Compulsory Competitive Tendering (Hansard, 10 November 1992)

§ Mr. Howard

The citizens charter sets out the Government's commitment to improving the quality and accountability of local authority services through the wider application of competition, to the benefit of the local taxpayer and consumer.

The Government received more than 650 responses to the consultation paper. Respondents made many helpful comments and offered constructive criticism. My hon. Friend the Minister of State for Local Government told the House on 20 May, Official Report, column 144, of our intention to bring forward regulations to secure a clearer framework for compulsory competitive tendering. We have consulted local authorities on our detailed proposals and intend to bring forward regulations shortly.

I have considered responses to our proposals to extend competition with my right hon. Friend the Secretary of State for Scotland and my right hon. Friend the Secretary of State for Wales. We have come to the conclusion that, while some amendment to the original proposals is necessary, a rigorous requirement to seek greater competition is the best way of securing greater efficiency and cost savings in the provision of construction-related services, while guaranteeing a high standard of service to local taxpayers.

We therefore intend to require local authorities to subject to competitive tendering a specific percentage, by 742W cash value, of each of these activities. For construction-related services, we intend that 90 per cent. of work be subject to a competitive requirement, for corporate services the requirement will be broadly in line with proposals made in the consultation paper. It will be for individual local authorities to decide which elements of each service should be market tested in order to achieve this requirement. They will also be free to organise the delivery of these services in the manner most suited to their own needs, and authorities will not be prevented from adopting innovative approaches to service delivery.

We do not intend to introduce a procedure for the separate evaluation of quality for construction-related services, but will allow local authorities to make their own judgments about the trade-off between quality and cost. Nevertheless, we expect authorities to introduce their own procedures to ensure that the evaluation is fair and even-handed, and is seen to be so.

We also intend to make regulations requiring all local authorities to establish an internal accounting framework to identify the true costs of both corporate and construction-related services. This will bring transparency to the cost structure of these services, facilitate the challenging of these costs by internal customers and encourage the development of an internal market, all of which will add to the pressures imposed by competitive tendering.

We intend to require these accounts to be kept from as early a date as possible, but no earlier than April 1994, and to prepare a programme for the early introduction of competitive tendering for construction-related and corporate services. Consideration of the timetable for these changes will take account of preparation time as well as the programme of the local government commission in England and the timetable of changes to local government structure proposed in Scotland and Wales.

The consultation paper also put forward proposals for extending CCT to a number of local authority manual and direct services. My right hon. Friends will be making separate announcements on how these are to be taken forward.

Department of the Environment, Scottish and Welsh Office officials will shortly begin discussions with the local authority associations and representatives of other interested parties on the practical details of the regime I have outlined. I hope that we will be able to work with local government to ensure that efficient, effective competition can lead to a high quality of services for local taxpayers.