This week I announced one of the most exciting changes in local government finance in years. Following the New Homes Bonus and Business Rates Retention, there is a new incentive for councils to act on behalf of their residents, rather than stick to the more of the same. I have been outlining on this site over the last few weeks examples of super Conservative councils doing good work to be innovative and sharing management. We are now going to be able to reward councils who move forward on this work.
The New Challenge Award will reward councils for the successful sharing of management and frontline services. For too long the system has rewarded failure, rather than success, with money going to the councils that made the least effort to use their money wisely. There was little incentive to become efficient and to spend taxpayers’ money in a responsible manner.
The new £9.2 million Transition Challenge Award will help councils across the UK emulate the tri-borough initiative of Hammersmith & Fulham, Westminster and Kensington & Chelsea, who are set to save £40 million by 2015-16. It will be important especially to small district councils looking to realise the benefits of shared management, as South Holland and Breckland and now Luton have, among a range of others. The award will enable councils not only to introduce changes, but to introduce them more quickly so that residents feel the benefit as soon as possible.
It is gone time that the system rewarded and encouraged success, rather than failure. I am very excited to see what innovative methods councils put in place to earn a slice of the Challenge Award.