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MORE COMPETITION FOR COUNCILS' PROFESSIONAL SERVICES

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ANNOUNCED ...
ANNOUNCED

Changes to the rules on Compulsory Competitive Tendering (CCT) for professional services and housing management were announced today by environment minister Paul Beresford.

The decisions, which follow consultation proposals that were published in May, are designed to improve the quality of local authority services and reduce the costs of internal services.

In answer to a written question from David Congdon MP (Croydon North East), Sir Paul said:

'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):-

-- 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 being exposed to competition more than once;

*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;

-- As a result of these two changes, which effectively concentrates competition on local authority labour costs, the competition percentages for Finance and IT services will be 50% and 40% respectively, except for county councils in England where the finance competition requirement will be 40%;

-- 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;

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% 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 below, will restore the amount of white collar work subject to competition to a level first envisaged when the statutory framework was introduced last 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 who have voluntarily sought opportunities to involve the private sector will find that the calculation framework recognises this. Authorities who 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.'

More to follow.

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