Local administrations and the procurement of performance. Evidence from English local authorities

Abstract

This paper theoretically and empirically examines two key aspects of local government performance: (i) the relationship between performance assessment systems and the efficiency of local authorities in delivering public services, and (ii) whether inefficient local authorities can improve their assessment scores by raising more tax revenues thanks to a better local socioeconomic conditions. We address these issues using the Comprehensive Performance Assessment (CPA) program implemented in England (2002–2008) as a case study. We provide insights into the design of performance evaluation frameworks in an era of increasing data transparency. Our two-step approach involves estimating an efficiency index using non-parametric Data Envelopment Analysis (DEA) and analyzing the relationship between technical efficiency and CPA scores through raw correlation analysis and a random-effects ordered probit model. We find that CPA scores are only moderately correlated with efficiency. Additionally, we provide evidence, in line with the theoretical framework, that inefficient councils can improve their CPA scores by increasing property tax rates. However, this strategy proves effective only under favorable local conditions. These findings offer valuable guidance for policymakers and local authorities in navigating the trade-offs between fiscal strategy and performance outcomes.