Direct Labour Organisations (Hansard, 13 May 1996)

§ Mr. Merchant
To ask the Secretary of State for the Environment what action he proposes to take against those local authorities whose direct labour organisations failed to meet their statutory financial obligations in 1994–95. [29186]

§ Mr. Congdon
To ask the Secretary of State for the Environment what action he proposes to take against those local authorities whose direct labour and direct service organisations failed to meet their statutory financial objectives in 1994–95. [29281]

§ Sir Paul Beresford
On 13 February this year, 19 statutory notices were served on eight local authorities concerning the failure of their direct labour and service organisations to meet the required financial objectives in 1994–95. My right hon. Friend has now considered the responses to those notices, and has decided to take action against six local authorities.
Each of the six local authorities which are the subject of today's announcement recorded losses in 1994–95 in excess of £500,000 on work they carried out. The action we have taken today will ensure that, where authorities are failing to put their houses in order, they will have to subject the work to a fresh competition.
In some cases, the in-house team will be barred from competing if it has been a consistently poor performer in recent years. The end result will be either better-run in-house teams or the use of private contractors. This will ultimately be for the benefit of local taxpayers.
The directions take the following five forms: preventing the following authority from carrying out the work after a specified date: Hereford and Worcester (building maintenance). restricting the work carried out by the DSO and preventing the authority from carrying out the remainder of the work if it fails to meet the financial objective in 1996–97 or 1997–98: Burnley borough council (building maintenance). requiring the authority to retender the work and to seek the consent of the Secretary of State if proposing to award the work in-house: Burnley borough council (highways and sewers). preventing an authority from carrying out the work if it fails to meet the financial objective in 1996–97 or 1997–98: the London borough of Southwark (building maintenance). requiring authorities to retender the work if they fail to meet the financial objective in a specified year or years, and to seek the Secretary of State's consent where the work has to be retendered and where the authority subsequently wishes to award work in-house: 321W 1995–96 and 1996–97: Hereford and Worcester county council (highways and sewers), Kingston-Upon-Hull city council (building cleaning, building maintenance and grounds maintenance), and Salford city council (grounds maintenance). 1996–97: St. Helens MBC (highways and sewers). 1996–97 and 1997–98: Burnley borough council (other catering).
The Secretary of State has also decided to take no further statutory action in respect of financial failure in 1993–94 by: New Forest district council (highways and sewers) and Salford city council (highways and sewers and schools and welfare catering). He is still considering the response from Liverpool city council (schools and welfare catering, vehicle maintenance, building cleaning, grounds maintenance and highways and sewers).
In addition to the 19 notices served on 13 February, a further 26 were served on 22 local authorities on 2 April. Responses to these notices are currently being considered, and our decisions will be announced in June. Further notices for financial failure will be issued later in the year, and we expect to have announced all of our decisions by the end of October.
The Secretary of State has also decided to revoke a direction given on 22 August 1995 to Hereford and Worcester county council for schools and welfare catering work, following financial failure in 1993–94.