24/02/2021
LA Spotlight
February – a month of change and challenge
The local authority sector remains in constant state of change and challenge, and February remained no different with the announcement of the revoking of the Exit Payment Cap. The Restriction of Public Sector Exit Payments Regulations 2020 SI 2020/1122, which came into force on 4 November 2020 and set a £95,000 cap on exit payments for public sector employers, had been much criticised and have been the subject of judicial review challenges which were due to be heard in March this year. However, the Government has now decided that the Regulations should be revoked. An HM Treasury Direction has been published that will disapply the cap until the Regulations have been revoked. The Government has also published guidance stating that any employee who was affected by the cap while it was in force should request the amount he or she would have received had the cap not been in place by contacting his or her former employer directly. The Government is encouraging employers to pay these additional sums.
February also saw the spotlight shine on the challenge of empty homes, with campaigners and local authorities taking part in National Empty Homes Week. The Government remains under pressure from organisations including Action on Empty Homes, to increase local authority powers to further tackle the problem of long-term empty properties. The latest statistics from Shelter show 280,000 people in England are homeless, while the number of empty homes stands at more than 648,000 – of which 225,845 have been empty for longer than six months. Local authorities have many tools available to assist in achieving a reduction in empty homes within their community, and the Week offered the opportunity to reflect on what more needs to be done to help meet housing need and address concerns of residents about neighbourhood blight. Many successes were showcased including Hinckley and Bosworth Council who implemented enforced sales to claim back monies owed from remedial works and the subsequent cost of selling the property.
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- Place & Growth Rebecca Pendlebury & Vicky Maher
- Governance & Reorganisation David Kitson & Victoria Barman
- Contract Management Richard Lane & Liz Fletcher
- Disputes & Regulatory Support Olivia Carter & Judith Hopper
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Delivering Value
Have your say - CIPFA consults on the Prudential Code
CIPFA has this month, issued a consultation on its proposals to strengthen The Prudential Code for Capital Finance in Local Authorities (2017). This follows the completion of HMTs consultation on Public Works Loan Board (PWLB) borrowing the results of which were published at the end of 2020 and which limit access to the PWLB for local authorities found to have engaged in controversial debt-for-yield activities. Bevan Brittan reported on the PWLB reform last month and our full comments on the consultation can be found here.
The proposed shake-up of the Prudential Code follows the lead of PWLB reform by clarifying the misinterpretation of the existing rules that has left some authorities over extended and clarifying restrictions on borrowing to fund purchases solely to make an investment return: “debt-for-yield”. Local authorities should have regard to the Prudential Code in formulating their capital investment plans and therefore the updates might help to clarify some of the less clear elements of the changes to the PWLB borrowing rules.
If we are re-imagining a post-Covid world in which local authorities demonstrate community leadership and seek to support the local economy through economic, social and environmental regeneration and development of infrastructure and housing to meet the needs of the local population, they will certainly need to borrow to fund that local development. The proposed changes to the Prudential Code aim to clarify the decision making process when entering into such arrangements and identify areas outside the discretionary powers of local authorities.
Overall, the market remains buoyant for local authorities seeking to raise finance in the capital markets as they are quite rightly considered safe and secure borrowers. These new clarifications will focus the attention of authority decision makers and lenders on ensuring borrowing and investment is properly considered with less scope for stand-alone investment in commercial property and more focus on what outcomes can be achieved for the local economy and long term sustainability, over and above just commercial return.
Responses to the consultation are sought by 12 April 2021.
Publications and Guidance
Prudential Code Consultation
CIPFA | February 2 2021
CIPFA has announced a consultation for the Prudential Code for Capital Finance in Local Authorities (2017) (Prudential Code) to be updated. There will be a full opportunity for the sector to comment on the proposed changes, and offer views to support the strengthening of the Prudential Code. In response to the recommendation of the Public Accounts Committee and the substantial increase in commercial investment, CIPFA is proposing to strengthen the provisions within the code. The closing date for responses is April 12 2021.
Shifting the balance: Local adaptation, innovation and collaboration during the pandemic and beyond
New Local | January 27 2021
This is an investigation into the new community-powered approach, where people across localities worked together to achieve shared objectives as the Covid-19 crisis unfolded. It includes case studies.
Councils concerned over Covid-19 election costs
Public Finance | January 25 2021
A survey of council leaders, chief executives and democratic services officers conducted by the Local Government Information Unit showed that 83% of respondents supported postponing the forthcoming polls. However, 64% called for additional ring-fenced funding to help hold the elections if the government decides not to postpone them.
Local Government financial resilience
House of Commons Briefing Paper | January 22 2021
The briefing paper summarises concerns around local authority financial resilience, which increased in the late 2010s. It begins by setting out the accountability framework within which local authorities operate, including the accountability system operated by the Ministry of Housing, Communities and Local Government (MHCLG), and statutory codes of practice: the Prudential Code, treasury management guidance, guidance on local authority investments, and guidance on minimum revenue provision.
2/2021: Council Tax information letter – 21 January 2021
Ministry of Housing, Communities & Local Government | Updated January 11 2021
This letter sets out the impact on the design of Local Council Tax Support schemes of the Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations 2021. This letter also highlights the guidance for creditors recently published by the Insolvency Service ahead of the commencement of the Breathing Space scheme on 4 May 2021.
Coronavirus (COVID-19): emergency funding for local government in 2020 to 2021 and additional support in 2021 to 2022
Ministry of Housing, Communities & Local Government | Updated January 11 2021
Allocations of additional funding to local authorities in the financial year 2020 to 2021 and additional support for local government in financial year 2021 to 2022.
Legislation
School and Early Years Finance (England) Regulations 2021 (SI 2021/59)
These Regulations which are coming into force on February 11 2021, make provision for local authorities’ financial arrangements in relation to the funding of maintained schools and providers of funded early years’ provision in England, for the financial year 2021-2022. They also make an amendment to the Schools Forums (England) (Coronavirus) (Amendment) Regulations 2020. The School and Early Years Finance (England) (No. 2) Regulations 2018 are revoked. The School and Early Years Finance (England) Regulations 2020 remain in force.
News
Reading halts commercial property investment programme | Public Finance
Public Finance | February 17 2021
Third council joins shared back office partnership | Local Government Chronicle (LGC) (lgcplus.com)
LGC | February 17 2021
Council agrees £89m property drive using internal resources | Public Finance
Public Finance | February 11 2021
Jenrick confirms local government finance settlement for 2021-22 | Local Government Chronicle (LGC) (lgcplus.com)
LGC | February 4 2021
Councils predict £2bn black hole due to business rate appeals | Public Finance
Public Finance | February 2 2021
New £40m fund launched to support victims of abuse
LocalGov | February 1 2021
The Government has launched a £40m fund to help victims of rape and domestic abuse during the pandemic. The new fund will allow support organisations to recruit more staff, keep helplines open for longer and adapt to remote counselling where necessary.
Pandemic has exposed how 'fragile' social care system is, report warns
LocalGov | January 29 2021
A new report warns the pandemic has highlighted 'the failings and underlying weaknesses' of the social care system, which must be drastically overhauled
Report sets out need for new digital operating model
LocalGov | January 21 2021
A report, Connected Citizens .published by Public Policy Projects, in partnership with Anderson Strategy and Huawei, sets out the vital need to create a network of cutting-edge digital infrastructure across the UK. It emphasises the need for a long-term digital skills strategy that centres on reforming the education system at all levels, and argues this new digital operating model must also mandate greater information and data sharing amongst local authorities, relevant stakeholders and digital operators.
Councils welcome £148m funding boost to cut misuse of drugs
LocalGov | January 20 2021
Blackpool, Hastings, Middlesbrough, Norwich and Swansea Bay will trial the new tougher policing of drug crime and enhanced drug treatment and prevention services. This is Project Adder - which stands for Addiction, Diversion, Disruption, Enforcement and Recovery, and will bring together local councils, the police and health services in areas with some of the highest rates of drug misuse.
Council chiefs welcome £120m boost to social care workforce
LocalGov | January 18 2021
Local authority leaders have welcomed a multi-million-pound funding boost from the Government which is aimed at supporting an over-stretched adult social care workforce. The Department of Health and Social Care (DHSC) has announced that £120m would be made available to councils to help them provide additional care staff where shortages arise
Review pledges to radically reform children's social care
LocalGov | January 15 2021
Council chiefs and the LGA have welcomed the launch of an independent review into children’s social care which aims to raise outcomes for vulnerable children and radically reform the system. It will address major challenges such as the increase in the number of looked after children, the failure of the system to provide enough stable homes, and the inconsistencies in children’s social care practice.
Six areas secure funding to develop local health partnerships
LocalGov | January 14 2021
Six areas in England have been chosen to take part in a programme aimed at tackling health inequalities and improving the wellbeing of local communities.
Place & Growth
Key recommendations from the 'Lessons from Major Projects and Programmes' report
A recent report from The House of Commons Committee of Public Accounts has highlighted concerns as to the delivery of major infrastructure projects in this country, with the Infrastructure and Projects Authority (IPA) confirming that around three quarters of all major projects are either delivered late or with significant costs overspends.
The Committee delivered the report, entitled “Lessons from Major Projects and Programmes”, against the backdrop of the ambitious plans set out by the government in the March 2020 budget for £600 billion of gross public capital investment by 2025, as well as a commitment to be net zero carbon by 2050.
Given these ambitions, the public accounts committee raised concerns about “the value for money risks resulting from the significant increase in investment, speed of delivery and changes to how government makes investment decisions... This Committee questioned the ability of both government and the private sector to deliver large increases effectively and efficiently”.
The Committee referred to earlier reports on major projects and programmes and noted “We see many of the same difficulties time and time again – such as programmes not keeping to cost or schedule, a lack of transparency in their progress, and weakness in leadership and governance”.
The Committee was keen to stress that procurements should not be rushed in the effort to deliver major infrastructure.
The report presented a series of conclusions for the reform of large-scale infrastructure project delivery. The key recommendations (and our observations) are set out below.
Procurement process
For the procurement phase, the Committee recommended:
- Rigorous option appraisal, and meaningful engagement with the public and stakeholders, before committing to a project’s scope. We frequently see disputes arising where, for example, time pressures on funding have meant the procurement process has been rushed. Identifying the scope of a project early on reduces the risk of disputes around scope later.
- Front end development of programmes. Again, the more the programme is developed during the procurement phase, the more accurate picture the parties will have as to an achievable timescale. Delays can have a significant financial impact for both the procuring party and the winning bidder – establishing a realistic programme lessens the chance of difficult conversations around timescales further down the line.
- Standardisation of costs estimates, and the ability to review and benchmark costs. The Comptroller and Auditor General recommended the use of ranges of estimates, which can narrow through the procurement process so that, for example, as a programme goes to outline business stage the range is 25% to 30%, with a costs estimate with an accuracy of plus or minus 10% by the final business case stage.
Delivery Phase
The Committee identified the following issues:
- Skills, Leadership and capacity. The public sector face a perennial challenge around not only skills shortages, but also individuals charged with delivering projects also “not being afforded the time in role to do the necessary work”. Managing project delivery requires rigorous contract management from both parties.
- Data analysis. The ability to review and track data measuring performance is critical. Many project agreements will contain contractual requirements for the delivery of management information and performance reports from the contractor/ supplier. Transparency around data allows an early identification which can be critical in managing issues early on to avoid significant disputes further down the track.
- The Committee wanted greater transparency as to progress with the projects. Whilst its primary focus was on parliamentary accountability, it also discussed the importance of transparency when it comes to budgets, timescales and capability. The Committee appear to have issued a broad call for open and frank discussion relating to all areas of major projects from the beginning of their life-cycle in order to ensure value for money for the taxpayer.
The report highlights common themes and challenges around successful procurement and delivery of major projects.
Successful project delivery requires:
- A well-developed procurement process, with a clear understanding of the objectives for all stakeholders
- A thorough appraisal of procurement procedure options to deliver the project
- A pragmatic approach to available data on costs and assets, to encourage funders and lenders to invest
- A commercial and technical understanding of the potential risks, and contractual solutions for how to manage those risks
- Anticipating needs and contingencies that may arise over the life of the project so as to future proof the specification as far as possible
- A focus on communication and transparency throughout project delivery
- A clear understanding of relief measures available for non-delivery, and
- A strategy for what steps will be taken if things do go wrong.
The delivery of infrastructure, with the public and private sector working together, creates opportunities for economic and social growth, as well as community cohesion.
Our market leading infrastructure teams are experts in delivering successful projects across all sectors including health, education, transport, leisure, energy, waste, social infrastructure and IT. We work with our clients from inception and choice of procurement, through to the tender process, complex contractual negotiations, contract management, dispute avoidance and (if necessary) dispute resolution.
Publications and Guidance
National Planning Policy Framework and National Model Design Code: consultation proposals
Ministry of Housing, Communities and Local Government | January 30 2021
The consultation seeks views on draft revisions to the National Planning Policy Framework. The text has been revised to implement policy changes in response to the Building Better Building Beautiful Commission “Living with Beauty” report.
The charter for social housing residents
White paper: Ministry of Housing, Communities and Local Government | Updated January 22 2021
Sets out the actions the government will take to ensure that residents in social housing are safe, are listened to, live in good quality homes, and have access to redress when things go wrong.
The future of public transport
Local Government Association (LGA | January 18 2021
Research commissioned by the LGA to initiate a debate on the future of public transport in England, outside of London, with a focus on local bus services. This report aims to begin to understand what ambitions councils have for the future of their local transport provision, what levers they have to enable that ambition, what barriers have prevented them from making it a reality before setting out what needs to change in order to build the public transport networks that are needed.
Tackling the under supply of Housing in England
House of Commons Briefing | January 14 2021
This paper considers key trends in supply of housing in the UK and focuses on some of the chief barriers and potential solutions to increasing supply in England. It refers to proposals in the Housing White Paper (February 2017) and in Planning for the Future (August 2020) and has been updated to include subsequent developments.
News
Key Cities group welcomes four new members
LocalGov | February 3 2021
Bath, Exeter, Lincoln and Wrexham - have joined the Key Cities group. The organisation said the new members will further strengthen the network’s ability to influence national policy, share and scale new ideas, and drive economic and social growth.
Councils urged to bid for extended electric vehicle charge-points funding
LocalGov | February 2 2021
The funding – which is available under the On-Street Residential Charge-point Scheme (ORCS) for 2021/22 - will cover 75% of the capital costs of procuring and installing the charge-point and an associated dedicated parking bay if required.
Government announces £93m investment for road upgrades
LocalGov | February 1 2021
The Government has confirmed £93m for three major road upgrade schemes across the country, including two schemes funded as part of the major road network.
One of London’s biggest estate regeneration gets green light
Wandsworth Council | February 1 2021
The development will provide 35 % of the homes for social rent, London affordable rent or shared ownership, while the rest are for private sale or rent. The regeneration programme includes building a state-of-the-art leisure centre, a community centre, a library, a children’s centre and nursery, a new local office for Workmatch which helps people into jobs, a health centre and a new 2.49 hectare public park.
West Yorkshire Combined Authority sets out plans for mass transit system
LocalGov | January 28 2021
The West Yorkshire Combined Authority is publishing its Connectivity Infrastructure Plan and Mass Transit Vision 2040 today and is asking people across the region to have their say. The proposals identify where people will live and work in the coming decades, the journeys they will need to take and how best to connect them through an integrated network including walking and cycling, bus, mass transit and rail.
Council shifts £11m of land to housing accounts
Public Finance | January 21 2021
Reading Borough Council has agreed plans to move £11m of land assets to its housing revenue account as part of a major regeneration project. This strategy will see them transfer four banks of land earmarked for a £44m affordable housing project from the general fund to the HRA.
Oxford first council to approve city-wide air pollution target
LocalGov | January 21 2021
Oxford City Council has become the first local authority in the UK to approve a city-wide air pollution reduction target. The council ‘s Air Quality Action Plan 2021-2025, sets out a list of 30 actions to protect residents from harmful air pollution.
Campaigners call on councils to help reduce car use
LocalGov | January 19 2021
Friends of the Earth has worked with Transport for Quality of Life, a transport consultancy specialising in sustainable transport, to put together a list of 27 actions local authorities can take to reduce car use.
New regulator established to ensure construction materials are safe
Ministry of Housing, Communities and Local Government | January 19 2021
A New national construction products regulator has been set up to ensure homes are built from safe materials. The regulator for construction products will have the power to remove any product from the market that presents a significant safety risk and prosecute any companies who flout the rules on product safety.
Councils urged to ensure Local Plans are up to date
Ministry of Housing, Communities and Local Government | January 19 2021
The Planning for the future white paper consultation published last year set out proposals to deliver a significantly simpler, faster and more predictable planning system. Councils should consider that an up-to-date plan will put them in the best possible position to deliver the homes are needed. In March 2020, the government set a deadline of December 2023 for all councils to have up-to-date Local Plans in place.
‘Right to Regenerate’ to free up public land, Jenrick says
LocalGov | January 18 2021
Under new proposals, underused public land could be sold to individuals or communities by default, unless there is a compelling reason the public body should hold onto it. Councils and public organisations would need to have clear plans for land in the near future, even if only a temporary use. If the land is kept for too long without being used, they would be required to sell it.
Governance & Reorganisation
#JackieWeaver – a catalyst for change?
You would be hard pushed not to have heard of Jackie Weaver or Handforth Parish Council in recent weeks.
The woman at the centre of the most unexpected viral phenomenon of 2021, Jackie Weaver was the host of a Zoom meeting of Handforth Parish Council’s planning and environment committee, footage from which ended up on YouTube and was viewed by millions. Immortalised in cake-form; inundated with television interviews and Sir Andrew Lloyd Webber has even composed a song in her honour: but what can Ms Weaver achieve for local government?
A lot, it seems.
The meeting truly shone a spotlight on the hosting of virtual meetings remotely and it seems may have helped to influence the Government to change the law to make permanent the temporary provision made for virtual council meetings.
The power under the Local Authorities and Police and Crime Panels (Coronavirus) (Flexibility of Local Authority Police and Crime Panel Meetings) (England and Wales) Regulations (No.392) is set to expire on 7 May but it has been reported in the Sunday Telegraph the Government is now set to consult councillors with a view to extending the law. This comes in the wake of ADSO (the Association of Democratic Services Officers) and LLG (Lawyers in Local Government) making preparations to seek a court declaration that pre-existing legislation means remote attendance at meetings can continue beyond 6 May 2021.
And what about what actually happened at that Handforth meeting? As reported in last month’s LA View, it has now been two years since the Committee on Standards in Public Life (CSPL) produced their report on ethical standards in local government and there is still no official response from the Government on sanctions. The bitter row in Handforth will have done little to instil confidence in the present standards regime. The National Association of Local Councils has recently sent a letter to Communities Secretary Robert Jenrick calling for the standards regime to have more teeth, and highlighting how "poor behaviour is creating significant disruption" in communities. It is an issue Ms Weaver is very vocal about. In an interview with the Local Government Chronical she said, “Every council has experience of someone who is badly behaved, and it brings the sector into disrepute."
With both Ms Weaver and the behaviour of councillors garnering so much attention in recent weeks, many hope that this will push the Government to respond the CSPL recommendations and implement a more robust regime at pace, so that the focus can return to the vital work of local government in our communities.
Publications & Guidance
Non-statutory review of Nottingham City Council
Ministry of Housing, Communities and Local Government | January 22 2021
Documents relating to the non-statutory rapid review and follow-up recovery and improvement work at Nottingham City Council.
The 2021/22 Provisional Local Government Finance Settlement: LGA response
Local Government Association | January 14 2021
The LGA will continue to promote the role councils play in making a huge difference to the lives of our residents and communities. As they prepare our submission for the 2021 Budget and look ahead to the 2021 Spending Review, the LGA will be campaigning for councils to be given clarity and certainty over their funding so that local services can be provided with a sustainable long term future.
Legislation
The West Yorkshire Combined Authority (Election of Mayor and Functions) Order 2021
SI 2021/112 | Made January 29 2021 [Awaiting commencement date]
This Order provides for the conferral of functions of local authorities and other public authorities on the West Yorkshire Combined Authority (“the Combined Authority”).
News
Councils propose ‘super-district’
LocalGov | February 2 2021
Stratford-on-Avon and Warwick DCs have announced proposals to merge by 2024. Members at both authorities will be asked to give the go ahead to unite as South Warwickshire Council by the end of the month. The councils already share heads of service in four departments and have collaborated over a waste collections contract. The ‘super-district’ should produce annual savings of £4.6m after five years and bring economies of scale
Rapid review warns of 'serious failures' at Croydon Council
LocalGov | February 2 2021
A non-statutory review discovered failures in identifying, escalating and addressing financial risk at the council. Other issues that were highlighted included poorly managed commercial ventures and low levels of reserves, which caused significant issues.
West Yorkshire’s devolution deal signed into law
LocalGov | February 1 2021
The devolution deal for West Yorkshire has been signed into law. The region will now elect its first ever mayor, who will have new powers over transport, education, housing and regeneration. The mayor will oversee an annual budget of £38m and will have control of the adult education budget.
Lawyers and democratic services officers to obtain legal advice on continuing with virtual meetings after 6 May without need for primary legislation
Local Government Lawyer | January 25 2021
LLG (Lawyers in Local Government) and ADSO (the Association of Democratic Services Officers) have instructed counsel to advise on whether remote meetings can continue to be held, without the need for primary legislation, when the regulations introduced during the Covid-19 pandemic come to an end.
More councils will be forced to issue Section 114 notices, MPs warn
LocalGov | January 22 2021
The influential Public Accounts Committee (PAC) has warned more councils will ‘soon be unable to balance their books and be forced to issue Section 114 notices. As well as Croydon LBC, up to 12 other councils are understood to have made capitalisation requests to the Government and are waiting for decisions.
Government finances at 'significant risk' from debt-laden councils due to Covid
The Guardian | January 22 2021
MPS have warned that local authorities who are taking on risky levels of debt to shore up dwindling resources during the pandemic, present a “significant risk” to the government’s finances,. The Commons’ public accounts committee has asked the Treasury on Friday to explain how it will manage the risk to the nation’s finances as the extra pressures of dealing with coronavirus adds to the pressure on councils.
Auditors raise questions over council transparency
Public Finance | January 21 2021
Bristol City Council’s auditors have raised concerns over transparency relating to the council’s failed energy company Bristol Energy. The company was sold when it ran into a “serious financial crisis”. The auditors advised the council to improve its’ risk management arrangements to ensure that all key risks are identified and clearly reported to cabinet.
The challenges of scrutiny at a distance
CfGS (Centre for Governance and Scrutiny) | January 20 2021
Describes Leeds City Council’s experience of lockdown scrutiny, and its practical challenges.
Brum plans for new senior structure
The MJ | January 19 2021 [Subscription only]
See also - Birmingham Live | January 21 2021
Birmingham City Council has agreed a plan for a new structure that will split the senior management team into “council core” directors and delivery managing directors’
Spelthorne commercial income allows council tax freeze
Public Finance | January 19 2021
Spelthorne Borough Council’s finance chief has announced that the council’s controversial commercial investment strategy has allowed it to propose council tax freezes next year despite Covid-19 disruption.
Nottingham plans £100m asset sale
LocalGov | January 15 2021
The recovery and improvement plan, ordered by the Government following a rapid review last year, proposed closing up to three companies, a complete rewriting of the council's constitution, a management restructure and efficiency savings. As a result Nottingham City Council has now identified £100m of assets for sale as part of a plan to bring its finances under control.
Contract Management
The first Procurement Policy Note for 2021 is issued
The Cabinet Office has published its first Procurement Policy Note (PPN) of 2021 – PPN 01/21: Procurement in an Emergency.
The PPN sets out guidance for contracting authorities on the options available to them to carry out emergency procurements. It is intended to build on the guidance in PPN 01/20 which was published at the outset of the COVID-19 pandemic to remind contracting authorities of the mechanisms under the Public Contracts Regulations 2015 (PCR) that enabled urgent procurement. We explained these mechanisms, and the effect of PPN 01/20 in our article last year.
By way of brief reminder, the main options are:
- To call off from an existing framework
- To run a procurement under accelerated timescales
- To extend or modify an existing contract (PCR 72(1)(c))
- To award a contract directly in reliance on there being an absence of competition or in order to protect exclusive rights (PCR 32(2)(b))
- To award a contract directly where extreme urgency renders a full procurement impossible (PCR 32(2)(c)).
This new PPN appears focussed on the direct award options under this list (options 3 to 5) and highlights to contracting authorities the inherent risks of making direct awards. It then sets out practical tips to minimise those risks. This guidance has no doubt been triggered at least in part by the number of challenges to direct awards that have been made subsequent to the issue of PPN 01/20 at the start of the pandemic. It is possible that some mistakenly considered that PPN 01/20 created a new type of exemption to avoid the need for an advertised procurement process; whereas in fact PPN 01/20 reminded contracting authorities of the different routes for urgent purchasing available under the PCR. Some of these ongoing challenges are very high profile judicial reviews brought by public interest groups against central government around the purchase of PPE from providers with no relevant experience and the entry into consulting contracts with companies linked to individuals within government. It is interesting guidance to see coming from central government where the outcomes of these judicial reviews are not yet known.
PPN 01/21 flags the potential for urgent direct awards to lead to poor value for money and weaknesses in documenting and ensuring due diligence in the process, which is something that a managed competitive process ought to iron out. The point is not made in the PPN, but direct awards of course also lead to the risk of procurement challenge. It therefore makes the following recommendations:
- Contracting authorities should seek to include mechanisms in the contract to enable price reductions once the market pricing surge brought on by the emergency has died down.
- The possibility of a form of advertisement or informal competition should be considered even where a Regulation 32 direct award is intended to be made. Bearing in mind that PCR 32 is about the ability to award a contract without advertisement, this is an interesting piece of guidance and something that was not mentioned in PPN 01/20. It may be linked to the fact that one of the grounds of challenge in the current PPE judicial review is that even where PCR 32 is justified, some form of competitive process should be followed if at all possible.
- Contracting authorities should keep full records of all decisions to make direct awards with reasons, as is required under PCR 84. From our experience, a good audit trail is often of huge importance in being able to successfully defend a procurement challenge.
- The use of processes or criteria to select suppliers for direct award should also be carefully documented and records kept. The criteria should be relevant, documented and applied consistently.
- The management of actual and potential conflicts of interest should also be carefully documented, noting the guidance set out in the Ministerial Code and Service Management Code and ensuring that decisions are taken based on relevant considerations and not personal recommendations.
The PPN then goes on to set out reminders of the requirements that must be met for a contracting authority to be able to use one of the options to award urgent contracts directly. None of this section of the note is new information – simply a reminder of what is already provided for in the PCR and associated case law.
The PPN does not cover possible risk mitigation measures open to a contracting authority where it has concerns about its ability to rely on one of these options. These may include the publication of notices on the Find a Tender Service website before or after contract signature, or the incorporation of contract terms to deal with what happens in the event of a challenge. Bevan Brittan’s contentious procurement team has significant experience of advising on these issues and would be happy to assist if your organisation is considering a direct award. If you would like to discuss this topic in more detail, please contact Fran Mussellwhite, Partner.
News
English councils spent £63bn on third parties last year
LocalGov | January 28 2021
The Local Government Third Party Spend Almanac, published by Oxygen Finance and EY, shows local government spent £63bn with third party suppliers in 2019/20. More than a third of this (37%) incurred within the vulnerable citizens category.
UK ‘does not meet conditions’ for data adequacy, EU parliamentary committee says
Mlex/Lexis Nexis | 4 February 2021
EU lawmakers have said the UK ‘does not currently meet the conditions’ to allow the continued free flow of personal and law-enforcement data, and expressed ‘strong doubts’ about an interim six-month agreement that allows those flows as part of a post-Brexit trade deal. The non-binding opinion from the European Parliament’s civil liberties committee (LIBE), adopted on 4 February 2021, comes just weeks before the EU’s data protection authorities are set to scrutinise the European Commission’s draft decision on adequacy, which is crucial for continued economic and security cooperation between the EU and the UK.
Trade union calls for higher human rights standards in PPE
LocalGov | January 26 2021
UNISON, a local government trade union, has called for new laws to stop PPE being supplied by companies that exploit workers. It has joined the lobby to bring in new laws to prevent UK businesses and public services from using companies that violate workers’ human rights.
Checklist for electronic signatures
Networking for Know-How | 29 January 2021
On 29 January 2021, a working group comprising several corporate professional support lawyers (PSLs), who are members of the Networking for Know-How association of corporate PSLs, published a checklist for use when conducting an electronic signing in relation to a corporate or commercial transaction. The purpose of the checklist is to set out a non-exhaustive list of points to consider when arranging the electronic execution of corporate or commercial documents using an online platform. It also provides a suggested framework for the relevant legal advisers to establish the mechanism for the signing to ensure that execution is completed in a manner acceptable to all parties.
Councils urged to end outsourcing of leisure facilities
LocalGov | January 13 2021
The Unite trade union has called on councils to take back control of leisure facilities after estimating leisure services giant Greenwich Leisure Ltd (GLL) has cut 2,000 staff on zero hours contracts since the start of the pandemic.
‘Local authority financial resilience’ report
House of Commons Library | January 22 2021
This briefing paper summarises concerns around local authority financial resilience, which rose in profile in the late 2010s. It begins by setting out the accountability framework within which local authorities operate, including the accountability system operated by the Ministry of Housing, Communities and Local Government (MHCLG), and statutory codes of practice: the Prudential Code, treasury management guidance, guidance on local authority investments, and guidance on minimum revenue provision.
The paper then provides brief details of the legal accountability structures faced by local authorities, and of the process that they must follow when developing their annual budgets. This includes the role of the head of finance (the ‘section 151 officer’) and the procedure surrounding the issue of ‘section 114 reports’ within local authorities.
Cases
COVID-19: interpretation of qualifying change in law mechanism in leisure facilities management contract
In Westminster City Council v Sports And Leisure Management Ltd (22 January 2021), the High Court had to determine the allocation of lost customer revenues caused by the introduction of COVID-19 lockdown restrictions between parties to a contract for the management of leisure facilities.
Procurement - withdrawal of challenged award decision ends automatic suspension
The judgment In Aquila Heywood Ltd v Local Pensions Partnership Administration Ltd (25 January 2021) concerns a short point of costs upon the settlement of an application to lift any automatic suspension that might still be subsisting in this case pursuant to regulation 95 of the Public Contracts Regulations 2015.
Boating company wins permission for judicial review over decision not to offer interim concession contract
Local Government Lawyer | January 20 2021
In Bluebird Boats Ltd, R (On the Application Of) v The Royal Parks Ltd [2020] EWHC 3647 (Admin), the judge granted a company permission to bring judicial review proceedings in relation to a decision by The Royal Parks Limited (TRP) not to grant it an extension to a concession contract for the operation of boating facilities in Hyde Park, on the Serpentine and in Greenwich Park.
Disputes & Regulatory Support
Covid-19; High court held that Council was not required to pay a “reverse” Management Fee to contractor
On 22 January 2021, the High Court handed down its judgement in Westminster City Council v Sports Leisure Management [2021] EQHC 98 (TCC) regarding allocation of lost customer revenues caused by the introduction of Covid-19 lockdown restrictions.
Sports Leisure Management (SLM) had entered into a concession contract (the “Contract”) with Westminster City Council (the “Council”) in 2016 for the management of leisure facilities. Under the terms of the Contract SLM was required to pay a Management Fee to the Council and in return SLM was entitled to keep the revenue from customers at the leisure facilities.
The Contract had been profitable however, following the introduction of national lockdown in response to the pandemic, SLM began to make significant losses. Both parties agreed that the legal measures introduced to combat the pandemic amounted to a “Specific Change in Law” under the Contract. However, the Council and SLM disagreed on how the resulting loss of customer revenue should be dealt with between them. SLM argued that the financial consequences of a Specific Change in Law, in accordance with the widely used Sport England Contract terms, required the Council to bear the financial burden.
The Council contended that the maximum possible effect of a Specific Change in Law was to reduce the Management Fee to zero and that the Council was not obliged to make any payment to SLM, specifically that nothing in the Contract required the Council to indemnify SLM against losses arising from a Specific Change in Law.
The court held that on proper construction of the Contract, Specific Change in Law does not reduce the Management Fee to below zero and that the definition of the Management Fee was absolutely clear, it is a payment made to and not by the council. At most, the Management Fee could be zero for a particular contract year. Further, the court rejected the argument that the Sport England contract was relevant and noted it was of no assistance to the court in this case as it made “completely different provisions from that made in this contract”.
The case is a reminder of the importance of drafting precise language in contracts and that each contract for management of leisure facilities will be considered and interpreted on its own specific provisions. Further, as the effect of the lockdown restrictions on the leisure sector becomes clearer we are likely to see an increase in cases before the courts as suppliers look to protect themselves from financial consequences flowing from extended closures and the economic decline.
Publications & Guidance
Judicial review: Time for change?
House of Lords Library | January 18 2021
The judicial review process may be subject to change during this parliamentary session. In July 2020, the Government launched the Independent Review of Administrative Law (IRAL). The IRAL will determine if the judicial review process needs reforming. This followed several high-profile judicial review cases that saw the Supreme Court rule against the Government.
News
Council secures possession order evicting environmental protesters at development site
Local Government Lawyer | February 2 2021
A High Court judge has granted the London Borough of Islington a possession order for a development site where protesters are occupying a copse scheduled for destruction.
Campaign group fails in legal challenge after council dismissed petition calling for referendum on governance model
Local Government Lawyer | February 1 2021
A High Court judge has dismissed a judicial review challenge to the London Borough of Newham’s decision to declare invalid a petition seeking a referendum to change the governance model of the council.
Town council facing judicial review over handling of staff grievances
Local Government Lawyer | January 28 2021
Three members of Andover Town Council are expected to issue a judicial review challenge regarding a complex dispute over staffing and the conduct of meetings. Local Government Lawyer has been told that the dispute concerned how staff grievances had been dealt with, and that some councillors felt they had been improperly silenced during online meetings.
Residents launch legal challenge over South Oxfordshire Local Plan
Local Government Lawyer | January 28 2021
A local group has issued a legal claim to try to overturn South Oxfordshire District Council’s Local Plan, which was adopted under pressure from Central Government.
Traders threaten city council with legal challenge over pedestrianisation plan
Local Government Lawyer | January 28 2021
Independent traders in St Marks Street, Bristol have threatened legal action against the city council over a pedestrianisation plan. The traders fear that their livelihoods would suffer.
Council calls Ombudsman recommendations in child protection case “inappropriate and misguided”, reserves legal position over report conclusions
Local Government Lawyer | January 27 2021
The Local Government and Social Care Ombudsman (LGSCO) and Kent County Council are disputing an investigation into the handling of a 'cross-border' child protection case. The county council has challenged some of the recommendations made in the LGSCO's report and questioned whether it was in the Ombudsman’s remit to recommend the local authority offers therapy services that "local government are not currently required or funded to provide".
Council fined for death of girl following playground collapse
LocalGov | January 22 2021
The London Borough of Tower Hamlets has been fined £330,000 after a five-year-old girl died when playground equipment collapsed on top of her. An investigation by the Health and Safety Executive (HSE) found that the council failed to carry out an annual playground safety check at Mile End Park. It also found the post was made from unsuitable wood that had decayed.
Council disputes MP allegations on Covid-19 grants
Public Finance | January 11 2021
Somerset Council is disputing the allegation made by a local MP that it has been given huge grants but has then diverted much of the money to balance its books.
Cases
High Court finds for local authority in dispute over backdating of council tax discounts in cases of severe mental health impairment
Local Government Lawyer | January 26 2021
A High Court judge has upheld a district council’s decision not to backdate a council tax discount due to severe mental health impairment (SMI) to the date where symptoms were first diagnosed. In Brown v Hambleton District Council [2021] EWHC 1 (Admin) a local resident unsuccessfully appealed a ruling of the Valuation Tribunal.
Family Division judge hits out at "breath-taking incompetence" of council, failures on disclosure to court (localgovernmentlawyer.co.uk)
Local Government Lawyer | January 22 2021
In Bedford Borough Council v CD & Ors (Rev 1) [2020] EWHC 3298 (Fam) the judge hit out at "breath-taking incompetence" of council, failures on disclosure to court, and severely criticised a social worker, in a case where a boy was left in a “thoroughly corrosive” foster placement for nine months longer than he should have been.
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