§ Mr. HendryTo 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 objectives for 1992–93.
§ Mr. BaldryIn March this year, 27 statutory notices were served on 12 local authorities concerning the failure of their direct labour organisations to meet the required financial objective in 1992–93. Further notices were served in May and others will be served over the next few months.
My right hon. Friend has now considered the responses of those authorities on which notices were served on 21 March.. He has today given directions to East Cambridgeshire—other catering; East Yorkshire—building maintenance, highways and sewerage; the London borough of Haringey—highways and sewerage; Hastings—highways and sewerage, ground maintenance, other catering; Maidstone—building maintenance and sport and leisure management; and North Hertfordshire—ground maintenance.
These directions take three different forms:
Preventing authorities from carrying out the defined activities after September 1995 if they fail to meet the required financial objectives for the work during the current year, 1994–95. East Yorkshire, Maidstone (building maintenance) and North Hertfordshire were given directions of this sort.Requiring authorities to seek the Secretary of State's consent if they wish to award work on the defined activity to their DLO following retendering which is currently underway. East Cambridgeshire, Hastings and Maidstone (sport and leisure management) fall into this category.Preventing the authority from carrying out elements of the defined activity through its own DLO. Haringey's direction fell into this category.The Secretary of State has also decided to take no further statutory action in respect of financial failure in 1992–93 by:
Huntingdonshire (ground maintenance), Lancashire (ground maintenance), North Hertfordshire (sport and leisure management, vehicle maintenance), Sheffield (building cleaning, school and welfare catering) and Staffordshire Moorlands (ground maintenance) because they met their financial objectives in 1993–94;Mid Bedfordshire (sport and leisure management) because the work in question is to be contracted out.He is still considering responses from Burnley borough council—building maintenance, ground maintenance, new construction work, other catering, other cleaning, refuse collection; and from Sheffield City Council—refuse collection, other cleaning, and other catering.
I am pleased to say that the majority of DLOs operate successfully, and provide a cost-effective service to local taxpayers. Local authorities have now had over five years' experience of CCT—over 10 years in the case of building and construction work. There is no reason why all DLOs 346W should not be able to operate to the prescribed financial standard. The number of notices being served this year reflects the fact that we are now taking statutory action against all DLOs recording any significant financial failures. I am also pleased to note that, in many cases where financial losses have been incurred, local authorities have taken prompt action to put matters right.
§ Mr. HendryTo ask the Secretary of State for the Environment when he intends to make regulations to extend compulsory competitive tendering to all local authority highway work by abolishing the present competition-free allowance.
§ Mr. BaldryRegulations made under sections 7, 9 and 23 of the Local Government, Planning and Land Act 1980 amending the Local Government (Direct Labour Organisations) (Competition) Regulations 1989 were laid before the House on 10 June. These come into force in England on 1 April 1995. The Government have consulted representatives of local authorities on these proposals, and the start date of 1 April 1995, seven months later than first proposed, reflects authorities' comments and allows additional time for authorities to carry out tendering.
The regulations abolish the present 40 per cent. competition-free allowance for small general highways jobs undertaken by local authority direct labour organisations and remove the exemption from competition of winter maintenance work. Recent Audit Commission research showed that the progressive extension of competition for highways work had produced cost savings while maintaining standards of service. These amendments are in accord with the Government's aim to increase the areas of local authority work subject to competition to promote greater efficiency, to give greater value for money to local taxpayers, and to improve the quality of services.
§ Mr. HendryTo ask the Secretary of State for the Environment if he will make a statement on the Government's proposals for the extension of compulsory competitive tendering to further local authority services.
§ Mr. BaldryCompulsory competitive tendering is being extended to six professional support services, in a phased programme—legal services, professional construction and property services, IT, finance, personnel, and corporate and administrative services. Detailed proposals for each service are being developed in close and very productive consultation with the local authority associations, the Audit Commission, the Accounts Commission for Scotland and the Chartered Institute of Public Finance and Accountancy. The Government also propose to extend CCT to three further manual services—management of on-street parking, security work and vehicle management.
Detailed consultation proposals for legal CCT and for the manual services were issued by my Department on 15 December 1993 and 16 November 1993 respectively. The Government have now considered the responses received from local authorities, the Law Society and other interested parties, and I have today tabled an order under section 2 (3) of the Local Government Act 1988 which will provide, subject to resolution of both Houses of Parliament, for these services to become "defined activities" for the purpose of CCT.
I hope that the debates on the order will take place shortly. Subject to Parliament's approval of the order, the 347W Government will then make regulations under section 6 (3) of the 1988 Act, to establish the competition requirement and start dates.
As regards legal services, the Government have concluded that the proportion of authorities' legal activity to be subject to CCT should be 45 per cent., as suggested in the consultation proposals. I have carefully considered the suggestion that the competition figure should be lower, but I feel confident that the proposed figure—subject also to a minimum in-house provision of £300,000 to safeguard the position of small authorities—will enable authorities to gain the benefits of competition across a wide range of their legal work, while ensuring that authorities can maintain the necessary in-house legal expertise. The minimum figure of £300,000 will be reviewed periodically to ensure that it continues to meet its purpose.
The Government propose that authorities will be able to count the following categories of legal work towards meeting their CCT requirement: work carried out in-house following a voluntary competitive exercise; work carried out for locally managed schools; legal work related to housing management, where this service will become subject to CCT at a later date for the authority in question; legal work in support of other local authority activity which itself has been exposed to CCT and legal work already contracted out.
In response to comments received, the draft order provides that, where individual members of staff spend less than 50 per cent. of their time on legal work, their time will not be included in the authority's aggregate of defined legal activity. We propose that the same cut-off figure will apply to the other professional support services also. This will reduce the administrative effort of operating CCT.
We also propose that legal services will become subject to CCT from April 1996 in the London boroughs and English metropolitan districts. This will, I believe, allow authorities good time to prepare specifications and carry out tendering. For the English shire authorities, CCT will come into effect following local government review and the determination of each authority's new structure. Separate timetables will apply in Scotland and Wales.
CCT requires authorities to operate free and fair competition. My Department will this week be issuing guidance to local authorities and others on the conduct of tendering for white collar services. This guidance reflects valuable comments received on the consultation draft, and it emphasises that quality of service should be fully considered alongside price, in selecting the best tender proposal.
The Government have also considered responses to the consultation proposals issued on 22 February 1994 for the internal accounting framework to accompany the introduction of professional CCT. As indicated in the consultation proposals, authorities will be required to establish and publish a "Statement of Support Service Costs" as part of their annual accounts. Regulations under section 23 of the Local Government Finance Act 1982 to this effect will be made shortly. The new statements will identify the costs of each of the six support services to an authority, providing local taxpayers and authorities' members and managers with valuable new information. In order that SSSCs can cover all six support services from the outset, SSSCs will start in 1995–96 for the London boroughs and metropolitan districts. For the shire authorities. SSSCs will come into effect following local government review. The Chartered Institute of Public 348W Finance and Accountancy is writing guidance material to assist authorities prepare SSSCs, which it expects to complete and publish in the autumn.
As the Minister for Transport in London and I told the House on 30 March—Official Report, columns 755 and 867, the three further manual services will become subject to CCT from October 1995 in the London boroughs and metropolitan districts, and following local government review in the case of the English shire authorities. The definitions of the further manual services have been clarified, following comments on the consultation proposals. We are discussing further with the local authority association provisions for exempting security work undertaken under byelaws which grant local authority officers powers of enforcement. I will make a further announcement in due course.
Some 266 responses were received on the consultation proposals for legal CCT, 114 on those for the internal accounting framework, and 200 on those for the manual services. I have placed lists of responses in the Library.