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Local Government Act 1999


8.The provisions in Part I of the Act (best value) are divided into six main categories:

  • category (i) describes those authorities to whom the duty will apply, or may apply in future;

  • category (ii) describes the scope of the duties of best value, sets out the minimum requirements for consultation and specifies the performance indicators and standards which will be used to measure best value authorities’ performance in connection with best value. It also sets out key aspects of the process which best value authorities will be expected to follow in complying with the duty, and factors to be taken into account in doing so;

  • category (iii) creates the framework which allows external bodies to assess best value authorities’ compliance with best value procedure and provides for the audit of performance plans;

  • category (iv) confers upon the Audit Commission powers to inspect best value authorities’ compliance with best value, and amends the Social Security Administration Act 1992 to make arrangements for best value inspections of the administration of housing benefit and council tax benefit. It also confers upon the Secretary of State enforcement powers which can be used to deal with any failure by best value authorities to meet their duties, and sets out the circumstances in which he may do so;

  • category (v) provides new powers for the Secretary of State to remove or modify enactments which restrict best value authorities’ ability to achieve statutory duties under best value, to confer upon best value authorities powers to facilitate the achievement of best value and to provide for best value authorities to contract out certain functions. It provides the Secretary of State with powers to modify existing legislation restricting the factors to which best value authorities can have regard in selecting tenderers and awarding contracts. It also makes provision for the publication of information by best value authorities;

  • category (vi) repeals compulsory competitive tendering (CCT) and provides for the Secretary of State to issue guidance on the transition from CCT to best value. It also makes some consequential amendments to the Audit Commission Act 1998, stipulates the manner in which orders under the Local Government Act will be made, and provides explicitly for the application of this Act to both England and Wales. Finally, it creates a regulatory power for the Secretary of State in respect of accounting matters, creates a general power to issue guidance in respect of matters set out in Part I, makes amendments to the Police Act 1996 and provides for co-ordination of inspections and inquiries.

9.Part II of the Act consists of two sections giving effect to Schedule 1 on reserve powers to regulate council tax, and providing for payments from a major precepting authority to a billing authority.

10.The new reserve powers will allow the Secretary of State to look at an authority’s changes in budget requirement over a number of years. It will also allow the Secretary of State to require a local authority to reduce its budget requirement over a number of years, and to require authorities to reduce their budget requirements below those of previous years or below their standard spending assessment. In addition, the Secretary of State will be able to exempt certain categories of authorities from budgetary controls, for example those with small budgets or those which provide only particular services. He will also be able to take into account factors such as the authorities’ performance in delivery of best value, the support of local people for authorities’ proposed budgets, and whether the council has beacon status, when deciding if the budget requirement is excessive.

11.The new reserve powers will operate as follows:


The Secretary of State will first have to decide if the budget requirement is excessive. He will be able to determine the set of principles he will use to decide whether or not the budget requirement set by a local authority is excessive. The set of principles must contain a comparison with the budget requirement of a previous year. He may also determine categories of authorities and use a different set of principles for each category.


If the Secretary of State decides that the budget requirement is excessive, he will be able to designate the authority for the year under consideration or for the following year. Where an authority is designated for a year, the Secretary of State will inform the authority of a target budget requirement and a maximum amount for that year. In some cases the target and maximum will be the same because the Secretary of State considers the local authority can reduce its budget requirement to target in a single year. However, if they are different the intention will be to designate the authority over a number of years until the target is reached. The Secretary of State will indicate how many years he considers it may take to reach the target (updated as necessary e.g. because of inflation).


An authority may be nominated by the Secretary of State instead of designated. In this case, he may set a notional budget requirement for the year under consideration. The notional budget requirement will be taken into account, instead of the actual budget requirement, if using that year to make a comparison when considering if future budget requirements are excessive.


The procedures for designation are similar to the current capping procedures. Where designation takes place in year the procedure is largely unchanged. Where designation takes place for the following year, again similar procedures are followed but the process will start at around the time of the announcement of the provisional Local Government Finance Settlement and be completed at the end of February and beginning of March.

12.In addition, the Act will contain provisions to require major precepting authorities to make payments to their billing authorities. Under the Council Tax Benefit Subsidy Limitation scheme, local authorities which make increases in council tax above a guideline set by the Secretary of State are required to make a contribution to the council tax benefit costs. Section 31 ensures that, where it is a major precepting authority which exceeds the guideline, it pays the contribution to its billing authorities since they are responsible for the administration of council tax benefit.

13.In Wales, the powers described above will largely be exercised by the National Assembly for Wales rather than by the Secretary of State.

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