Pension rights cloud CCT issue

Cyril Dixon reports

LOCAL authorities are facing a legal dilemma over the awarding of competitive contracts in the wake of controversial new thinking on the issue of staff pension rights.

They have been left confused about whether they can choose a contractor on the basis of its pension scheme.

Previously, councils accepted Whitehall's advice that they could turn down an otherwise-good bid if the firm involved was offering inferior pension rights to council staff who transferred to its employ.

However, Tony Child, the former Audit Commission solicitor, now warns that councils which make a decision on that basis could face a successful challenge in the courts.

Child, now a partner in London solicitors' firm Rowe & Maw, gave the advice in a company bulletin, which was circulated to district auditors.

He says the courts may take the view that authorities which take into account staff pension provisions when deciding on a tender could be acting in an "anti-competitive" manner.

The advice has confused local authority lawyers because it contradicts Department of the Environment guidelines.

DoE officials warn that councils who accept tenders from firms with weaker pension schemes could be sued for constructive dismissal by employees who transfer.

Child's advice has worried the Association of District Councils so much that it has written to the Audit Commission seeking clarification.

And David Carter, chair of the Law Society's local government group, says his members would now have difficulty deciding where they stand.

"Most local authorities and contractors had got to a position where they accepted central Government advice. It seems to complicate it for everybody to have another opinion."