Tough talk on a tender issue

After the trials and tribulations of compulsory competitive tendering (CCT), the more user-friendly – and accountant friendly – phrase of “best value” will be the mantra for the next millennium in local government circles.

The Local Government Bill is currently going through Parliament and it is envisaged that the Act will start to be phased in from 1 April 2000. In addition to abolishing CCT and replacing it with best value, the new Act will also replace the existing powers to cap local authority budgets and introduce changes to subsidies for council tax benefit.

With its introduction, local authorities will have a duty to provide best value in the supply of services, to “secure continuous improvement with regard to economy, efficiency and effectiveness”.

Critics of the public sector have commented that the latest legislation – and the concept of best value – is a belated attempt to bring the public sector into the 20th century, just in time for the next millennium. But most lawyers, in both the public and private sectors, have welcomed the proposals and will not be mourning the departure of CCT.

Nigel Roberts, head of legal services at West Oxfordshire District Council, is just one lawyer on the front line of local government law who believes the new proposals are “a huge improvement”.

“Under CCT, the system was bureaucratic, inflexible and formulaic, and it was inevitable that relations between the public sector lawyers and those in private practice became strained,” he says. “One of the key features of the new Act is transparency. The metamorphosis into a culture where there is continuous improvement, consultation and review, as well as set performance indicators and standards, is a far more flexible approach.

“As a small legal department, we already outsource certain matters, and we look forward to the opportunity to keep doing that within the parameters of best value – bearing in mind that local government lawyers are not driven by the profit motive.”

And in-house local government lawyers are not alone in welcoming best value with open arms. Private practice also broadly applauds the proposals, saying they will open doors into local government that the outgoing CCT regime had kept closed.

On a wider political – and some might say cynical – note, one argument is that best value proposals pander to the unions, because they give more discretion as to what services are outsourced.

Of the role of the in-house lawyers in the public sector, Ray Ambrose, a partner at Nabarro Nathanson, says: “Local government lawyers will have a lot of involvement in setting up the new procedures and systems in line with the new regulations which will come into force under the new Act. They will be involved in advising their authorities on all aspects of the legislation.”

The good news is not confined to the in-house legal sector – lawyers in private practice will also be able to seize opportunities, says Ambrose. “More generally, the best value principle will also give rise to new types of contracts. Local authorities, and the lawyers advising them, will deal with new types of joint ventures and partnerships between the public and private sectors in all areas of the services provided by the local authorities.

“In practical terms, despite the long lead time, the new proposals will require local authorities to review all services over a five-year period and draw up service delivery plans – all within the best value regime.”

New partnerships will be forged for a diverse range of services, including cleaning, school dinners and administration. And legal services will not escape the scrutiny.

Ambrose says: “Because local government legal services are a service as well, they are also subject to best value provisions. So in-house government lawyers will have to look at their legal services – how they are provided, how efficiently and at what cost. They will also have to carry out reviews and draw up plans to secure best value in providing those legal services and that may, for example, involve a partnership with a firm in private practice.”

The reviews to be undertaken are not just within the control of the local authority, but are subject to review by the district auditor, who can assess whether or not there is continuous improvement. This does not necessarily mean that any particular service will have to be outsourced; the review might conclude that the service can be better provided in-house.

As Ambrose says: “The service, legal or otherwise, has to be provided economically and moves have to be made to improve it, but, as ever, there will not necessarily be more money: there may be less. The main feature is that local authorities will have to conform to a mould of review and improvement and continuous assessment in providing services, and to meet performance standards and targets which are set both nationally and locally.

“It could mean more work, but it is an improvement to the more rigid rules under CCT where there was often forced fragmentation of services. With CCT, certain services had to be put out to tender and the local authority had to take what was seen as, in practice, the cheapest tender.”

The opportunity to look at the bigger picture in local service provision has won best value wide support, even though some of the proposals made in the Local Government White Paper, such as a duty to promote the economic, social and environmental well-being of the area and to initiate community plans, were not included in the Bill.

Councillor Neil Turner, chair of the quality panel of the Local Government Association, says: “Across the country, hundreds of local authorities are committing themselves to best value. Local government has shown it is willing and able to pick up the challenge – and opportunities – provided by best value and make it work. But local government can only do so much by itself. We need legislation as soon as possible to keep the momentum going.

“Local authorities are still shackled to the old bureaucracy of CCT. While this is in place, councils can't advance best value as much as they want to because of the time and effort the regime takes up. Under CCT, authorities don't have the freedom they need to trade and enter into partnerships with other organisations.”

The drive for economy, efficiency and effectiveness is seen as essential if the public sector is to keep pace with the modern world. “The change is fundamental,” Ambrose comments. “What everyone recognises is that local authority services have not kept pace with the private sector. This is an effort to bring them up to the standards of, say, Sainsbury's or Marks & Spencer. The commercial world is constantly finding out what the customer wants and catering to those needs, whereas authorities have lagged further behind.

“If best value works, then there will be partnerships with the private sector rather than the previous direct competition with arguments about price and cutbacks. This idea of partnerships rather than confrontation is a positive one and can only lead to an improved service, which is, after all, the whole point of best value.”