This paper studies Comprehensive Performance Assessment, an explicit incentive scheme for local government in England. Motivated by a simple theoretical political agency model, we predict that CPA should increase service quality and local taxation, but have an ambiguous effect on the effciency of service provision. We test these predictions using a difference in difference approach, using Welsh local authorities as a control group, exploiting the fact that local authorities in Wales were not subject to the same CPA regime. We also construct indices of service quality and effciency, using Best Value Performance Indicators. We estimate that CPA increased the effective band D council tax rate in England relative to Wales by 4%, and increased our index of service quality output also by about 4%, but had no signi…cant effect on our effciency indices. There is evidence of heterogenous effects of CPA on effciency, with the electoral and economic characteristics of local authorities mediating the effect, and the "harder test" from 2005-8 having a much bigger effect.