Rewards for 'best' local councils

England's best 22 councils will be granted wide-ranging freedoms from Whitehall control today after an independent review categorised the overall performance of all 150 town halls for the first time.

The comprehensive performance assessment system (CPA), done by the National Audit Commission (NAO), measured authorities against 123 criteria from council tax collection to recycling and GCSE results. The process classified 22 councils as excellent, 54 good, 39 fair, 22 weak and 13 poor.

John Prescott, the Deputy Prime Minister, will welcome evidence that more than half are excellent or good. But he will challenge the others to match their performance.

The 22 best councils will have a three-year holiday from further inspection, will not have to submit plans to Whitehall for approval and, apart from school funding, will no longer be subject to "ring-fenced" government grants that limit local discretion.

They will also be given freedom over income from civil penalties, such as dog-fouling and littering. They will be able to take advantage of new trading powers in the Local Government Bill to sell services, such as graffiti removal or CCTV management, to other councils and even the private sector. "Poor" performing councils will be required to work with government officials to draw up and implement "recovery plans", for which they will be given eight weeks.

Mr Prescott said last night: "The standard of services councils provide have a profound effect on the quality of life of the people who live and work there. For the first time local people will be able to see how good their council is at delivering everyday services, from education, social care and housing to street cleaning, refuse disposal and libraries, and compare its performance with others."

Sir Jeremy Beecham, chairman of the Local Government Association, said the CPA had been a "burdensome period of form-filling" and inspection. He challenged the NAO to look at the CPA process and consider a similar independent review of government departments and agencies.