HC Deb 12 November 1996 vol 285 cc105-7W
Mr. Congdon

To ask the Secretary of State for the Environment what proposals he has, following the consultation, to vary any of the proposals to tighten up the compulsory competitive tendering framework for local authority professional services and housing management which he announced in May. [4112]

Sir Paul Beresford

The Secretary of State is today writing to the local authority associations to consult them on draft regulations which we intend to put before the House early in the new year. The Welsh and Scottish Offices are also writing in similar terms. These draft regulations will amend the existing CCT framework for local authorities, other than police authorities in England and Wales. The Government will be considering whether to make comparable changes to the CCT regime for police authorities and will be consulting the relevant associations.

These draft regulations incorporate the proposals which we put forward earlier this year, except that they will include five main variations in respect of English authorities—there are minor differences in the variations for Scotland and Wales: (a) The means by which authorities calculate the amount of work which must go out to competition to exclude the need for credits and allowances which prevent work from being exposed to competition more than once; (b) Goods and services which are "bought-in" will be recognised in the new formula. Where work has been awarded after a competition, this will directly work towards satisfying the amount which must be exposed to competition; (c) As a result of these two changes, which effectively concentrates competition on local authority labour costs, the competition percentages for finance and information technology services will be 50 per cent. and 40 per cent. respectively, except for county councils in England where the Finance competition requirement will be 40 per cent. (d) On housing management, the "de minimis" level is reduced in due course to 2,500 properties as proposed, but not further reduced to 500 properties as originally proposed; (e) Authorities are given 18 months from the new regulations coming into force to meet the new requirements on finance and housing management.

These variations address the major concerns that local authorities put to us in the consultation exercise, namely, that the calculation framework remained unclear in the light of our intention to abolish certain credits and allowances, that the proposed 65 per cent. competition percentage on finance cut too deeply into core services and did not recognise differences in the functions of different local authorities, that a 500 property de minimis figure for housing management might mean competitions which cost more than they saved, and that, because local authorities were unprepared for competition beyond the existing CCT requirements, they needed more time than proposed to meet the higher requirements.

The revised package of changes, which is summarised in the table, will restore the amount of white collar work subject to competition to a level first envisaged when the statutory framework was introduced lat year, with an increase in the volume of work where subsequent experience has shown the market is well placed to respond. It will mean we have a much more robust CCT framework which will force authorities to put the interests of local taxpayers first. Local authorities that have voluntarily sought opportunities to involve the private sector will find that the calculation framework recognises this. Authorities that are reluctant to expose work to competition will find it much more difficult to use flexibilities within the rules to avoid competition. External auditors will also have a clear basis for checking local authority calculations.

Type Activity Details
1 Credit All Amend credit on work for LMS and DSM schools
2 Credit Personnel Amend credit on Grant for Education Support and Training
3 Calculation/Allowance All Abolish 'double-counting' of work in totals and allowance
4 Credits All Abolish credits on work done in support of DSOs and DLOs
5 Calculation/Allowance All Abolish 'pre-shrunk allowance'; create credit for indirectly contracted-out expenditure applied before competition percentage in CCT calculations
6 Allowance All Replace 'Bought-in Goods & Services allowance with BIGs credit applied before competition percentage and credit for work awarded under CCT applied after the competition percentage
7 Competition Percentage Finance Increase percentage from 35 per cent. to 50 per cent. (40 per cent. in English County Councils)
8 Competition Percentage Personnel Increase percentage from 30 per cent. to 40 per cent.
9 Competition Percentage IT Reduce percentage from 70 per cent. to 40 per cent.
Type Activity Details
10 De Minimis Construct & Property Reduce from £450,000 to £300,000
11 De Minimis Personnel Reduce from £400,000 to £300,000
12 De Minimis Housing Management Set level at 4,000 properties in England reducing to 2,500 properties. In Wales and Scotland the 2,500 properties figure comes into effect when the regulations take effect.
13 Exemption Security work Increase cut-off from 51 per cent. to 81 per cent.
14 Allowance Vehicle management Abolish allowance