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Compulsory Competitive Tendering

Volume 301: debated on Friday 21 November 1997

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To ask the Secretary of State for the Environment, Transport and the Regions if he will announce the conclusion of the recent review of regulations and guidance on compulsory competitive tendering. [17588]

I have today laid before Parliament new regulations which amend the existing framework for Compulsory Competitive Tendering in England and Wales to make it more flexible and encourage local authorities to move to a Best Value-based approach to service delivery. In due course we will be replacing CCT with a new legislative framework on Best Value. In the meantime, I want local authorities to develop Best Value ahead of primary legislation.These changes take account of the views of nearly 300 local authorities, professional bodies and relevant private sector interests who responded to the consultation paper I published on 25 July. Copies of these responses will shortly be placed in the House of Commons Library. The regulations themselves have also been the subject of consultation with local government and other organisations.The key changes brought about by the Regulations are:

(a.) a significantly enhanced credit for voluntary competition of 125 per cent. of its real value which offsets the amount of work which must be exposed to compulsory competition and is designed to encourage authorities to pursue this route ahead of Best Value;
(b.) Lowering of the competition percentage for finance to 40 per cent. and for construction and property to 55 per cent. A raising of the de minimis for construction and property to £450,000.
(c.) Moving the implementation date from a finance-based to a 4,000-properties de minimis level for housing management to 1 April 1999 and abandoning the previous Government's plans to move to a 2,500 property de minimis level;
(d.) a relaxation of the implementation timetable for reorganising authorities in England in respect of professional services, particularly for authorities reorganised in April 1996 and April 1997, and housing management. Also an alignment of implementation dates for professional services, where they have not yet been reached, to align with, or post date, the effective dates of the new Regulations;
(e.) exemption of all schools from CCT with a special credit within the Regulations to take account of the potential anomaly which might otherwise have increased the overall competition requirement within an individual local authority;
(f.) a significant reduction in the amount of detailed prescription in relation to tendering and evaluation of CCT contracts. The de minimis level for manual services is raised to £150,000;
(g.) removal of need for local authorities to prepare an annual statement of the costs of supporting their front line services (the 'SSSC').

I believe that we have made sensible adjustments to the regulations set in place by the previous Government. I believe that these will be broadly acceptable to all parties. The new Regulations will allow local authorities to develop Best Value alternatives which are consistent with the purpose of the primary legislation and allow them much greater flexibility. We have removed many of the prescriptive elements of CCT. Local authorities now have real incentives to seek partnerships with the voluntary and private sectors to deliver quality services.

The changes emphasise voluntary competition. Competition will remain a vital element of Best Value but we are keen to use it in a more flexible and constructive way. We are increasing the credit that local authorities will get for any professional services work that they put out to competition voluntarily during the remainder of the CCT regime.

In recognition of the concerns expressed in the responses to our consultation paper, we have also decided to extend our original proposal to exempt work done on behalf of LMS schools from CCT, to cover all local authority maintained schools. This will reduce the administrative burden on school heads and allow local authorities to consider Best Value alternatives for schools.

I hope local authorities will respond to the opportunities these changes now provide. Best Value is about providing quality services at a price that local people are willing to pay. There is no reason for any local authority to put off considering how they are going to approach this. The new Regulations will provide the extra flexibility and resources they need to consider the new agenda.

I also intend to publish a new Departmental Circular to replace Circular 5/96 (Welsh Office Circular 11/96), which provides guidance on the conduct of CCT, shortly.