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PRIVITISATION OF SERVICES MAY BREACH EC DIRECTIVES

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Councils may be breaching European Community legislation when they sell off services to the private sector, a publi...
Councils may be breaching European Community legislation when they sell off services to the private sector, a public procurement law expert has told LGC. Brian Clark, a solicitor with Masons, believes many of the deals which have already gone through and others being negotiated may fall foul of the EC Works and Services Directives. He argues that deals in which councils offer work bundled up in a package involving the sale of a council service are questionable. 'Any sale of a direct service organisation which has attached a guarantee of work clause in which the purchaser is entitled to receive the work of the vendor for a given period of time is more than likely to be in breach of the EC procurement regime', said Mr Clark. 'This is because the EC Service Directive only caters for the letting of competitive tenders for the provision of services. It does not provide for a situation where the service provider bids and pays to the contracting authority a sum of money in return for a guarantee of work for a given period of time'. Hertfordshire CC Director of Law and Administration Bill Church disagreed. He said Mr Clark was wrong to assume externalisations in local government necessarily resulted in the council receiving money. The council is currently negotiating the privatisation of its highways and grounds maintenance operation. It is asking companies to bid to take over the DSO's work and give it a discount. The council will expect the successful company to take on its staff. Mr Clark also argues any requirement that a company take over a council organisation could be seen as anti competitive to foreign companies. Mr Church said the reverse was arguable and local companies may be the ones disadvantaged.

If they already had a local base they may not want to take over a council operation. Essex CC Assistant Clerk Derek Beer said Mr Clark's argument did not take into account the Transfer of Undertakings (Protection of Employment) Regulations 1981. If a company took over council work it was likely to constitute a TUPE transfer so it would have no option but to take over the existing workforce, he said.
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