Best value in Scottish local authorities: as simple as ABC?

Bill McCabe, Jim McKendrick, John Keenan

Research output: Contribution to journalArticle

Abstract

The concept of Best Value is at the root of the reforms currently taking place in local government in the UK and was introduced by the Labour government after the May 1997 general election The policy was introduced to England and Wales by the department of the Environment, Transport and the Regions (DETR) and into Scotland by the Scottish Office. Each legislative area introduced the
policy in a slightly different fashion. In Scotland, the policy was introduced to all 32 unitary authorities (across all departments) and had a very tight timetable. The aim of the policy was to replace CCT in local government with a more balanced approach that considered both the cost of service delivery and quality issues in evaluating performance. In addition to the 4 C’s (competition,
challenge, consultation and comparison) suggested by the DETR in England and Wales, Scottish guidelines suggest key principles of accountability, transparency, continuous improvement and ownership. From the beginning there has been a significant differentiation between Scotland and the rest of the UK in the methods used to implement the policy which the creation of the Scottish
Parliament has done little to diminish. Best Value is both a resource allocation technique and a performance measurement framework. It
involves long term rolling programmes of fundamental performance review, and accountability through local performance plans and local and national performance indicators. The requirement for meaningful performance measurement under Best Value has led local authorities in Scotland to
embrace activity based costing (ABC). The Best Value Task Force clearly recommended that a system of activity based costing was an essential tool for sound financial management and continuous improvement. It was considered that the introduction of ABC into a local authority and
the consequential change in management philosophy and culture would greatly enhance the 4C’s evaluation process. Again, this view is markedly different from the rest of the UK.
Activity based costing is a technique, which attempts to uncover the causes of cost, and tries to absorb overheads appropriately using cost pools and cost drivers. In this way it differs from established methods, which absorb departmental overheads using traditional bases such as direct
labour hours. Activity based budgeting and activity based management can be linked to an activity based costing system. However activity based costing is not without its critics. Using information drawn from local authorities, this article examines the relevance of activity based costing within the
context of the Best Value framework and investigates the process of introducing this technique in Scottish local authorities. A combination of questionnaires and elite interviews are used to obtain the empirical data.
The paper carries out an evaluation and draws some tentative conclusions in a number of areas. Issues reviewed are: the organisational and managerial difficulties experienced by councils in the introduction of ABC; interaction with service departments; and the potential need for IT
enhancements. Some of the desired advantages are improved quality of financial information making costing data more transparent and relevant to users.
Original languageEnglish
Pages (from-to)43-54
Number of pages12
JournalThe Journal of Finance and Management in Public Services
Volume2
Issue number2
Publication statusPublished - 2002
Externally publishedYes

Fingerprint

Local authorities
Activity-based costing
Scotland
Costs
Continuous improvement
Evaluation
Local government
Accountability
Performance measurement
Wales
England
Budgeting
Ownership
Empirical data
Management philosophy
Authority
Activity-based management
Labor
Transparency
Service delivery

Cite this

@article{69adcf3535104c029c26c85bef76b8d7,
title = "Best value in Scottish local authorities: as simple as ABC?",
abstract = "The concept of Best Value is at the root of the reforms currently taking place in local government in the UK and was introduced by the Labour government after the May 1997 general election The policy was introduced to England and Wales by the department of the Environment, Transport and the Regions (DETR) and into Scotland by the Scottish Office. Each legislative area introduced thepolicy in a slightly different fashion. In Scotland, the policy was introduced to all 32 unitary authorities (across all departments) and had a very tight timetable. The aim of the policy was to replace CCT in local government with a more balanced approach that considered both the cost of service delivery and quality issues in evaluating performance. In addition to the 4 C’s (competition,challenge, consultation and comparison) suggested by the DETR in England and Wales, Scottish guidelines suggest key principles of accountability, transparency, continuous improvement and ownership. From the beginning there has been a significant differentiation between Scotland and the rest of the UK in the methods used to implement the policy which the creation of the ScottishParliament has done little to diminish. Best Value is both a resource allocation technique and a performance measurement framework. Itinvolves long term rolling programmes of fundamental performance review, and accountability through local performance plans and local and national performance indicators. The requirement for meaningful performance measurement under Best Value has led local authorities in Scotland toembrace activity based costing (ABC). The Best Value Task Force clearly recommended that a system of activity based costing was an essential tool for sound financial management and continuous improvement. It was considered that the introduction of ABC into a local authority andthe consequential change in management philosophy and culture would greatly enhance the 4C’s evaluation process. Again, this view is markedly different from the rest of the UK.Activity based costing is a technique, which attempts to uncover the causes of cost, and tries to absorb overheads appropriately using cost pools and cost drivers. In this way it differs from established methods, which absorb departmental overheads using traditional bases such as directlabour hours. Activity based budgeting and activity based management can be linked to an activity based costing system. However activity based costing is not without its critics. Using information drawn from local authorities, this article examines the relevance of activity based costing within thecontext of the Best Value framework and investigates the process of introducing this technique in Scottish local authorities. A combination of questionnaires and elite interviews are used to obtain the empirical data.The paper carries out an evaluation and draws some tentative conclusions in a number of areas. Issues reviewed are: the organisational and managerial difficulties experienced by councils in the introduction of ABC; interaction with service departments; and the potential need for ITenhancements. Some of the desired advantages are improved quality of financial information making costing data more transparent and relevant to users.",
author = "Bill McCabe and Jim McKendrick and John Keenan",
year = "2002",
language = "English",
volume = "2",
pages = "43--54",
journal = "The Journal of Finance and Management in Public Services",
issn = "1475-1283",
publisher = "Chartered Institute of Public Finance and Accountancy",
number = "2",

}

Best value in Scottish local authorities : as simple as ABC? / McCabe, Bill; McKendrick, Jim; Keenan, John.

In: The Journal of Finance and Management in Public Services, Vol. 2, No. 2, 2002, p. 43-54.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Best value in Scottish local authorities

T2 - as simple as ABC?

AU - McCabe, Bill

AU - McKendrick, Jim

AU - Keenan, John

PY - 2002

Y1 - 2002

N2 - The concept of Best Value is at the root of the reforms currently taking place in local government in the UK and was introduced by the Labour government after the May 1997 general election The policy was introduced to England and Wales by the department of the Environment, Transport and the Regions (DETR) and into Scotland by the Scottish Office. Each legislative area introduced thepolicy in a slightly different fashion. In Scotland, the policy was introduced to all 32 unitary authorities (across all departments) and had a very tight timetable. The aim of the policy was to replace CCT in local government with a more balanced approach that considered both the cost of service delivery and quality issues in evaluating performance. In addition to the 4 C’s (competition,challenge, consultation and comparison) suggested by the DETR in England and Wales, Scottish guidelines suggest key principles of accountability, transparency, continuous improvement and ownership. From the beginning there has been a significant differentiation between Scotland and the rest of the UK in the methods used to implement the policy which the creation of the ScottishParliament has done little to diminish. Best Value is both a resource allocation technique and a performance measurement framework. Itinvolves long term rolling programmes of fundamental performance review, and accountability through local performance plans and local and national performance indicators. The requirement for meaningful performance measurement under Best Value has led local authorities in Scotland toembrace activity based costing (ABC). The Best Value Task Force clearly recommended that a system of activity based costing was an essential tool for sound financial management and continuous improvement. It was considered that the introduction of ABC into a local authority andthe consequential change in management philosophy and culture would greatly enhance the 4C’s evaluation process. Again, this view is markedly different from the rest of the UK.Activity based costing is a technique, which attempts to uncover the causes of cost, and tries to absorb overheads appropriately using cost pools and cost drivers. In this way it differs from established methods, which absorb departmental overheads using traditional bases such as directlabour hours. Activity based budgeting and activity based management can be linked to an activity based costing system. However activity based costing is not without its critics. Using information drawn from local authorities, this article examines the relevance of activity based costing within thecontext of the Best Value framework and investigates the process of introducing this technique in Scottish local authorities. A combination of questionnaires and elite interviews are used to obtain the empirical data.The paper carries out an evaluation and draws some tentative conclusions in a number of areas. Issues reviewed are: the organisational and managerial difficulties experienced by councils in the introduction of ABC; interaction with service departments; and the potential need for ITenhancements. Some of the desired advantages are improved quality of financial information making costing data more transparent and relevant to users.

AB - The concept of Best Value is at the root of the reforms currently taking place in local government in the UK and was introduced by the Labour government after the May 1997 general election The policy was introduced to England and Wales by the department of the Environment, Transport and the Regions (DETR) and into Scotland by the Scottish Office. Each legislative area introduced thepolicy in a slightly different fashion. In Scotland, the policy was introduced to all 32 unitary authorities (across all departments) and had a very tight timetable. The aim of the policy was to replace CCT in local government with a more balanced approach that considered both the cost of service delivery and quality issues in evaluating performance. In addition to the 4 C’s (competition,challenge, consultation and comparison) suggested by the DETR in England and Wales, Scottish guidelines suggest key principles of accountability, transparency, continuous improvement and ownership. From the beginning there has been a significant differentiation between Scotland and the rest of the UK in the methods used to implement the policy which the creation of the ScottishParliament has done little to diminish. Best Value is both a resource allocation technique and a performance measurement framework. Itinvolves long term rolling programmes of fundamental performance review, and accountability through local performance plans and local and national performance indicators. The requirement for meaningful performance measurement under Best Value has led local authorities in Scotland toembrace activity based costing (ABC). The Best Value Task Force clearly recommended that a system of activity based costing was an essential tool for sound financial management and continuous improvement. It was considered that the introduction of ABC into a local authority andthe consequential change in management philosophy and culture would greatly enhance the 4C’s evaluation process. Again, this view is markedly different from the rest of the UK.Activity based costing is a technique, which attempts to uncover the causes of cost, and tries to absorb overheads appropriately using cost pools and cost drivers. In this way it differs from established methods, which absorb departmental overheads using traditional bases such as directlabour hours. Activity based budgeting and activity based management can be linked to an activity based costing system. However activity based costing is not without its critics. Using information drawn from local authorities, this article examines the relevance of activity based costing within thecontext of the Best Value framework and investigates the process of introducing this technique in Scottish local authorities. A combination of questionnaires and elite interviews are used to obtain the empirical data.The paper carries out an evaluation and draws some tentative conclusions in a number of areas. Issues reviewed are: the organisational and managerial difficulties experienced by councils in the introduction of ABC; interaction with service departments; and the potential need for ITenhancements. Some of the desired advantages are improved quality of financial information making costing data more transparent and relevant to users.

M3 - Article

VL - 2

SP - 43

EP - 54

JO - The Journal of Finance and Management in Public Services

JF - The Journal of Finance and Management in Public Services

SN - 1475-1283

IS - 2

ER -