Comment: More equal than others, by Akash Paun

Central government has promised an equal relationship with its local counterparts through Local Area Agreements. But councils resent what they see as Whitehall's continued attempts to tell them what to do

Central and local government can appear like a crotchety old married couple. The controversies over Children's Secretary Ed Balls' intervention in the Baby P episode and Prime Minister Gordon Brown's announcement of a new wave of council-house building are two reminders of the interlocking nature of national and local politics.

Bicker though they might, divorce is not an option, so Whitehall and town hall both know they must ultimately find a way to get on. Relationship breakdown would be disastrous for public services.

Whitehall, ever the dominant partner, has recently launched a charm offensive, promising a new relationship of equals instead of control from the centre. This rhetoric of partnership forms the basis of the 150 Local Area Agreements signed across England last year.

Each of these consists of up to 35 jointly agreed local targets - on measures selected from the National Indicator Set, which covers everything from obesity levels to carbon emissions - plus a few mandatory education targets.

The revamped system integrates local and national targets into a framework that the then chief secretary to the treasury, Andy Burnham, promised would be 'more streamlined... more local... more collaborative... and more ambitious'.

Assessment by the Audit Commission of local areas' performance begins this spring but the early evidence, as discussed in the Institute for Government report Performance art, raises questions about the new framework's capacity to live up to its lofty ambitions.

Certainly, the LAA framework can lay claim to being more streamlined: councils were once assessed against up to 1,200 indicators. However, data must still be reported for all 198 national indicators, as well as legacy targets from previous settlements.

As a result, there is scepticism that the new system has enabled a meaningful shift of resources to frontline services. One council's housing director complains: 'You really can't underestimate how much time is spent collecting indicators we don't use, number crunching, checking data processes and conducting audits.'

Yet it is not targets and measurement themselves that are the problem. As one council chief executive puts it: 'The lesson of performance management has been taken at local level.' This is reflected in the additional targets many areas have voluntarily committed to, such as Leeds' commitment to raising the number of cycle journeys into its congested city centre.

What causes resentment are attempts to tell authorities what their priorities should be. Anecdotes abound of central government throwing its weight around - one official recollects how individual Whitehall departments disrupted negotiations with last-minute demands to include 'their' indicators.

The new framework was intended to foster partnership working - with organisations such as the police, primary care trusts and the voluntary sector. The logic is sound. Without co-ordination across institutional boundaries, complex 'wicked issues', such as the number of Neets (young people not in employment, education or training), will remain intractable.

However, despite the statutory 'duty to co-operate', the incentives for innovative cross-sector action might be too weak. Too much money remains tied up in specific grants rather than pooled funds - and too little is available to reward partners for meeting targets.

The system is also crude, failing to base rewards on overall savings to society (such as the estimated £14,000 saved in a year for every teenage pregnancy avoided).

Neither has the new system solved the problem of fragmentation in Whitehall, such as the tension between the Department for Children, Schools and Families' indicator of reducing the number of children entering the criminal justice system and the Ministry of Justice's objective of increasing the number of offences punished.

The recession and associated spending squeeze might exacerbate such problems. When each organisation is fighting to maintain its own budget, requests for resources to fund innovative joint programmes will not cut much ice.

Whitehall might also lose its taste for a light-touch approach as pressing economic and political pressures are deemed to require a strong national response. At the same time, local government is unlikely to accept any rollback of autonomy when it is predicted to face real-terms funding cuts.

This does not augur well for the health of the central-local relationship. Yet the stakes are high. Strengthening the existing framework to facilitate effective co-ordination between all parts of government will be vital to prevent economic problems leading to the social and behavioural breakdowns of previous downturns.

Akash Paun is a senior researcher at the Institute for Government and co-author of its recent report Performance art: enabling better management of public services