Local Government and Transport Committee, 22 Jun 2004

Meeting date: Tuesday, June 22, 2004

Official Report 207KB pdf

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Best Value in Local Government

That brings us to the first of our two major evidence-taking sessions this afternoon. We will receive a briefing from the Accounts Commission on best value in local government and on the 2002-03 local authority audits. The panel consists of Alastair MacNish, the chair of the Accounts Commission; Bill Magee, the commission's secretary; David Pia, the director of performance audit at Audit Scotland; and Gordon Smail, senior manager with Audit Scotland. We welcome all four of you to the committee. I invite Alastair MacNish to lead off with the briefing.

I will outline briefly the commission's remit. There are 12 commissioners, who are appointed by ministers for three years in a rolling programme. Our duty is to hold councils to account for financial and service performance.

We secure the audit of Scotland's 32 councils and of the 34 joint boards by appointing their external auditors from Audit Scotland and the private sector. In addition, performance studies of services are undertaken, sometimes in conjunction with the Auditor General. An example of those is the recent youth justice report. Each year we publish some 80 statutory performance indicators on council services. We receive an annual overview report on local government to which I will refer later this afternoon.

I thank the committee for giving us this opportunity to share the progress that we have made to date in developing the best-value audit of local government in Scotland. David Pia and I will highlight briefly a few points in the paper that is before the committee. I hope that we will be able to answer any questions that members have.

The Local Government in Scotland Act 2003 gave local government specific statutory responsibilities in respect of best value and community planning, together with the power of well-being. An integral requirement of the act is for a best-value audit to be carried out in each authority by Audit Scotland and for the findings of that audit to be examined by the Accounts Commission. Based on that requirement, the key features of the new audit approach are a more local focus and a focus on individual councils, rather than all councils at once; a three-year cycle, so that every council will be covered over a three-year period; and a focus on results and future improvement, rather than processes. In the past, the criticism has been made that quangos examine processes, rather than outcomes. Best value is about examining improvement and outcomes. The new audit approach should be risk based, targeted and proportionate in the targets that it sets.

Specialist audit teams are being created and will link to the work of the inspectorates. It is vitally important that we do not duplicate effort—we do not need any more paper mountains in inspectorates or in the Accounts Commission. If work has been done—for example, by Her Majesty's Inspectorate of Education—and is satisfactory, we will use the information that has already been gleaned. Every report on councils will be submitted to the commission. There will be no single label for a council, but clear conclusions will be drawn about the service provided by all services in that council area.

I refer members to page 4 of the briefing paper, which is headed "Initial meeting". In total, the audit for each council will take 20 weeks. That period is broken down as follows. An initial meeting with the auditors will take place in week 1. In weeks 2 to 7, there will be a self-assessment by the council of its strengths and weaknesses. In other words, the council will make a submission, which we will examine. Over this period of five or six weeks, the auditors will prepare to challenge the council on various areas of service that it provides. In week 8, the council will make a presentation to the auditors. In weeks 9 to 10, the overall audit will take place. Detailed audit will take place in weeks 11 to 15. The process will culminate in the last four weeks, when findings and the report are prepared.

David Pia will deal with the next couple of pages of the presentation.

Good afternoon. I will provide the committee with a little more detail of the audit process.

The next slide, which is headed "Basic Structure for Submission", describes what we invite councils to cover in their submissions. We ask for contextual information, which gives councils an opportunity to say something about their area and the factors about the local context that are important to understand. We ask for performance results, so councils must tell us what they know about how well they perform. Councils must also cover key features of best value and community planning and refer to the guidance that the Scottish Executive issues, which covers such criteria as leadership, the management of resources, engagement with local communities and community planning. The submission should also include a draft improvement plan that sets out what the council intends to do to improve services and it should be backed up with documentation to support the points that it makes. We also invite councils to give a presentation to the audit team, prior to our analysis of the material.

I move on to the next slide. The initial analysis takes an overview of the information that the council submits about its performance and seeks to provide high-level assurance about the quality of performance in relation to the particular best-value criteria. The audit team then carries out a risk assessment with the intention of targeting areas for in-depth examination. Those areas might relate to corporate issues, such as resource management, or to particular services, for example the education service or the leisure and recreation service. The purpose of the risk assessment, which is an important part of the process, is to identify aspects of a council's activity that are worth examining more closely. The detailed audit follows and involves three weeks of visits by the audit team to the council area. The team reviews documentation and interviews a wide range of people inside and outside the council. The team might also attend and observe meetings.

The next slide describes our best-value audit report. A draft is discussed with the chief executive before the report is finalised, to give the council an opportunity to check the accuracy of the facts in the report. The report seeks to be balanced, to give a fair account of strengths and weaknesses and to take account of the local context. We do not seek to place councils in league tables or to give them a simple score on their performance. The report includes an improvement plan that sets out the action that should be taken to improve services and, of course, the report is published. Meetings take place—certainly in the initial cycle of audits—between Accounts Commission members and each council and there is provision for follow-up audits.

The next slide describes the options that are open to the Accounts Commission when it receives the report. In essence, there are four options: the commission may direct further work by Audit Scotland to examine the issues that arise from the audit; it will state its findings and record its views on what the audit describes; it may make recommendations for action to ministers and councils; and it may hold hearings and meet councils to discuss the first audit of best value that is carried out. For the commission to have such direct contact with councils in the normal course of events is an innovation; previously the commission had such contact only when special matters were being investigated.

I move on to the slide entitled "Next Steps". We selected the first seven councils for audit with reference to geography, urban-rural split, size, political balance and so on. As members can see from the final slide, those seven councils were: Angus Council; Dundee City Council; Inverclyde Council; North Ayrshire Council; Shetland Islands Council; Stirling Council; and West Lothian Council. While those audits are going on, traditional work will take place with other councils. The target is to complete the audit of all councils within the three-year cycle and to continue the cycle thereafter, making progress on improvement plans with the councils that have undergone their first best-value audit.

A guide on their submissions will be produced for councils. As the best-value audit is new, there will be a learning curve not only for the councils, but for the Accounts Commission and Audit Scotland. If the best-value audit is successful, it should be rolled out to the whole public sector, not only local government; the rest of the public sector should be held to account under the best-value regime. I will be happy to take questions.

In your opening remarks, you said that you hope that the best-value audit will not take up too much time and that you will build into it whatever reports and inspections have already been done, such as by HMIE. I have no doubt that the best-value audit is a worthwhile process to go through, but it obviously involves a large amount of work. I suppose that you would say that the gains from the process for a council could be enormous, so their input of time will be worth while. Will you comment first on that? Secondly, I assume from what you said that every council department, service and so on will come under scrutiny within the process. Thirdly, what sort of information will you gather prior to the submission that you receive from the council?

We believe that the best-value audit will add value to the whole process of local government service provision. It is important to say that the statutory audit of the probity of the council will continue. The external auditor will continue to do the nuts and bolts—best value is about added value and improving the service level within a council. I believe that best value will help because the council carries out a self-assessment, which we then consider. Not every department will be considered in depth—that cannot be done in a 20-week period—but a risk assessment will be done by the council and by us. If a particular department looked from the statutory performance indicators to be performing poorly and the council ignored that in the improvement plan, we would investigate that area and delve into it with the council. The process should be fairly comprehensive. I ask David Pia to deal with the third question.

On prior information?

Yes.

A range of information is readily available. Audit Scotland publishes the statutory performance indicators and a range of financial information is published regularly, such as the rating review, which covers local government finance. Information about spending on services is published regularly by the Executive. As Dr Jackson said, the scrutiny bodies publish reports. We will build up profiles of each council so that we have a bank of information to draw upon. That provides the basis and we will add to that the information that comes in from the council.

The best-value audit should prevent a council from being damned in total when some very good high-quality services are being provided, because it goes into far greater depth and identifies good practice as well as poor performance. That is a big change from the usual approach of taking straight performance indicators across the whole of Scotland: we can target in on the local authority. For the first time in 30 years the Accounts Commission went out to meet all the councils. I am not saying that the councils are delighted that best value is here, but they saw the merits of self-assessment and of being able to challenge the service provision. We have had genuine consultation with councils on best value. I will ask them in a year's time whether they still think that it is a good idea.

Looking at the books is pretty black and white; money is either being spent properly or it is not. A lot of what you are describing, in particular self-assessment, is subjective. As you will know, my constituency covers both North Lanarkshire Council and South Lanarkshire Council. The two local authorities deliver very good services, but they deliver them differently and there is a difference in their cultures and leadership. How do you assess such things according to the criteria that you use?

The audit team is made up of specialists and the backgrounds of its members are diverse. It is not a straightforward external audit; a far wider team is looking at this. We can use all the information that is available to us, not just the black-and-white information.

You are quite right to say that every council is different. No two councils in Scotland are the same in terms of the deprivation, social mix, and so on, in their areas. They will all be different and will be judged on their merits and, as David Pia pointed out, the contextual information base will be used to analyse them and highlight where there are differences. Council tax is a perfect example of that. Collection rates are quite different in different parts of Scotland and there are many reasons for that difference in the level of immediate recovery, many of which are justified.

That being the case, do you assist councils in determining what they should be assessing in their self-assessment?

No, we have absolutely nothing to do with that. In weeks 2 to 7 we work separately from the councils. They do all the self-assessment. They should know the job that they have to do, and I am confident that they do. We look at the process objectively, from outside, with the benefit of all the information that we have. If a service appeared to need further comment or improvement and the issue had not been raised by the council, the auditors would challenge the council and ask why that was not included in its improvement plan.

It is not about signing off a certificate; it is about the improvement of service delivery in a council area in the long term. That will take time, and of more benefit will be the second best-value audit that will come three years down the road. The important thing is that, when targets are set, we do not suffocate the council by requiring it to achieve high targets. The danger would be that the council would play safe and set fairly low targets. It is important that we allow councils to set high targets for the delivery of services and monitor them on that basis.

So you have a purely monitoring role. What would your position be if you were not satisfied that a council was assessing matters properly?

We have the power to hold a hearing with the council. The end result would be that we could remove individuals from the council. We hope that it would never come to that, but that is the final power that the Accounts Commission has. This process has been sold as one that should improve service delivery, not make a block between Audit Scotland and the Accounts Commission and the local authority. So far, that has been accepted as the way forward.

Are you satisfied that the process is working well?

We are two thirds of the way through the first audit in Angus, and the Accounts Commission is having nothing to do with it until it is finished. Until Audit Scotland finishes its work, we will have no input into it; therefore, I have no idea how the process is going. I will know in five or so weeks' time.

Can you give us a flavour of the recommendations that you will make? Will they be specific or general? Was there a phrase about removing people from councils?

No, that was an issue that Mr McMahon raised. If it became starkly obvious that a council was not performing at all, the ultimate power of the Accounts Commission would be to remove people. However, there is no evidence anywhere in Scotland of councils not performing at all.

Our reports are of no value unless they add value to the process, so the recommendations have to be fairly specific. If the report is woolly, it does not serve the community and it certainly does not serve the council. It should be fairly hard hitting, but objective.

There must be an element of fairness, because measuring constant improvement all depends on the starting point and the baseline. In other words, a 1 per cent increase in financial terms could actually be £1,000, whereas a 15 or 20 per cent increase could be £1—it depends on the starting point. I hope that fairness will be in-built.

One of the benefits of the approach is that it looks specifically at one council, rather than comparing it with all 31 other councils at the same time. One of the unfair parts of the blanket cover is that we might not be comparing like with like with regard to geography or social mix. With this approach, we are looking at a specific council area and the targets that it has set itself and that we believe can be achieved.

It is clearly an in-depth exercise, with the Accounts Commission working with the council, but I hope that you are able to avoid some of the pitfalls of performance indicators and value for money. Can you reassure us on that? I remember talking to a parks department official who said, "In the past, we used to cut the grass. Nowadays, all we seem to do is measure it." Can we be assured that the new approach will avoid some of the pitfalls of sticking too strictly to indicators and will bear in mind the task itself? After all, councils have to deliver services, but you will be talking to council officials over quite some time and involving them in carrying out the exercise while they have a job of work to do.

That is an important point. In any quango, the danger is that all that you are doing is making the position worse, rather than adding value. I believe that the audit that we are discussing today will genuinely add value to the council and to the provision of services. The council can also be challenged from within the council area by members of the public, so I believe that it will be fair. Whether people will agree with the findings in any council area is a matter for individuals, but the process should be scrupulously fair. I stress that we are totally independent and are not governed by anyone. The only governance is that the Scottish Executive can remove me from the chair. That is the only power that it has. It cannot change the findings of our best-value audit, so the process should be fair.

Is the ultimate goal to complement and help to improve services, working with the councils?

I believe that the bottle should be half full rather than half empty, and I want to achieve that. However, let us make no bones about it; if a service is not performing, we will identify that. That is not bad news for the community. It is actually of benefit to the community, and it may be a better service than the Accounts Commission provides in some other areas.

I would like you to comment on a couple of areas. Your report mentions the reserves—

Can I stop you there? That is in the overview report, which we shall come on to in about five minutes' time.

Okay. I shall keep my questions until then. Most of them relate to the overview report.

I take it from the overview that local authority audits will continue, as will audits into special service areas.

Yes.

Is the new system intended to complement that?

Yes. The special reviews of specific services will continue as before.

Thank you. I shall hand back over to you to tell us about the "Overview of the 2002/03 local authority audits".

The overview report from the controller of audit for the year to 31 March 2003 was published recently and included the following main messages. First, on the positive side, the councils' financial controls are improving year on year. For the first time since reorganisation in 1996, there are no audit qualifications at any council in Scotland. Secondly, council tax collection rates are the highest in real terms since 1997. Thirdly, home care for the elderly in the evenings, overnight and at weekends has increased significantly over the past two years. Lastly, the proportion of waste recycled rose to 9.6 per cent in the year, although that still falls far short of the Scottish Executive's target of 25 per cent by 2006. Nevertheless, the trend for recycling is still upward.

On the flip side, we have concerns that the auditing scrutiny within councils is far from independent in some local authorities. Financial monitoring by elected members requires timely and relevant service information and that needs attention in several councils across Scotland. However, the reduction in the value of the local government pension scheme assets, although consistent with all other pension schemes, is worrying. External auditors will continue to monitor the situation across Scotland. Moreover, borrowing from libraries continues to fall for the fifth year in a row, with only 24 per cent of the adult population now borrowing books from the library service. Some will have transferred over to DVDs and so on but, nevertheless, there has been a continual drop in library provision in the past five years.

Mr Sheridan made a point about reserves. The commission's point was not about the level of reserves, but about the fact that councils should be prudent and transparent in arriving at the reserve and should make it clear why they have arrived at that reserve for that year. That is to say not that the reserve should be 2 or 3 per cent, but that the reasons for arriving at the reserve should be transparent, clear and open. I am happy to take questions.

I will let Tommy Sheridan pursue that point further.

I have questions on two or three areas, but I will take the reserves first. My concern is that the biggest growth area is in other reserves, rather than in the general fund or housing revenue account, which means that moneys that we would expect to be used in the course of a year seem to be rising. It seems that the figures are £590 million for 2000-01 rising to £686 million in 2001-02 and to £839 million in 2002-03. If that growth was in HRA or the general fund, it might be to do with changes in housing tenure and housing expenditure, but the fact that it is in other reserves worries me. I wonder whether the money should be being utilised in those financial years.

We will soon hear from the Convention of Scottish Local Authorities about the deficit that it perceives to exist and about how much is being made available to Scotland's councils and how much they require. I am very much in favour of fully financing local authorities to do the excellent job that they do, but are you applying pressure on councils in relation to the growth in reserves? Why is there such significant growth?

That is exactly the question that we are asking. There was a significant increase in 2002-03. Such increases were not obvious in the past, which is why we highlighted that one. People's reaction has been to say, "It is up to the local authority to decide," which is true, but councils have to be transparent when they make such provision. In our overview report, we say that we are not convinced that that transparency exists. That goes back to the earlier point about audit and scrutiny within the councils. Elected members should have the right to scrutinise the leadership clearly and openly in relation to all provision, of which the reserves are an important part. We will continue to examine that in depth during the 2003-04 audit.

You flagged up the private finance initiative and public-private partnerships and referred to the fact that contracts to the tune of £2.5 billion are live across Scotland. You also referred to the Accounts Commission report of 2002, which questioned whether PFI/PPP represents best value for the public pound. You do not seem to be completely happy that the reporting of PFI/PPP expenditure is as transparent and easily understood as it should be. Could you comment on that? What is the problem?

It is not so much the reporting of PPPs that concerns us as the fact that we are dealing with swings and roundabouts. There are some benefits from PPP, but there are disadvantages. One issue, which was raised in the 2002 report, is the financing. We are concerned enough to be producing a report on the £2.5 billion education PPP in our next tranche of special reports. The issue has not gone away. There are benefits from PPPs—if they work properly, there can be benefits in relation to maintenance, for example—but there are disincentives, which were clearly identified in the 2002 report. We require to revisit PPPs, because we cannot sign them off one way or the other. We need further evidence from a far bigger tranche. Although some people claimed otherwise, we believe that our 2002 report was balanced. Given that we received criticisms and plaudits from all sides, I argue that our 2002 report was reasonably balanced. However, we need to do more work on the issue, which I can assure the committee we will carry out.

On the pensions issue, I have a general question about the overall 20 per cent reduction in assets, which is quite significant. The overview report points out that there has been a recovery in some markets, but are you still concerned—perhaps more than you have said today—that councils will not have enough funds to meet their liabilities?

We have as yet no indication that the pension funds have come to a crisis point. Their performance has been consistent with that of other pension funds and, as our 2004 report will identify, there has been a recovery. The problem is that the overview report is more than a year late. One bonus that will come from best value is that our overview reports will be more up to date.

The performance of the pension funds has not been out of kilter with that of other pension fund schemes across the United Kingdom, but we are not unconcerned about the issue. After all, we are talking about a 20 per cent reduction in assets. For the benefit of the later lives of those future pensioners, it is vital that we ensure that the funds are up to date and that they are adequate. That is particularly important in the public sector, which has huge pension funds.

The 20 per cent reduction in assets was in line with the performance of other funds, but we need to ensure that the trend has bottomed out and that the figures are starting to rise. We will report back on that. Each council's external auditors have been asked specifically to examine the individual pension schemes. Obviously, not every council has its own pension scheme, because the Strathclyde pension fund covers almost half of Scotland. Indeed, that fund was more buoyant than some of the others for a while, but it dipped, too.

Collectively, councils control some £9.8 billion of pension fund assets. Has the Accounts Commission a role in the returns on investment that the pension funds make? Could the pension funds be removed from the chaos of the casino if a system were developed that paid a steadier stream of return on investment by keeping that public money in public use? Is it beyond the remit of the commission to develop such innovative schemes?

That is well beyond our remit. Only a small amount of time is allotted for the commission's work. The commissioners are employed for only one and a half days a month, so the commission is a very small entity. However, we will continue to highlight any concerns that we have about the need to develop a strategy to ensure that the pension funds are as safe as possible for the pension holders. That may be a bureaucratic answer, but your suggestion is way beyond our remit at the moment.

That is a pity.

Audit committees are clearly crucial in tightening up performance and procedures. When will the commission issue specific guidance on those for local authorities? How will the commission encourage local authorities to introduce such committees? Will the guidance be purely advisory or will it be compulsory?

When I wore my old hat as chair of the leadership advisory panel back in 2000 and 2001, I begged local authorities to introduce audit committees. All councils are moving towards establishing such committees, but we have concerns about the committees' independence and whether they receive information that allows them to carry out appropriate scrutiny. We will continue to report whether we are happy with the progress that has been made.

We are not happy about progress in many councils. The remit of some audit committees that have been set up is not what it should be because it does not provide for genuine scrutiny of the council and of its corporate governance. We will continue to highlight that both in our overview reports and in our best-value reports on individual councils.

The great thing about best value is that we will be able to pinpoint whether the audit and scrutiny function in individual councils is working well. With the three-year best-value audit, we will be able to answer your question specifically. Unfortunately, at the moment, the external auditor can take only a general overview of the council's internal audit and its audit committee. Although almost all the councils now have audit committees in name, our concern is that the committees must become specific entities.

I think that guidance on that matter has now been issued. Gordon Smail knows more about that.

I was about to mention that. Earlier this month, the Chartered Institute of Public Finance and Accountancy published for the first time guidance on the principles of how audit committees in local government should operate. That is a positive development, because it will provide a good benchmark for councils and will allow us in Audit Scotland to measure their performance.

It is also important that councils should receive advice and back-up. When I was on the Parliament's Audit Committee, I found that in many cases outside organisations lacked experience in this area, especially in how to set up audit committees. As a result, professional advice was of great assistance to them. Could councils seek advice or guidance from the Accounts Commission or could the commission guide them towards some suitable source of advice?

It would be of greater benefit to councils and indeed the whole local government sector if COSLA could provide that advice. Our problem is that, as soon as we start to give specific advice and help on individual issues, we will no longer be independent, because we will not be sitting outside the situation. We can of course cajole and help councils through the CIPFA guidance and all our other outlets. However, providing specific assistance is outwith our remit.

I take your point. However, such advice would be helpful. I hope that COSLA is listening to your comments and can arrange matters.

I also hope that the external auditors will work closely with the internal auditors in councils. One of the best changes in local government in Scotland has been the strengthening of internal audit across all councils. The situation is different from what it was even five years ago and should give the audit committees tremendous weight.

I was interested to find that, according to the 2002-03 figures, there has been substantial improvement in surpluses and a substantial reduction in deficits for direct labour and direct service organisations since 1997-98. Given that the legislation has changed since the report was carried out, how does the Accounts Commission intend to monitor the performance of DLOs and DSOs to ensure that that improvement continues?

As that issue now forms part of the prudential framework, it will be taken into account in a council's on-going audit. However, despite one or two glitches, the majority of the DLOs and DSOs showed a continuing year-on-year improvement.

Convener, you are right to point out that the legislation has changed. As councils are now required to have trading accounts, we expect most of the organisations that were previously DLOs or DSOs to have the same trading account arrangements. Councils will also be required to disclose in their annual accounts the results of trading operations. In fact, the legislation also requires councils to break even over a rolling three-year period. Some similarities have been carried over into the new system and, as I have said, councils are now required to keep accounts for those substantial trading operations.

We also considered that factor in the best-value audits.

It would be helpful if we could receive a copy of the CIPFA guidance on local government audit procedures.

My questions centre on two points that Tommy Sheridan raised. First, as far as PPPs are concerned, I should point out that there has been quite a spin-off of sports facilities from secondary schools in the Stirling constituency. I take it that you will consider the whole breadth of issues associated with PPPs, including the positive additions that they have made to communities. I suppose that that goes back to Andrew Welsh's earlier point about narrow performance indicators.

Tommy Sheridan also asked about your role. How can councils best learn from other councils? I accept that we need flexibility and that councils have different needs, but we want to spread good examples. How should that information be disseminated?

When we examined the PFIs—as they were called previously—in education, we looked at all aspects, both positive and negative. That is why it was possible to pick any part of the report on that and say that it was either negative or positive. We will continue to look at all aspects in considering spin-offs, the cost of funding and security of tenure. I guarantee that that will continue to be our main aim. Our year-on-year overview report will refer specifically to best value.

The overview report is an opportunity to spread good practice because it brings together everything from the audits that have been carried out in a year. We will continue to do that with the best-value audits, which means that recurring issues that arise—whether they are good practice or areas for improvement—will be reflected in the overview report. The report is one way in which we can disseminate the messages from our work, including the work on best value.

In addition to written material, will there be a conference to allow greater discussion?

CIPFA is setting up various seminars for that purpose. To return to my old COSLA threads, I repeat that COSLA could play a major role in spreading information about best value.

It is worth mentioning the improvement service that COSLA, the Executive and the Society of Local Authority Chief Executives and Senior Managers are setting up, the central purpose of which is to help to disseminate good practice.

I have a question about the performance indicators. Paragraph 17.6 states:

"Not all indicators which were poorly ranked are of equal importance … so it is important to use this summary in conjunction with the ‘Council Profiles 2002/03'".

That raises the possibility that some councils might in effect be outperforming other councils that have a better performance indicator. Is there no way in which you can tabulate the information so that the unfairness is removed? Given that you are aware that unfairness may exist, can there be a value-added tabulation of the statistics?

We have tried hard to make the statutory performance indicators more relevant—that has been the bane of my life in the past three years. The danger is that the number of indicators will rise—we started off with 60 or 70 and kept going up—which could mean that council employees do not do any work because they are filling in forms for the Accounts Commission. For the first time, we have now started to reduce the number of indicators. We discuss and carry out detailed consultation on every statutory performance indicator with the councils before the indicators are introduced. When we produce results for an individual statutory performance indicator, we tend to begin by giving reasons why there might be differences between councils. The added-value aspect would be in that part. However, it would need a large tome to say that X does not equate with Y because of Z.

I make no apology for returning to best value, which should remove a massive part of the problem, because services and provision will be considered within local areas, using local targets. If, for a perfectly legitimate reason, a council starts from a low base, it will get the credit for its improvement plan. The media sometimes take the simple across-the-board line and say that one council's performance is far poorer than another's, but there may be many reasons for that. The statutory performance indicators are only one element of the report on all 32 councils, but they are a significant element. It is legitimate to use many of the indicators to compare all 32 councils, but some of the indicators tend to be transitional. We continue to change, improve and modify the indicators.

Is the problem with the new system that high-performing councils will not show much improvement because they start from a high base, whereas poorer-performing authorities will have spectacular results? We all hope that authorities will improve, but is there not a problem at the higher end, where councils are already performing well?

There is not, because the statutory performance indicators will show that, for example, last year a council had an achievement level of 94 per cent and that has now risen to 95 per cent. For another council, the figure may have risen from 75 per cent to 85 per cent, which is a huge improvement. Sometimes press releases indicate that council X has improved by 25 per cent, which may equate to an increase to 70, 80, 85 or 90 per cent. However, the report that we issue makes it clear that a council that starts at 94 per cent is doing a very good job if its achievement level rises to 95 per cent. The report identifies those councils that are in the highest bracket and are continuing to deliver on the statutory performance indicators. The information is there, but it is sometimes taken out of context.

We have had a similar debate about the publication of statistics on educational performance. Black-and-white statistics will not bring out the information to which we have alluded: councils' starting points and the percentage increase in their performance. That was the reason for my original question. You may take into account the various facts, figures and circumstances when you draw up the performance indicators, but once the result is published an unfair judgment can be made on a local authority unless a qualification is made in the table. It would be helpful if the information were provided there.

The report contains qualifications of the sort that you are seeking. Normally, the media have a great interest in the overview report and in best value. The major television networks will probably record a four-minute interview with me on the report. For 95 per cent of that interview, I will highlight the positives, but the 10 seconds that are used will relate to the bottom end. The report identifies all the issues. We cannot write the headlines, but we try our best to ensure that we are fair to councils that are performing well.

As there are no further questions, I thank Alastair MacNish and his team for their interesting presentation.

Once some of the best-value audits for the first year have been completed, we are happy to give further evidence to the committee, if that would be of use.

That would be very useful.