The LGA has been working to ensure new legislation empowers councils
In December 2020, the Government set out its proposals for reform of public procurement in the Green Paper, ‘Transforming public procurement’.
Since then, the LGA has been engaging closely with ministers and civil servants to help them understand the way that councils procure goods, works and services, and to ensure the Procurement Bill – currently working its way through Parliament – creates an effective regime that works for local government.
While the LGA was broadly supportive of the Government’s proposals, which aim to create a simpler, quicker and less bureaucratic procurement regime in UK law, there were several issues.
We worked with officials to address many of these before the Bill was introduced to Parliament, including steering government away from removing the ‘light touch’ regime.
When the Bill was introduced, our primary concern was that the legislation would significantly limit councils from using the current ‘horizontal’ and ‘vertical’ procurement exemptions.
These enable local authorities to deliver effective public services and significant savings through collaborative and ‘in house’ arrangements.
The Bill included a new ‘reasonableness’ test, which stipulated that the exemptions could only be used if “the goods, services or works representing the main purpose of the contract could reasonably be supplied under a separate contract”.
As it is often the case that public services could “reasonably be supplied” by a provider that is not a public entity, the legislation could have been interpreted in a way that would, in effect, close down the exemptions.
We engaged extensively with government and worked closely with parliamentarians to make the case that the wording risked adverse, unintended consequences.
At report stage in the House of Lords, Lord Moylan (Con) tabled an LGA amendment to remove the reasonableness test, which garnered cross-party support.
The Government subsequently agreed to revise the wording to avoid ambiguity and brought forward two amendments in the Commons.
“Flexibility is vital to allow councils to shape their places and drive economic growth”
It is now beyond doubt that the vertical and horizontal exemptions will not be subject to the reasonableness test, and local authorities can continue to use them with confidence.
Another key issue for councils that we have been raising through the parliamentary process is that Section 17 (1) of the Local Government Act 1988 currently prohibits local authorities from reserving contracts, whatever their value, to local suppliers, small and medium-sized enterprises, and voluntary and community organisations.
We have been making the case that this flexibility is vital to allow councils to shape their places, drive economic growth and achieve wider objectives, such as reducing carbon emissions and boosting supply chain resilience.
We are therefore pleased that the Government has listened to our calls and has committed to amending the 1988 Act in secondary legislation. This will become ‘live’ at the same time as the Procurement Act.
It was also good to see the Government’s plan to introduce a single digital platform, where all public procurement opportunities will be published and viewed in one place.
To make the platform a success, we continue to raise that it will be necessary to tidy up existing pieces of legislation and guidance that specify where and how public bodies publish procurement information.
As the Bill approaches its remaining stages in Parliament, we continue to work with government to ensure it empowers councils to deliver for their communities.