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The purpose of this paper is to build on a previous study of strategy in the public sector by Dereli in 2003. In the intervening period the environmental factors influencing local government's approach to strategy have changed considerably, particularly with the government's changed emphasis from best value to comprehensive performance assessment as its methodology for assessing local authorities. The impact of CPA on strategy formation in local authorities is the central focus of this study. The starting point for the research is the question of whether the tension between top‐down and bottom‐up strategy formation which was evident in the earlier study has disappeared, increased or been replaced by other tensions.

The research involved semi‐structured interviews with Chief Executive Officers and middle managers in three smaller local authorities in England.

The research found that living with a top‐down/bottom‐up tension in the creation of strategy is almost a norm, but that there is also evidence of a further tension between strategy making and performance management, from which flow some concerns about the future of strategy in local government.

The paper records the views of local government officers, as key participants in the processes of strategy formation in their authorities as valuable evidence in a changing local government scene. The research acknowledges the external factors creating the new set of tensions in local government, which are examined here. It does not seek to examine the relative diachronic impact of these external factors, a piece of work which could usefully explore further the relation between pressures from the centre and local strategy directions.

In the present public sector context, where major reforms are on the horizon, the paper records a snapshot of opinion from key participants in strategy formation in three smaller local authorities.

This paper aims to initiate debate about the tension between ideologies being played out in local government, as illustrated by the case of the empowerment agenda.

The paper considers a range of evidence from: academic research; government documents; personal perspectives from the author's experience as an elected member in local government; and semi‐structured interviews with a number of senior managers in local authorities in England.

The paper suggests that the development of performance management frameworks for community engagement has been a means to shift the agenda away from democratic representation to a governance agenda around empowerment. This now includes giving a role to the voluntary sector both as the voice of the people and as providers of public services. It is argued that this illustrates a tension between ideologies at work behind the facade of performance management in local government.

The paper can only sample both the extensive range of government output on the community agenda and the academic work in this area over the last few years. Nor is it examining a finished product, as the government is setting up more agencies to develop the work further. The implications of this paper are that there is a need for future academic work to relate accountability and democracy locally to new public management and its connection to the global ideology of neoliberalism.

Paralleling recent work in critical management studies, the paper links the consideration of local/national issues of democratic representation, community engagement and the role of the voluntary sector to the impact of the global ideological framework of neoliberalism.

This paper is based on interviews with four chief executives of district/borough authorities in a two‐tier local government area. The interviews constitute a snapshot of opinion from a group of people ideally placed to relate to the issue under discussion, namely the importance of strategy and strategic partnering for smaller local authorities. The paper considers the extent to which the views of this group develop or interlink with the thinking around strategy, in the literature on strategy in the private sector, and with views of public sector strategic management, particularly in the work and in the critique of the operation of the modernising agenda in the NHS. It concludes that, far from strategy being an irrelevancy to small authorities, it may be that they are ideally placed to provide insights into some of the tensions evident in the strategy debate at all levels.