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Local government minister Nick Raynsford launches LAAs which he claims "represents a radical new approach in the relationship between local and central government". Lindsay Clark reports.

Financing and managing local government never really promised to be a barrel of laughs, and, as if to prove a point, the Office of the Deputy Prime Minister this week launched a new strategy that seems only to muddy the waters.

One official admitted the prospectus on the new Local Area Agreements (LAA) was one of the most impenetrable government documents he had seen. The plan is that LAA will incorporate central government Public Service Agreements (PSA) and local PSAs (LPSAs), and be able draw from existing Neighbourhood Renewal Funds (NRF).

However, within this turgid soup of acronyms lies a policy shift that could mean those providing community support services for children and older people are freed from complex and repetitive auditing and given more time to address locally driven priorities.

Introducing the new agreements, local government minister Nick Raynsford said: "Local Area Agreements represent a radical new approach in the relationship between local and central government. We are focusing on what is important: the outcomes in key areas. Central government will set strategic priorities but will leave authorities and their partners to decide the detailed implementation."

Although central government will still set national targets with public services agreements, devolved through local PSA, in LAA these agreements to be interpreted in a local setting and additional local priorities to be included.

The Local Government Association is taking a lead on the introduction of LAAs and will meet local authorities interested in piloting the system in September. Simons Edwards, senior policy officer with the LGA, said the proposed agreements could potentially take some of the hassle out of administering local services. “Sometimes in local government you have to fill in a form to move a paper clip from one side of the office to another,” he said.  “We need to develop a new relationship with central government, built on trust, not command and control.”

The large number of funding streams available to local public sector and voluntary services can mean that even very modest projects can be expensive to administer, because of a variety of reporting requirements. As a result, for some services administration costs can equal the funding gained, Edwards said.

Local authorities will lead development of LAAs in discussion with other local strategic partners, which might include primary care trusts, voluntary groups, local education authorities, schools and the forthcoming children’s trusts.

Although they could eventually apply to a broad range of local services, the LAA pilots will initially address three themes, each with its block of funding: children and young people; safer and stronger communities; and healthier communities and older people.

The nine pilots due to be launched later this year will include a least one unitary authority, a two-tier council system, and authorities from areas of differing local needs. The government said the LAA approach could be taken further in a more comprehensive funding model. In one of the nine pilot areas, therefore, a “single pot” LAA will be developed in which there would be no barriers between the separate blocks of funding and where there would be more flexibility in spending funding on agreed local priorities.

While applauding LAAs as an attempt to decentralise service priorities, the Local Government Information Unit, a local democracy think-tank, suspects the project is being hijacked by the big spending central government departments. It points out that the three funding themes reflect the government departments of health, education and the Home Office. Meanwhile, other vital local services, such as the police, are left out in the cold.

Dennis Reed, LGIU chief executive said: “The LAA pilots could develop into the best idea for better public services in a long time and be a valuable step in overcoming the old-fashioned centralist mindset. Sadly, this modernising initiative has been somewhat mauled by the spending departments.”

The LGA’s Edwards admits there are many questions to be resolved before service funding can be truly aligned. “Probably some way off that discussion, but many people thought we would not get this far. More and more people realise the need to change their game, not just local and central government, but in voluntary and community services too.”