LGA warns procurement bill could risk in-house waste deals

Last week (25 November), the LGA, the national membership body for 328 of the 333 councils in England, published a response to the bill as it travels through the House of Lords.

Outlined at the state opening of parliament in May, the bill enshrines several objectives for public procurement in law.

The LGA said it “broadly welcomes” the government’s proposed reforms but has concerns the bill will limit public bodies using the current “vertical and horizontal” procurement exemptions, which enable councils to enter collaborative arrangements to run public services.

In a statement, the LGA said: “The bill introduces a new ‘reasonableness’ test which stipulates that these exemptions can only be used if the contract ‘could not reasonably be supplied under a separate contract’.

“It will often be the case that public services, whether front-line or back-office, could ‘reasonably be supplied’ by a provider that is not a public entity.

“As a result, the legislation would require the public sector to have to engage the market, even for arrangements wholly within the public sector, such as one council wishing to collaborate with a neighbouring council, for example.”

The LGA pointed to research it published in 2018/19 showing shared service arrangements contributed “in part” to saving the taxpayer nearly £200 million.

Partnerships were also backed by the current resources minister, Rebecca Pow, in an interview with letsrecycle.com in 2018 (see letsrecycle.com story).

This is the second time the LGA has raised concerns, after it said in July that the bill risks requiring councils to go to the market for services already delivered “effectively” by collaborative arrangements within the public sector (see letsrecycle.com story).

Exemptions

The LGA says there are two important procurement exemptions to public contract regulations which facilitate cooperation and shared services between entities within the public sector.

The change comes to the detriment of efficient service delivery

• LGA

The ‘vertical arrangements’ exemption, widely known as the Teckal exemption, enables public bodies to award contracts to entities that, though legally distinct, are in-house to the awarding authority.

The second, the ‘horizontal arrangements’ exemption, relates to public-to-public cooperation arrangements, for example where public authorities cooperate in the delivery of waste services.

Introducing the reasonableness test will significantly limit the use of these exemptions, the LGA claims.

The LGA’s statement adds: “The change comes to the detriment of efficient service delivery and closes down certain models of service delivery which save public money.”

Baroness Noakes has tabled an amendment to the bill, supported by Lord Moylan, which looks to maintain the current exemptions. The LGA says it supports this amendment, which the Lords are considering this week.

Stages

The procurement bill is currently going through the report stage in the House of Lords, which gives all peers an opportunity to examine the legislation and make amendments. The Lords are meeting throughout this week to discuss the bill.

The bill will then go to the Houses of Commons for a further five stages, before any final amendments are considered and it is given royal assent.