Labour toughens town hall policy

Labour has toughened up the reserve powers it will take to deal with extreme cases of high-spending councils in a new policy otherwise intended to restore local authority autonomy eroded by the Conservatives.

As expected, a document to be unveiled today by Frank Dobson, the shadow Environment Secretary, will seek to end compulsory competitive tendering - long regarded as a flagship policy by the Government for Britain's town halls.

The proposal is among a series published earlier this year in a consultative document. The new document, Rebuilding Democracy, Rebuilding Communities, which will go to the party conference, closely follows that consultative paper.

But the party's national executive has approved three important changes - all designed to ensure that councils do not abuse their new independence through unacceptably spiralling expenditure and council tax levels. They are:

t A reserve capping power to be used only if a maverick council allows spending and council tax levels to spiral out of control.

t A new incentive scheme, designed to increase central government grant for councils which have significantly improved their efficiency.

t A new government power to allow a management team sent in to sort out councils guilty of exceptional abuse to take over direct control of the council's services.

The third of these changes replaces a proposal in which the management team would have simply ordered the council to put its services out to tender.

The reserve powers are intended for use only in highly unusual cases and overall the document lays great stress on the need for elected authorities to have much more power to control their own budgets.

"The Government's rules assume that what is cheapest is always best and prevent councils going instead for higher quality bids, many of which are actually more cost-effective," the document says.