LOCAL AUTHORITY SERVICES: CCT (Hansard, 14 June 1994)

§ The Earl of Arran

Compulsory competitive tendering (CCT) 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.

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Detailed consultation proposals for legal CCT and for the manual services were issued by the Department of the Environment on 15th December 1993 and 16th November 1993 respectively. The Government have now considered the responses received from local authorities, the Law Society and other interested parties, and 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.

We hope that the debates on the order will take place shortly. Subject to Parliament's approval of the order, the 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. We have carefully considered the suggestion that the competition figure should be lower, but feel confident chat 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 LMS 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 administra-tive 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 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. The department will this week be issuing guidance to local authorities and others on the conduct of tendering for white collar services. This guidance 91WA 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 22nd 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 (SSSC) 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 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 of State for Transport in London and the Parliamentary Under-Secretary of State for the Environment told the House on 30th March [Official Report, cols. 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 by-laws which grant local authority officers powers of enforcement. We will make a further announcement in due course. Two hundred and sixty six 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.