Local government update

Localism Act

The Localism Act 2011 gained Royal Assent on 15 November 2011. The provisions of the Act have been coming into force in stages and there are still a number outstanding. The general power of competence in section 1 has now come into force following the decision by the community secretary, Eric Pickles, to sign a parliamentary commencement order on 17 February 2012. This section was fast tracked because of a recent High Court ruling involving Bideford Town Council and the power to hold prayers as part of their formal business.

Section 1 of the Localism Act 2011 provides local authorities in England with a new general power of competence which will give them the powers to do anything that an individual is able to do that is not specifically prohibited. This will open the way for local authorities to be more innovative in their thinking and actions and will cure the legal defect that caused London Authorities Mutual Ltd (LAML) to founder. The power may be exercised anywhere, for commercial purposes, for charge or without charge and for the benefit of the authority, its area or persons resident or present.

Community right to challenge

One of the most controversial parts of the Localism Act 2011 will be the new 'community right to challenge' contained in sections 81-86. The provisions are expected to enter into force by the end of 2012 and are intended to enable voluntary and community bodies, employees of the authority that wish to form a mutual organisation to deliver services, and parish councils to express an interest in running a local authority service. A local authority is under a duty to consider expressions of interest, and, where they accept them, run a procurement exercise for the service.

Section 81(6) defines a 'relevant body' that may express an interest in running a local authority service under the right as: a voluntary or community body; a body of persons or trust that is established for charitable purposes; a parish council; or, in relation to a relevant authority, two or more employees of that authority.

The legislation does not seek to prescribe the precise legal form that employee-led bids would have to take, though the government has signalled its preference for entities in which the employees enjoy a material ownership interest.

County councils and district councils are within the current scope of the right and the government is consulting on extending the right to all fire and rescue authorities, while exempting core services including fire-fighting and responding to road traffic accidents.

Section 83(3) requires the procurement exercise carried out by the authority following a successful challenge to be 'appropriate having regard to the value and nature of the contract that may be awarded as a result'. Sections 83(8) and (9) require authorities to consider whether and how an expression of interest, and any subsequent procurement exercise, can promote or improve the social, economic or environmental well being of its area. This is intended to encourage authorities to consider the benefits of including social benefit clauses in the delivery of the service. However, section 83(10) requires authorities to comply with existing public procurement law in doing so. Failure to do this could provide a number of grounds for legal challenge.

On the face of it, the community right to challenge could be a powerful tool to open up public services markets in line with the government's vision in the Open Public Services White Paper published in July 2011 and envisaged in the the Public Services (Social Value) Bill which is currently passing through the House of Lords.

Boosting social enterprise

The Public Services (Social Value) Bill was introduced into parliament by way of a private members' bill in the House of Commons in June 2010. Its journey started slowly but since October 2011 the bill has completed its passage through the Commons and is now at the report stage in the House of Lords.

In essence, the bill aims to strengthen the position of social enterprises in the business sector and there will be a greater emphasis on social value in the placement and provision of public services. Under the proposals, section 4 of the Local Government Act 2000 will be amended to require local authorities to include in their sustainable community strategy proposals for promoting engagement in social enterprise in their area. Greater consideration will also need to be given to economic, social or environmental well being in the pre-procurement stage of public contracts. A duty will also be placed on the secretary of state to publish a 'national social enterprise strategy'.

Health and social care

Last month, the Health and Social Care Bill reached the report stage in the House of Lords. A number of amendments to the bill have been proposed by the health minister and several other peers and these will be subject to discussion during this stage. A controversial amendment, proposed by Labour's Lord Patel, to ensure mental health is treated the same as physical health has already been passed during the first sitting, causing another defeat to the government.

Other proposed amendments include: putting beyond doubt the accountability of the secretary of state; strengthening the role that commissioners play in education and training; making clear Monitor's role with respect to integration and competition; strengthening patient involvement in decisions about their own care and treatment; and ensuring patient confidentiality is appropriately protected.

As well as encountering strong opposition from the Labour Party, the government is now also facing increasing criticism from medical professionals, including the British Medical Association and the Royal College of Nursing.

The government is still in the process of responding to the recommendations made by the Dilnot Commission. A white paper is expected to be published by the government in the spring of this year. The white paper will cover not only care funding but also wide-ranging reforms in social care law and is likely to include the government's response to the proposed cap on fees.

In order to assist the government in drafting the white paper, a consultation engagement, 'Caring for our Future', was conducted between 15 September and 2 December 2011. The Department of Health is now continuing to work with discussion leaders and reference group members to develop policy recommendations for the white paper.

Education Act and PFI schools

The Education Act 2011 received Royal Assent on 15 November 2011. The Act is an important step in implementing the government's education reform programme to help create an education system that delivers higher standards for all children.

The Act:

• introduces two new types of academies: 16-19 academies and alternative provision academies;
• removes the requirement for an academy to have a specialism;
• requires local authorities to give precedence to academy proposals when considering opening a new school;
• gives the secretary of state greater powers in relation to underperforming schools;
• abolishes a number of arm's length bodies;
• gives teachers greater powers and protections; and
• removes some of the unnecessary legal burdens on governing bodies, teachers and local authorities.

Controversy over whether a local authority would be 'maintaining' an academy where the school is part of a PFI scheme has been laid to rest by a change to section 6 of Academies Act 2010. This provides that the local authority is not prohibited from providing financial or other assistance in respect of an academy, including making payments in respect of the expenses for maintaining, providing premises, goods or services, or making premises, goods or services available to be used. This section came into force immediately when the Act was passed and is in response to the problem highlighted by an academy conversion in Sheffield relating to an existing PFI arrangement with the local authority.

Public procurement

In December 2011, the European Commission announced its proposals for reform of public procurement law. The proposals will now be considered by the member states and the European parliament with a view to launching the legislative procedure for adoption. If adopted, new directives would have to be implemented into UK law, possibly by the summer of 2014 if the planned European-level changes stay on schedule.

The proposals would simplify and modernise EU procurement law, which has been criticised for being too complex and inflexible. Brussels has claimed that the administrative burden on companies tendering will be reduced by more than 80 per cent.

The government has welcomed the proposals but considers that they still do not go far enough: the Cabinet Office will continue to push for provisions allowing for a temporary exemption for employee-led organisations. The proposed changes include:

• enabling contracting authorities to negotiate with tenderers to improve and tailor their offers;
• allowing authorities to publish general notices for their planned procurement for the next year instead of individual contract notices;
• abolition of the distinction between part A and part B services; and
• requiring member states to set up national independent oversight bodies.

Planning disputes

Any local government lawyer dealing with an adverse possession case should study Chambers v London Borough of Havering [2011] EWCA Civ 1576.

At county court level the case was found against Chambers who claimed adverse possession of several parcels of land. The evidence presented by him was viewed by the trial judge as insufficient to defeat the claim to ownership by the local authority, which was the registered owner of the disputed land.

However, on appeal the legal/factual basis for the decision in favour of the local authority was questioned in relation to two of the parcels of disputed land and a re-hearing was ordered.

The judgment is useful because it highlights appropriate legal tests and key legal principles to apply in this area, including those laid down in the well-known JA Pye case. The case also explores a number of interesting points around the importance of the particular facts of a case and the importance of evidence, acts amounting to possession and the significance of fencing, factual possession and continuity of use.