This paper examines the Beacon Council Scheme as a distinct policy element within the UK government's wide-ranging local government modernization agenda. The aim of the Beacon scheme is two-fold. First, reward for high performing councils and second, the achievement of substantial change by sharing `best practice' from identified centres of excellence. The scheme pressupposes an implicit theory of organizational change through learning. The Beacon Council Scheme is based on the assumption that the organizational preconditions exist which will facilitate learning, and through its application to practice, improve service delivery. The paper analyses the presumed and possible conditions which facilitate or impede interorganizational learning and service improvement through the scheme. The paper then examines empirical data from 59 local authority elected members and scheme during the first year of its existence. The data indicate that there are differing motivations for participation in the scheme and that these reflect different learning needs. The experiences of local authority participants suggest that the formulators of the dissemination strategy at the heart of she scheme have not yet given sufficient consideration to the processes of interorganizational learning, the conditions that support such learning between authorities and the embedding of new understandings, practices and organizational cultures in the receiving authority. This suggests that the underlying theories of organizational learning and cultural change may be insufficiently develop to create and sustain the kind of tranformational change t hat is intended by central government