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Written evidence submitted by Department for Levelling Up, Housing and Communities [OLG 013]
The Department for Levelling Up, Housing & Communities and the Office for Local Government submission to the Levelling Up, Housing and Communities Committee inquiry into the Office for Local Government
We welcome the opportunity to respond to the Committee’s questions. We also refer members of the Committee to the letter from Minister Hoare and Lord Morse on 19 December 2023 addressed to the Chair which includes further detail on some of the points below.
Responses to call for evidence questions
We remain committed to the Government’s approach since 2010, which has centred on localism and sector-led improvement. However, it has become clear that the sector-led system needs strengthening. First, following mismanagement and other challenges, we have seen several high-profile local authority failures with significant implications for citizens and public money. Second, local authorities have told us they do not spend enough time learning from each other or from data. Third, it is too difficult for citizens and civil society to know how their local authority is performing relative to others.
Oflog’s aims are therefore in three primary objectives:
Inform
Oflog will enable citizens, local government, central government and civil society to be better informed about the performance of local authorities. Oflog's initial action on this front is the Local Authority Data Explorer.
Warn
Oflog will seek to spot potential failure before it becomes inevitable. Alongside setting up its own early warning system, Oflog will work with Government and the LGA to shape the overall ecosystem of warning mechanisms to be as effective as possible.
Support
Oflog will, over time, identify, celebrate, and propagate good practice by local authorities, and provide expert support to help them use data to improve performance.
Both Oflog and the Department are supportive of the overall work on sector improvement done by the LGA, CIPFA, and others. The Department funds some of these programmes (such as the LGA’s sector support programme) and works closely with the sector on developing new initiatives. Oflog will work closely with inspectorates, regulators, agencies and other relevant bodies to ensure its work complements and does not duplicate theirs.
Within local government, there are existing data products (such as LG Inform) and existing support mechanisms (such as the LGA’s Corporate Peer Challenges (CPCs)).
While LG Inform is a powerful repository of information available at a local government level, particularly for the expert user, with more than 17,000 metrics available, Oflog’s Data Explorer provides a different and complementary offer. The three main advantages of the Data Explorer for a non-expert user are curation of metrics, comparability, and accessibility.
In terms of the curation of metrics, Oflog is including only the best available metrics to assess local authority performance in service areas. Over time, we expect the total number of metrics in the Data Explorer not to exceed the low hundreds. Oflog will continue to revisit the published metrics to ensure they are the best available.
Comparability is built into the Data Explorer by default. It allows the non-expert user to compare a local authority with similar local authorities (in terms of physical and demographic characteristics), using CIPFA ‘nearest neighbours’ as a default, and presenting data across the same time periods. If users wish, the Data Explorer also provides the ability for wider comparisons (outside of CIPFA nearest neighbours) between local authorities.
The Data Explorer is freely available, with all users being presented with the same information, and not requiring a user to register. In contrast, parts of LG Inform and LG Inform Plus are only available to local authorities or require a subscription. Additionally, for some users the Data Explorer will be more user-friendly (including for those with dyspraxia, those with colour vision deficiency, and those who use a screen reader). Oflog intends to update and improve the Data Explorer, ensuring it meets the needs of the non-expert user.
The LGA’s CPC programme plays a valuable role. However, as can be seen in some of the prominent recent council failures, the CPC system does not prevent all serious failures. Nor was it designed to do so. Oflog’s EWCs are intended to be complementary to and not duplicative of CPCs in several respects. First, CPCs are for all local authorities who are members of the LGA, whereas EWCs will be only for councils and combined authorities identified as potentially at risk of serious failure. Second, CPCs are voluntary, and the council has scope to choose the timing and scope of the review, and who is selected as their reviewers. This will not be the case with Oflog’s EWCs. Third, a CPC has a broad scope, looking at potential for improvement throughout the council. By contrast, an EWC will have a narrower scope, focused on identifying whether the local authority is at risk of serious failures of leadership, governance, or culture. Fourth, an EWC will, unlike a CPC, start with hypotheses and lines of enquiry about potential risks drawn from the desk-based warning system. Finally, many sector leaders also tell us that the robustness of a CPC's public recommendations can be constrained by the fact that the CPC is conducted by peers providing voluntary advice. An EWC's robustness will not be similarly limited.
To help establish Oflog rapidly it has been set up initially as an office of DLUHC, which means Ministers retain direct accountability for the organisation. Alongside this, Ministers appointed an independent Chair at an early stage of Oflog’s development to provide independent advice, support, and challenge to its strategic vision, functions, and delivery priorities.
The Secretary of State has been clear that he wants Oflog to act independently from central government and over time, the Department’s aim is for Ministers to set the objectives for Oflog though an annual remit letter and then for Oflog to deliver those objectives however they see fit. The intention is that Oflog will be free to decide independently how data is presented and interpreted, and any views reached about local areas. We intend to say more about this shortly.
In order to level up and tackle the regional and local inequalities across the country, we need a resilient, efficient, and effective local government sector. Oflog will help to support this through the action set out above.
It will also play a role in supporting devolution by enabling transparency and fostering informed accountability.
Oflog is strongly committed to working in close partnership with the local government sector and other relevant stakeholders to ensure that it adds as much value as possible. In the six months since Oflog was launched, the interim Chair and Chief Executive have met with dozens of senior colleagues from the sector and from other relevant organisations such as regulators and think tanks. In parallel, Oflog has undertaken formal engagement on its choice of metrics, including through workshops open to every local authority, and has invited feedback from all local authorities on: its plans for future areas to add to the Data Explorer; its process of engaging on the choice of metrics; and its proposal for a new early warning system. Oflog is also establishing regular standing advisory groups of colleagues from the sector.
For the Data Explorer, Oflog is presently only using data that is already collected, rather than collecting new data. We acknowledge that the process of an ‘early warning conversation’ with an individual authority may create some short-term demands on that authority’s staff, in the same manner as for any peer review or inspection. In mitigation, we hope that on average the value to the authority and its citizens of the conversation – identifying the types and degree of risk faced by the local authority and making recommendations for improvement – will exceed the cost. We anticipate that there will be relatively few early warning conversations each year. We also hope that Oflog’s ‘inform’ and ‘support’ activities will, over time, help many local authorities to make even better use of their resource.
Oflog's Data Explorer will increase financial transparency in the sector. It will make it easier for the public to understand their local authority’s financial context by presenting information about authorities’ finances alongside information on service delivery. It will also help councils and combined authorities to identify areas for improvement and learn from others.
Oflog is also developing a two-part early warning system:
a new internal desk-based early warning system (using qualitative and quantitative data along with soft intelligence) to identify councils and combined authorities potentially at risk of developing serious problems of leadership, governance or culture;
a set of ‘early warning conversations’ with some councils and combined authorities identified as potentially at-risk, to establish the type and degree of risk, and make recommendations for improvement. Oflog plans for the first of these conversations to take place in mid-2024. We anticipate that Oflog will publish a report setting out the evidence, conclusions, and recommendations for the council or combined authority.
This system will make it easier for central government to identify authorities who have not flagged to central government that they have financial problems, but nevertheless have, or are at risk of developing, such problems. For councils and combined authorities that consider themselves to have financial problems, Oflog should not be the first port of call: they should continue to contact DLUHC to discuss their options.
Oflog will not be making any judgement about the necessity of formal intervention. That role remains with DLUHC through the existing Best Value framework.
Oflog takes seriously its responsibility to publish quality and accurate information. Oflog will publish a retrospective annual report each year, assessing its progress against its stated business objectives for the year and setting out its expenditure against budget for that financial year. The department will have the opportunity to check and approve the content of the report.
Oflog will seek to avoid creating new burdens for local authorities, so for the Data Explorer is presently only using data that is already collected, rather than collecting new data. When conducting an ‘early warning conversation’ with an individual local authority the review team will request data from the authority as needed to help establish the type and degree of risks that the authority faces.
As above, for the Data Explorer, Oflog is presently only using data that is already collected, rather than collecting new data. In conducting an ‘early warning conversation’, the review team will seek to ensure the burden on the local authority is no greater than necessary.
Oflog seeks to engage collaboratively with local authorities on themes and metrics for inclusion in the Data Explorer. Oflog advises DLUHC Ministers on which themes to prioritise, and then engages with the relevant Government Department to understand what data is available. Oflog will then put together a set of draft metrics on which it then engages with local authorities. After engagement with local authorities, Oflog takes account of feedback received and secures approval of DLUHC and other policy owning Ministers.
At launch, Oflog included four local authority service areas in the Local Authority Data Explorer: adult skills; adult social care; finance; and waste management. Since then, Oflog has written to all local authorities (included as an Annex to the letter from Minister Hoare and Lord Morse) setting out how it intends to expand the number of metrics in the Data Explorer to ensure it covers the breadth of roles and responsibilities of local authorities. Oflog engaged with local authorities on suitable metrics on the themes of business and economic growth, planning and roads, and iterations to existing themes in November 2023: Oflog’s response to that feedback was covered in the summary document published on 19 December 2023.
At present, metrics included in the Data Explorer are a combination of outputs, outcomes and selected contextual information. Oflog recognises that presenting data on outcomes is important, and over time intends to increase that, along with relevant context. Oflog will review continuously the areas and metrics published on the Data Explorer and evaluate whether to update metrics and data on the site.
Josh Goodman’s letter to local authority Chief Executives on 26 October 2023 (included as an Annex to the letter from Minister Hoare and Lord Morse) set out a proposal for which service areas to add to the Data Explorer and invited feedback from the sector. The intention is for the Data Explorer to include metrics that reflect the breadth of local authority roles and responsibilities. Following engagement with local authorities, in December 2023 Oflog published metrics on the themes of roads, planning, and finance.
Where Oflog receives feedback that suggests that Government Departments should collect new sets of data, or amend existing data collections, Oflog will bring this to the attention of the responsible Government Department. For example, in the December publication ‘Summary of engagement on tranche two metrics for the Local Authority Data Explorer’, Oflog set out feedback received in regard to road condition data and has shared the feedback with the Department for Transport.
Oflog is presently determining what themes it will next engage with local authorities on, and subsequently include on the Data Explorer. In addition, Oflog will continue to review metrics already published on the Data Explorer and will consider whether to revise these as new data becomes available.
Many cross-departmental policies and initiatives rely on having effective and resilient local authorities; all of Oflog’s work will help to support that goal. In addition, it is possible that clear presentation of data through the Data Explorer will help local authorities and citizens to identify how cross-departmental approaches could be made more effective in a particular local area. Also, over time, we expect that Oflog’s work to identify and propagate best practice, and to strengthen local authorities’ use of data in their management, will help both Government departments and local authorities to make cross-departmental approaches more effective.
All of Oflog’s work aims to ensure that local authorities are effective and resilient, which is important to the local NHS and other bodies that work in partnership with local authorities. Beyond this, it is possible that clear presentation of data through the Data Explorer will help local anchor institutions to identify where and how they most want their local authority to adjust the way it works. Also, over time, it is likely that Oflog’s work to identify and propagate best practice will include best practice in partnership between local authorities and other local anchor institutions.
At this early stage of its development, Oflog is focused on the performance of local government rather than providing a full overview of a local area, such as the provision of other public services not delivered by local authorities. Once complete, the Data Explorer will make it easier for central government to get a simple overview of key data that will help it ask informed questions about whether, and in what respects, a local authority may need to improve. Similarly, Oflog’s early warning system will enhance central government’s understanding of the issues facing local areas by identifying councils and combined authorities potentially at risk of serious failure.
January 2024
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