Councils to be cash competitive

COLIN BROWN

A pounds 250m pilot scheme for local authorities to compete for cash for capital projects, including schools and roads, is to be given the go-ahead by the Environment Secretary John Gummer.

Local authorities made it clear in consultation which ended in the past few days that they were opposed in principle to the extension of the concept of "capital challenge" contests, the brain-child of Michael Heseltine, the Deputy Prime Minister, when he was Environment Secretary.

Gillian Shephard, the Education Secretary, fought strenuously against the competition for funds being applied to schools. A leaked document disclosed that she was fighting Mr Heseltine's initiative, but on 30 January, the DoE announced it was going ahead with the consultation on the plan.

While that represented a partial defeat for the Education Secretary, she has still not conceded that schools will be open to bids for challenge money. It is likely that she will resist any attempt to involve schools.

Local authorities also warned the Government that in addition to their general misgivings, the proposed pilot for a 12-month period was too short. Mr Gummer is expected to heed their warnings when he makes the announcement next month, by extending the scheme beyond a year. He may also amend it to increase the money available.

Under the plan, about pounds 250m will be taken from the pounds 3.5bn normally given to local authorities in spending approvals for capital projects each year, and offered to the best bids.

Mr Heseltine's aim is to persuade authorities to sharpen up their thinking in order to win the money. He believes it leads to a spin-off in projects among the losers, but local councils complain that it is a waste of time and effort for those who fail to win.

Labour is committed to abolishing the competitions for funds, making the pilot scheme in April 1997 an academic exercise, if it wins the election.