Update | Local government: public pensions, procurement, social care

Public Service Pensions Bill

The Public Service Pensions Bill was published on 13 September 2012 with the aim of implementing the recommendations of the Independent Public Service Pensions Commission (IPSPC) led by Lord Hutton as made in its final report of March 2011. Initially the report led to a strong wave of resentment and various widely-publicised protest marches on Parliament by public sector workers. Recently, however, the consultation specifically relating to the Local Government Pension Scheme ?(LGPS) has won support from both local authority employers and the local government trade unions.

The independent commission's report demonstrated that the cost of the present system is soaring and is not sustainable in the longer term. The scale of the potential future savings from reform make the issue one of national economic significance, with the Bill now a key part of the present recession-driven austerity measures.

The key points in the Bill are:-

? the switch to career average pension schemes, instead of final salary schemes;

? extending the length of service required by a scheme member to qualify for a full pension (the early retirement dates for the Armed Forces, Police and Fire fighters are not affected);

? phasing the changes so that those retiring within the next 10 years will be protected, with their accrued rights preserved;

? capping employer contributions so that the cost to government remains affordable and sustainable;

? provisions to discourage changes to certain elements within 25 years - the so-called 'settlement for a generation';

? establishing a common legislative framework with improved governance arrangements for all public service pension schemes (but the schemes will remain separate and LGPS' features as a funded scheme are unchanged).

Other key cost-saving measures have already taken effect under existing legislation. They include switching index-linking from RPI to CPI, and changes in contribution rates.

The underlying problem which makes the existing schemes unsustainable is the increase in longevity of members, and underestimation of how quickly this is increasing. The present schemes date from the 1960s and 1970s when average life expectancy was below 70 years. By 2010 this had risen to around 79 years, and is predicted to be over 83 years by 2035. Being defined benefit (as distinct from defined contribution) schemes, the additional costs fall wholly on the employers, so, ultimately, the taxpayer.

Do the reforms mean that the young and future generations of public service workers will receive smaller real value (i.e. after adjustment for inflation) benefits than previously? This will certainly be the case. Will this be fair? The good news for members is that public service pension schemes will remain defined benefit schemes. This contrasts sharply with the present situation in the private sector, where only 1 per cent of employers now have defined benefit schemes open to new members, and only 28 per cent of private sector employers offer a pension at all. The government is addressing that issue through the new mandatory auto-enrolment regulations which begin to take effect in October 2012, which will also apply to the public sector. However, membership of any scheme, whether in the private or public sector, remains voluntary, with the opportunity to opt out of auto-enrolment.

Procurement rules

The UK government is currently negotiating proposals to revise the public procurement rules through the EU Competitiveness Council, which represents EU member states in the discussions with the European Commission. In July 2012, the council published a revised compromise text highlighting current progress. This includes:

? Removal of the proposal for 'national oversight bodies'. Instead of each member state setting up a separate body to oversee the application of the public procurement rules, member states are to decide how to organise monitoring of compliance with the procurement rules;

? Relaxing the proposal to require mandatory division into lots for SMEs;

? Removal of the proposed requirement for public authorities to issue a European Procurement Passport for suppliers;

? Allowing poor performance under previous contracts to be explicitly permitted as grounds for exclusion;

? Removal of proposed restrictions on use of direct call-offs and mini-competitions under frameworks.

There is also widespread support for requiring only the successful bidder to submit various certificates and documents, simplifying the rules on dynamic purchasing systems, and on a proposal ?for a new innovation partnership procurement procedure. This new procedure would allow a public authority and a supplier to enter into a long-term partnership to develop innovative solutions where there are not already solutions available on the market.

Although the government does not see the need, there seems to be a strong consensus among other member states in favour of the commission's proposals to abolish the lighter touch regime for Part B services (for which currently, the procurement requirements include obligations relating to technical specification and post-award information instead of the full requirements which includes advertising in the EU Official Journal). The council has suggested a compromise position which will maintain a lighter touch regime for a wider range of services. The government has said it will continue to press for a less onerous regime for Part B services such as education, health and welfare, as well as pushing for a temporary exclusion for public service mutuals to allow them to establish themselves in immature markets, before being exposed to full competition.

The revised directives could be adopted by early 2013. Under the current proposal member states will be required to implement the new rules within 18 months of adoption.

Social care reform

Proposals to modernise the care and support system were announced on 11 July 2012 with the publication of the White Paper 'Caring for our future: reforming care and support'. The paper supports the principles of the Dilnot Commission's model '“ financial protection through capped costs and an extended means test '“ but proposes a deferred payment scheme under which councils lend individuals funds to meet the cost of care and recoup the loan with interest from the borrower's estate after their death.

Two core principles lie at its heart: minimisation and postponement of the need for care, and allowing individuals choice in how to spend their own care budget.

The Care and Support Bill now in Parliament creates a single law for adult care and support, replacing and consolidating a patchwork of outdated legislation. It aims to underpin and simplify how the care and support system is managed and delivered. Implementing the core principles of the paper, the Bill facilitates individual choice, and enables better access to information and advice about care and support available. Key provisions include:

? A new statutory framework for adult safeguarding promoting individual wellbeing and setting out the responsibilities of local authorities;

? Clear legal entitlements to care ?and support;

? Establishment of personal budgets ?for all;

? Population-level duties on local authorities to provide advice and information.

The current system of locally-determined eligibility is confusing and unfair for many. From 2015, the government will introduce a national minimum eligibility threshold. Local authorities will then be free to set their own eligibility thresholds of at least the national minimum.

Demographic changes mean that there could be at least 1.4m more people who require care in the next 20 years who will benefit from these reforms.

Squatting offence

Section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 which came into force on 1 September 2012 creates a new criminal offence to squat in a residential building, punishable by a maximum term of up to six months imprisonment, a £5,000 fine, or both. It allows local authorities to contact the police to raid residential properties on suspicion that the property is being occupied by squatters and to remove them, instead of having to pursue civil eviction proceedings.

This aligns the law for England and Wales with that in Scotland, where a criminal offence has existed for many years. Westminster City Council has already successfully used the new legislation to reclaim a family home from a squatter at its Lisson Green estate.

Equality duty

Mr Justice Wyn Willams QC on 18 July in the case of Aaron Hunt v North Somerset Council [2012] EWHC 1928 dismissed the legal challenge to the reduction of the funding for council youth services. Mr Hunt alleged North Somerset Council had breached section 149 of the Equality Act 2010 as the council did not have 'due regard' to the needs of vulnerable young people nor conduct adequate consultation with the service users when reducing ?the budget.

The court accepted that 'due regard' in the Equality Act does not require every protected characteristic to be considered for the particular outcome at every stage, but that a conscientious consideration of the issues in the Equality Act should be made throughout the decision making process. However decision-makers are not required to make decisions that would cause unnecessary expense or which would require impractical steps, merely to preserve every detail of the protected characteristics in the Equality Act.