1. INTRODUCTION
1.1 The Origins of the Research Project
The Department for Transport, Local Government and the Regions (DTLR) - now the Office of the Deputy Prime Minister (ODPM) - and the Improvement and Development Agency (IDeA) have agreed a programme of research to assess the impact of the changes to Part II of the Local Government Act 1988. The Local Government Best Value (Exclusion of Non-commercial Considerations) Order 2001 (SI 2001 No 909) made under section 19 of the Local Government Act 1999 provides, in respect of best value authorities, for the workforce matters described in Part II of the 1988 Act to cease to be defined as "non-commercial matters" to the extent that they are relevant to the achievement of best value, and also in circumstances where they are relevant for the purposes of a TUPE transfer.
This research relates to the first part of this programme. It provides detailed baseline information on best value authority and supplier attitudes towards these legislative changes. The next and on-going stage of this programme will be monitoring exercises at six monthly intervals on the effect of the changes.
The Department and Austin Mayhead would like to thank the Social Partners for their collaboration and support in conducting this research project. The Social Partners who represent local government, trade unions and businesses have been working together to achieve a culture change under best value. The Department and Austin Mayhead are grateful for all the help they have received.
1.2 Background: The Local Government Act 1988 and the Order
Section 17 of the Local Government Act 1988 was designed to prevent authorities from introducing political or other irrelevant considerations into the contractual process. It did this by defining certain matters as "non-commercial" and prohibiting authorities from having regard to them. However, it later became evident that these restrictions, by preventing authorities from considering how contractors managed their workforces, presented an obstacle to the achievement of best value. For example, the restrictions could inhibit the introduction of more innovative means of procurement.
The following matters are prohibited under Section 17:
the terms and conditions of employment by suppliers of their workers or the composition of, the arrangements for the promotion, transfer or training of or other opportunities afforded to, their workforces (section 17(5)(a))
the conduct of suppliers or workers in industrial disputes between them (section 17(5)(d)).
The 2001 Order allows authorities to now consider the above matters to the extent that they are relevant to the delivery of best value or for the purposes of a TUPE transfer. Restrictions on other non-commercial considerations listed in Section 17 of the Local Government Act 1988 remain in place.
DTLR published Statutory Guidance to accompany the Order in the form of Departmental Circular 02/2001 the "Local Government Act 1999: Section 19 Best Value and Procurement: Handling of Workforce Matters in Contracting". The Circular explains how in the view of the Secretary of State workforce matters should be taken account of at various stages in the procurement process.
1.3 Research purpose
The purpose of this report is to provide baseline information on best value authority and supplier attitudes on:
the arrangements for the supply and use of workforce information in local authority procurement before and after the Order;
attitudes towards the Order – expectations and concerns;
the need for further support in implementing the changes to procurement and tendering encouraged by the Order.
The key questions to be answered are:
a) What is likely to be the impact of the Order on local authority procurement? Will it promote best value? Will it promote long-term partnering agreements? How could it affect the costs involved and skills required in procurement and tendering?
b) What support is needed to assist all parties to make effective use of the Order in the interests of achieving higher standards of performance in public services?
1.2 Report structure
The remainder of this report is structured as follows:
Chapter 2 outlines the research approach.
Chapter 3 compares practice regarding the exchange of workforce information before and after the Order.
Chapter 4 discusses benefits authorities and suppliers expect the Order to provide.
Chapter 5 outlines the difficulties that authorities and suppliers are concerned might arise as a result of the Order.
Chapter 6 deals with the exchange of information relating to TUPE transfers and pensions.
Chapter 7 looks at the possible implications of the Order for authorities and suppliers working together and concludes the analysis.
Published 6 August 2002
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