation, as that is the best way to identify a council's risk of failure.
There are two organisations providing a service that fits the bill. One is the Audit Commission, the other the Improvement and Development Agency.
The Audit Commission carries out corporate assessment. This pools information from all the inspectorates to give a rounded view of each council. It reveals anomalies such as excellent education services and dire housing services within the same council, and the commission sees it as a front-runner in risk-based inspection.
IDeA's peer review pioneered the overview or corporate assessment approach to councils. It is acclaimed for supplying friendly criticism rather than demotivating its subjects. Many believe it should play a part in any risk-assessment process.
Head of strategy at the Local Government Association, Matthew Warburton says: 'We don't accept councils will normally need an inspection to decide the scale of further inspection. Evidence from other sources will be adequate, particularly evidence from peer review.'
IDeA is already selling the role of peer reviews in a risk-based inspection regime. Assistant director John O'Brien says: 'There might be [some] who could say, 'let's use corporate governance or invent another mechanism [for risk assessment'. If we're going to focus more on outcomes and trust councils, peer review could be a pretty important way of refining that practice.'
The Audit Commission and IDeA are in talks over this precise area. But Mr Kirby looks set to stand his ground over the pre-eminence of statutory procedures.
'For the audit regime to change, there has to be good risk-based assessment and good corporate assessment to allow all the auditors to do that,' he says.
'Peer reviews are helpful in lots of cases, but they're not the whole picture.'
So where does this leave corporate governance inspection? Inspired in part by the local government peer review programme, it looks at the overall way the council is run.
This new style of inspection is still in development. The first was in Hackney LBC, followed by Walsall MBC and Hillingdon LBC. Bromsgrove DC is among those discussing the next sequence of inspections.
There are fears the technique duplicates the peer review, minus the constructive dimension. Mr Warburton says: 'There was some concern the effect of corporate governance inspection in Hackney was simply to tell the authority what it already knew on the basis of a peer review.'
Mr Kirby insists the commission will use this type of inspection sparingly, where corporate assessment indicates it is needed.
But Mr Warburton adds: 'The bottom line is that at the end of this process, authorities which can show they've got robust performance management arrangements in place can expect to be rewarded by a lighter touch, fewer days spent with inspectors and less costs. If [risk-based assessment] doesn't deliver that it isn't worth it.'
A NEW STYLE OF AUDIT
Corporate governance inspection focuses on:
- How a council relates to its public and partners
- Decision-making structures and processes
- The political-managerial interface
- Service delivery at a corporate level - how does a council know a service is under-performing?