Compulsory Competitive Tendering (Hansard, 7 June 1995)

§ Mr. Robert B. Jones

In August 1994, my Department issued a consultation paper inviting comment on the minimum and maximum contract periods for work then subject to the Local Government Act 1988. In it, we asked252W whether, in the light of experience, the existing statutory minimum and maximum contract periods need to be changed. The responses were mixed, but after careful consideration I have decided that changes to the existing contract periods are needed.

I have today issued to the local authority and trade associations for consultation a draft set of regulations which will increase the minimum and maximum contract periods for a number of defined activities subject to CCT. The new periods will apply except where the work consists wholly or mainly of work for education establishments.

The new contract periods are as follows, with old periods in brackets:

Years
	New Minimum period	New Maximum period
Collection of refuse	6(5)	10(7)
Other Cleaning	5(4)	10(6)
Maintenance of grounds	5(4)	7(5)
Repair and Maintenance of vehicles	5(4)	7(5)
Managing sports and leisure	5(4)	10(6)

There will be no change to the minimum and maximum contract periods for building cleaning, school and welfare catering or other catering services. The changes will also not affect the recently introduced new manual services or white collar services. The contract periods which will apply to contracts for work wholly or mainly at educational establishments shall be unchanged from those which previously applied to authorities with educational functions.

A number of respondents observed that it seems illogical that, for some services, shorter contract periods apply to work tendered by an authority with education functions even where the contract in question does not involve any work at an educational establishment. Therefore, separate contract periods will no longer be specified for local education authorities as a whole. Instead the shorter contract periods shall apply only to contracts consisting wholly or substantially of work for educational establishments.

There can be no doubt that longer contracts will provide a greater incentive to contractors to invest in the services which they provide and thus improve the quality of those services. They will also reduce the average cost of that investment by allowing it to be spread over a longer period. In addition, contractors have indicated that, as longer contracts are of greater value to them, they would be more likely to bid for work if contract periods were to be increased. Improved levels of competition will ensure that bids are more competitive and local authorities will have more choice in deciding who to invite to bid. The combined effect will be to improve greatly the value for money which is obtained in the provision of local authority services.

Longer contract periods will also encourage local authorities and tenderers to take a longer view when making plans for service provision. The greater stability and continuity which longer contracts provide will assist in the planning of long-term projects such as recycling schemes.

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However, we do not intend to increase the minimum contract period of any service by more than one year. Instead, we propose to make significant increases to the maximum contract periods for certain services to allow local authorities the discretion to tender longer contracts where it is beneficial to do so.

These changes will not affect tenders in progress for which a tender notice specifying a contract period has already been published.

An announcement about Wales will be made by my right hon. Friend the Secretary of State for Wales shortly.