Government acts to relax compulsory competitive tendering

New regulations proposed in November 1997 pave the way for changes to the UK's compulsory competitive tendering rules, which have been blamed for widespread employment insecurity.

Compulsory competitive tendering (CCT) was one of the key privatisation measures of the Conservative governments of 1979-97, which brought much insecurity into the lives of those who provided services to local authorities. Much to the joy of local authority workers and trade unions, in June 1997 the new Labour Government announced that the rules on CCT would be changed after a wide-ranging consultation exercise (UK9706141N). On 21 November 1997, local government minister Hilary Armstrong laid before Parliament new regulations which amend the existing framework for CCT to make it more flexible, and encourage local authorities to move to a "Best Value" based approach to service delivery, in which value to customers would take priority over competition per se. She said: "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."

The changes take account of the views of nearly 300 local authorities, professional bodies and relevant private sector interests which responded to the consultation paper that was published on 25 July. The Government says it has removed many of the prescriptive elements of CCT, and that local authorities now have real incentives to seek partnerships with the voluntary and private sectors to deliver quality services.

CCT applies to a wide range of local authority services. A local authority can carry out certain defined activities in-house only if the work has first gone out to tender and been won in open competition. According to the unions, since CCT's introduction it has caused a general decline in wages, standards and quality of work as the various parties involved have sought to compete by cost-cutting measures.

CCT was first introduced for construction, maintenance and highways work by the Local Government, Planning and Land Act 1980. It was extended to other manual services, such as refuse collection and ground maintenance, through the Local Government Act 1988. Sports and leisure management was added as a further defined activity through secondary legislation in 1989, and other manual activities were added during 1994. CCT was then introduced in England for a wide range of local authority professional services, under a phased timetable for implementation, beginning with housing management, legal and construction and property services in 1994, and information technology, finance and personnel services in 1995. Local authorities are required to expose all their existing work for each manual service to CCT before it can be undertaken by their own staff, but they are only required to expose a percentage of their work for each professional service.

The Trades Union Congress (TUC) welcomed the Government's announcement and said that it would consent to work with the Government and local authorities to ensure that Best Value pilots are successful. General secretary John Monks said that "local government workers will be pleased that the government have taken such early action to develop the best value model", and argued that the principle of testing some of the ideas before drafting new legislation is exactly how policy should be made. The TUC adds that it is time that changes are made to the Local Government Act 1988, so that a range of workforce considerations should be taken account of in evaluating tenders and awarding contracts, including the encouragement of best practice through a fair wages resolution.

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment