Can local governments buy a good performance evaluation? Theory and evidence from the comprehensive performance assessment of English local authorities

The use of Comprehensive Performance Assessment (CPA) to monitor the performance of 148 English local authorities (unitary and two-tier) between 2002 and 2008, and reward good performers with lower central intervention was a unique policy experiment. Taking advantage from the English assessment procedure this paper studies, both theoretically and empirically, two issues: 1) the relationship between CPA scores and local government efficiency in the provision of local services; 2) the fiscal behaviour of local authorities to verify under what conditions inefficient councils can "buy" better CPA scores increasing their property tax rate. Final results show that councils’ efficiency is only moderately correlated with CPA scores (a Spearman correlation around 0.30), and inefficient local authorities can "buy" better CPA scores only if favoured by a good local context.