Update: local government

Localism bill

The localism bill has been making its way through parliament and is close to Royal Assent. Recent amendments include:

• Provisions for greater devolution of powers to England's largest cities. This will allow for greater local government control to drive growth and create jobs, as well as saving time and money.
• Refining the provisions for local accountability and the new criminal offence of deliberate failure to declare a personal interest (intended to replace the Standards Board regime and Model Code of Conduct).
• Amending the referendum trigger from five per cent of the electorate to 2.5 per cent and providing councils with a discretion not to hold a referendum in prescribed circumstances.
• Introducing the concept of 'business neighbourhood' where the right to vote in those areas will be extended to businesses.
• Requiring authorities to prepare, approve and publish 'pay policy statements' to include their lower paid staff, rather than 'senior pay policy statements' for senior staff only.

The localism bill includes two new rights for communities '“ the community right to buy and the community right to challenge.

The community right to buy gives communities a right to identify a building or land which they believe is of importance to their community's social well-being as an 'asset of community value'. Once listed by the local authority as an asset of community value, when the asset comes up for sale, the community will be given an opportunity to bid to buy it at the open market value.

The community right to challenge allows a community group or group of council employees to express an interest in running a local authority service. This must then be considered fairly by the local authority and, if accepted as genuine, should trigger a procurement exercise for the service.

In practice, to avoid disruption from a challenge, councils will need to consider new pre-procurement consultation procedures.

Two policy statements relating to these community rights published on 12 September 2011 detail the procedures and information to be contained in regulations and some amendments to be made by government to the bill.

Academy conversions

A number of planned academy conversions have been held up because of legal complications. The schools involved were built using private sector funding under PFI schemes. There are concerns arising from the ownership arrangements where these have been transferred to the PFI vehicle and whether the local authority would still be 'maintaining' the school under the proposed arrangements.

Under certain PFI agreements, schools were paid for and built by private sector firms and then leased back to local authorities. When these schools wish to convert to academy status, new arrangements must be made to channel the DfE funding of the academy to the PFI service provider.

The concerns were first highlighted at Tapton School in Sheffield which was three weeks away from opening as an academy when it was put on hold. A further 16 school conversions have been put on hold following the concerns. The same issues may be found at more schools trying to convert to academy status in the future.

Discovery of the problem only when the conversion process is underway may have a serious and unfortunate impact. In some schools bank accounts had already been frozen in anticipation of the conversion resulting in cash flow problems and teachers are being employed by the local authority but managed by the academy trust.

The DfE is currently discussing how to the resolve the issues with Lloyds Banking Group, the funder of Tapton School. The DfE has commented that they are hoping to resolve the matter and for the schools to be converted within a few months. It is not yet clear whether the solution will involve changes to legislation.

The issues affect only some PFI schemes with particular transfer of ownership features, which more recent PFI schemes omit. Twenty-four schools built with PFI funding have already converted to academies.

Adult social care funding

Fairer Care Funding, the report of the Commission on Funding of Care and Support (the Dilnot report) was published in July 2011 and recommended major reforms to the system of funding for adult social care. The commission, set up in July 2010, was chaired by Andrew Dilnot, an economist.

The commission found that the current system was unsatisfactory and not fit for purpose. There needs to be urgent and lasting reform. Therefore the commission sets out a number of recommendations to improve the system. Their view was that there needs to be a fairer way of sharing the costs and responsibilities between the state and the individual.

The current system was described as confusing, unfair and unsustainable. The assessment processes are too complex, eligibility criteria differed depending on location, information and advice made available are poor and individuals are unable to protect themselves against high care costs. The recommendations propose there should be a cap on the lifetime contributions of individuals at around £35,000. Also, the upper threshold for means-tested state support should be increased from £23,250 to £100,000. This would help to reduce the amount of assets lost by individuals in the current system.

Inconsistency between levels of care provision in different locations is, the commission believes, unacceptable. The eligibility criteria need to be set on a standardised national basis rather than by each authority. The government should urgently develop a more objective eligibility and assessment framework and make assessments portable.

The current system is failing to provide citizens with good-quality information to guide their choices. It is recommended that the government should invest in an awareness campaign to show the importance of planning ahead for care needs in old age. Partnerships should be made with charities, local government and financial services organisations, to provide better information and advice about services and funding sources.

Other recommendations include:

• Making those who enter adulthood already having a need immediately entitled to state support rather than being subject to means testing.
• Reviewing the scope for integration of adult social care and support with other services.
• For people in residential care to contribute a standard amount of £7,000-£10,000 per year, to cover their general living costs.

The impact of the Dilnot report on local authorities may not be immediate but in the longer term may be significant. Personalised budgets with greater citizen choice are now being introduced. New models of service delivery are being encouraged by the Open Public Services white paper. Against this background, introduction of a minimum care funding guarantee and a system of top-up fees for those able to pay for additional services would become key features helping the market to develop.

'Meanwhile' uses and schools

As part of the government's drive to simplify and speed up the planning system, a review of the 'use classes order' and permitted development rights is underway by the Department for Communities and Local Government and the Department for Business, Innovation and Skills. The outcome of the review is due out later this year, but any proposed changes would be subject to formal consultation.

One proposal under consideration in the review is removing the requirement to obtain planning permission for 'meanwhile' uses. If implemented, this would allow new shops, businesses and community uses to open up in empty buildings temporarily while permanent accommodation is being sought and arranged. Relaxing the current restrictions to allow businesses to set up more easily and quickly would help revive town centres, benefit the community and waste less space and resources.

The recent government consultation on planning for schools development resulted in a mixed response, with the majority of respondents favouring no change to the existing planning framework. Notwithstanding this, in August, communities secretary Eric Pickles issued a policy statement supportive of expansion of state schools and the creation of academies and free schools. The government wishes to see school proposals processed swiftly to allow new schools to be developed or existing popular schools extended to meet demand. This is particularly important at the moment as a significant number of places are needed to accommodate the rising demand for primary school places over the next few years.

The guidance makes clear that councils should work positively with communities from an early stage to identify suitable sites and prepare strong applications. A number of pointers are given in the policy statement to achieve this. There is a presumption in favour of the development of state-funded schools, and local authorities should set up a streamlined system for submitting and determining school applications.

However, there was a negative response to the idea of some buildings being converted to free schools without any planning permission being required. Proposals for changes to the Town and Country Planning (General Permitted Development) Order 1995 to enable this have now been dropped by government.

Procurement challenges '“ revised time limits

Significant changes to the time limit for bringing legal proceedings under the Public Contracts Regulations 2006 (where the proceedings do not seek a declaration of ineffectiveness) are being implemented by the government with effect from the 1 October 2011. This flows from the decision of the Court of Justice of the European Union (CJEU) in Uniplex (UK) Ltd v NHS Business Authority C-406/08 in 2010.

According to the 2006 regulations, a legal challenge should be brought promptly and in any event within three months of the ground for compliant first arising, subject to the court's discretion to extend time (regulation 47(7)(b)). The amended regulation requires such proceedings to be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds had arisen. The court has power to extend the time for good reason but it must not permit proceedings which have been started more than three months after the actual or constructive knowledge. Proceedings are deemed started when the claim form is issued.

The CJEU decision in Uniplex was that the time limit in the 2006 regulations did not comply with the general principles of EU law regarding the effectiveness of national remedies. Although it is for each EU member state to establish the time limit, the time limit must comply with EU law. Under EU law, limitation periods must be sufficiently precise, clear and foreseeable in their effect. Therefore one that is left to the court's discretion did not comply with these requirements.

It was also held that it is only after the aggrieved bidder has been informed of the reasons for its elimination or failure to win the tender competition, that the bidder can reach an informed decision as to whether or not to bring a challenge. Time therefore, must start to run from the date of knowledge, rather than from when the ground for challenge first arose.