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Performance action teams from the private sector are to be sent into four of the councils awarded a zero star rating. The councils are Walsall, Coventry, Birmingham and North East Lincolnshire.

Health minister Jacqui Smith said that immediate action will be taken to start improving performance in the zero-rated councils. Chief inspector of social services, Denise Platt, will meet with all 10 zero-rated councils to agree performance improvement plans and report back to ministers on any further action needed.

Smith said:"I expect to see improvements by November. If there has been no improvement, we will consider the use of our powers under the Local Government Act 1999. These powers include directing a council to carry out a review of its social services functions or to bring in external teams." The performance action teams are to be sent in "where we don't believe they have sufficient capacity to turn themselves around", she added.

Five private consultancies were selected after a competitive tender, which resulted in no appropriate bids from the public sector. The five will now bid for contracts with the four councils.

Meanwhile, three-star councils are to benefit from fewer inspections, "less onerous monitoring", and total freedom on how to spend grant money. Any scheduled joint review will go ahead, and an inspection of children's services will be carried out if there has not been one in the past four years. But any other inspections will only be carried out at the council's request or with their agreement.

Three-star councils will be able to spend their share of the £50m performance fund on any area of social services, whereas councils with zero, one and two stars must use the money for intermediate care.

Next year, three-star councils will have complete flexibility over the spending of their social services grant with no ringfence, because they have "proved their ability to deliver on the government's priorities", said Smith.

The star ratings will be reviewed in the autumn before they are fed into the overall council star ratings - the comprehensive performance assessment - but from next year the social services star ratings will only be published each autumn.