HC Deb 29 March 1993 vol 222 cc54-6W
Mr. Alan W. Williams

To ask the Secretary of State for the Environment (1) what action has been taken to clarify the application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 in respect of the definition of transferral of an economic entity with regard to the compulsory competitive tendering of public services;

(2) what are the reasons for the non-application of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and the EC acquired rights directive with regard to a normal contract let under the compulsory competitive tendering legislation.

Mr. Robin Squire

My right hon. Friend the Chancellor of the Duchy of Lancaster announced on 11 March that he had issued and placed in the Library guidance on the application of the Transfer of Undertakings (Protection or Employment)—TUPE—Regulations 1981 to the market testing of public services, including the contracting-out of local authority services following compulsory competitive tendering—CCT—Official Report, column 648. As the guidance indicates, the contracted-out provision of a service is not affected by the TUPE regulations unless it involves the transfer of an undertaking in the terms of the regulations—that is to say, the transfer of an economic entity which is capable of operating as a going concern, and which retains its identity. Whether or not a particular case of contracting-out following CCT involves such a transfer will depend on the nature of the service in question, and the arrangements under which the contractor carries out the provision of the service.

Mr. Pickles

To ask the Secretary of State for the Environment when he intends to make regulations and issue guidance to ensure that local authorities seek competitive tenders for services in a fair manner.

Mr. Robin Squire

My right hon. and learned Friend the Secretary of State, my right hon. Friend the Secretary of State for Wales and my hon. Friend the Parliamentary Under-Secretary of State for Scotland have today laid before the House regulations made under section 9 of the Local Government Act 1992. These come into force on 10 May, when guidance will be issued.

The regulations and guidance meet our commitment in the Government's Green Paper "Competing for Quality: Competition in Provision of Local Services" to establish a clear statutory framework for compulsory competitive tendering. They will ensure that competition for local services is fair, allowing local taxpayers to receive quality services which offer value for money.

Mr. Lester

To ask the Secretary of State for the Environment whether local authorities in England which are to undergo a structural reorganisation following the Local Government Commission's recommendations will also be required to seek tenders for work under the compulsory competitive tendering legislation.

Mr. Robin Squire

This Government are committed to efficient, effective local government. The work of the Local Government Commission in England and the compulsory competitive tendering—CCT—regime both have an important part to play in achieving this aim.

Reorganisation of boundaries and responsibilities is bound to put extra pressures on local authorities. Moreover, existing arrangements for the provision of services will not necessarily be appropriate for the reorganised authority structure. We therefore intend that local authorities which, following a review by the Local Government Commission, are about to undergo a structural reorganisation, or have recently undergone such a reorganisation, will be exempt for a short period from the obligatory requirements of CCT. In doing so, we also intend to protect the interests of contractors engaged by the local authority.

For those services already subject to CCT under the Local Government Act 1988, local authorities will be seeking to retender work throughout the period over which the commission will be conducting reviews of English authorities. We intend that the local authority undergoing restructuring will be exempt from the statutory requirement to seek competitive tenders before the work can be awarded to their own direct services organization—DSO. This exemption will start from the date at which Parliament approves the statutory instrument making the structural change. New authorities will then be required to start CCT tendering as soon as possible after their setting-up, so as to have new contracts in operation within 18 months of reorganisation, or sooner.

Similar exemption provisions will apply to services subject to CCT under the Local Government Planning and Land Act 1980.

My right hon. and learned Friend announced on 10 November 1992 Official Report, column 743, the Government's intention to extend CCT to local authority construction-related and corporate services. We intend that these services will be brought into the CCT regime from 1995–96, and a detailed timetable will be announced shortly. The Government recognise that it is particularly important for the arrangements for the key corporate services to reflect the structural organisation of the authority concerned.

We therefore intend that, as with services already subject to CCT, any local authority which is undergoing a structural change will similarly be exempt, for the period immediately before and after reorganisation, from the statutory requirement to seek competitive tenders for these services before work can be awarded to their own DSO.

The provisions I have described will not apply to metropolitan districts and London boroughs. Nor will they apply to those authorities which, following review, are not subject to structural reorganisation.

My Department will give careful consideration to the position of authorities which do not fall to be considered by the Commission until after the date at which new services become subject to CCT. The general exemptions described above will not apply to these authorities, but it may nevertheless be inappropriate to introduce com-petition for new services where a reorganisation may shortly follow.

These general exemptions are intended to allow for a smooth transition to successor authorities and the continued effective operation of CCT thereafter. I anticipate they will affect only a relatively small proportion of the contracts let by English local authorities at any one time. They will relieve both local authorities and contractors tendering for this work from the uncertainties surrounding the reorganisation process.

While these arrangements remove the mandatory requirement on the authorities concerned, authorities will have the freedom to continue competitive tendering throughout the reorganisation period, where they judge this to be sensible, and with appropriate consultation with shadow successor authorities.

There are a number of technical issues relating to the reorganisation of DSOs and the protection of existing contractual arrangements. My Department will issue more detailed advice on the operation of CCT where local authorities are undergoing structural change in due course.