Local Government (Contracts) Bill

House of Commons

Session 1997-98
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Arrangement of Clauses (Contents)

Local Government (Contracts) Bill

EXPLANATORY MEMORANDUM

    The Bill clarifies the powers of local authorities (including probation committees and the Receiver for the Metropolitan Police District) to enter into contracts. It also provides a certification scheme whereby a contractor may be assured that his contract with a local authority will not be treated as being outside the authority's powers. While it preserves the right to challenge certified contracts in judicial review and audit-related proceedings, it also safeguards contractual provisions contingent on the outcome of such proceedings and makes provision about the rights and liabilities of the parties to contracts in the absence of such provisions. The Bill also varies the powers to make grants towards local authority expenditure in respect of magistrates' courts.

    Clause 1 makes it clear that where the discharge by a local authority of any of its functions involves the provision of assets or services, the authority can discharge the function by arranging for a contractor to provide the assets or services. It also makes clear that the authority may make direct arrangements with the contractor's financiers.

    Clause 2 allows local authorities to certify certain contracts which they enter into and provides that the effect of certifying a contract is that it is assumed that the authority had power to enter into it. Clauses 3 and 4 make provision about certification. For a contract to be certifiable, the contractor must have to provide both assets and services and his doing so must enable the local authority to discharge its functions. Contracts have to run, or be intended to run, for at least five years. There is power for the Secretary of State to make regulations varying the types of contracts which may be certified.

    Clause 5 preserves the right to challenge the lawfulness of a local authority's contract in judicial review proceedings, even though the contract has been certified. It also provides that certification does not affect the powers of the authority's auditor in relation to a contract. A court in audit-related proceedings is given the discretion it would have on a judicial review to give effect to an unlawful contract. Where a certified contract is found to be unlawful in judicial review or audit-related proceedings, clause 6 safeguards any provisions for compensation in such an event which were agreed as part of the contractual arrangements and clause 7 provides that, if no such provisions have been agreed or have effect, the local authority is to be liable in damages to the contractor. Clause 8 includes provision to prevent a prohibition order issued by a local authority's auditor affecting a certified contract before the authority acquiesces in the order or it is considered on appeal.

    Clause 9 amends section 57 of the Justices of the Peace Act 1997 which makes provision about the payment of grants for local authority expenditure on magistrates' courts. The amendment will allow capital expenditure to be treated for the purposes of the payment of grants as not being capital expenditure, so that revenue grants may be paid in respect of it. This will promote the provision of, for example, court-houses and information technology by way of public/private partnerships.

    Clause 10 makes provision about regulations under the Bill.

    Clause 11 deals with commencement and extent. Clause 9 only extends to England and Wales. The rest of the Bill extends to England and Wales and Scotland but not to Northern Ireland.

Financial effects of the Bill

    The Bill will not have any effect on central government expenditure.

Effects of the Bill on public service manpower

    The Bill will not have any effect on central government staff numbers and is not likely to have any significant effect on local government staff numbers.

© Parliamentary copyright 1997
Prepared 12 June 1997

Local Government (Contracts) Bill

	EXPLANATORY MEMORANDUM
	The Bill clarifies the powers of local authorities (including probation committees and the Receiver for the Metropolitan Police District) to enter into contracts. It also provides a certification scheme whereby a contractor may be assured that his contract with a local authority will not be treated as being outside the authority's powers. While it preserves the right to challenge certified contracts in judicial review and audit-related proceedings, it also safeguards contractual provisions contingent on the outcome of such proceedings and makes provision about the rights and liabilities of the parties to contracts in the absence of such provisions. The Bill also varies the powers to make grants towards local authority expenditure in respect of magistrates' courts.
	Clause 1 makes it clear that where the discharge by a local authority of any of its functions involves the provision of assets or services, the authority can discharge the function by arranging for a contractor to provide the assets or services. It also makes clear that the authority may make direct arrangements with the contractor's financiers.
	Clause 2 allows local authorities to certify certain contracts which they enter into and provides that the effect of certifying a contract is that it is assumed that the authority had power to enter into it. Clauses 3 and 4 make provision about certification. For a contract to be certifiable, the contractor must have to provide both assets and services and his doing so must enable the local authority to discharge its functions. Contracts have to run, or be intended to run, for at least five years. There is power for the Secretary of State to make regulations varying the types of contracts which may be certified.
	Clause 5 preserves the right to challenge the lawfulness of a local authority's contract in judicial review proceedings, even though the contract has been certified. It also provides that certification does not affect the powers of the authority's auditor in relation to a contract. A court in audit-related proceedings is given the discretion it would have on a judicial review to give effect to an unlawful contract. Where a certified contract is found to be unlawful in judicial review or audit-related proceedings, clause 6 safeguards any provisions for compensation in such an event which were agreed as part of the contractual arrangements and clause 7 provides that, if no such provisions have been agreed or have effect, the local authority is to be liable in damages to the contractor. Clause 8 includes provision to prevent a prohibition order issued by a local authority's auditor affecting a certified contract before the authority acquiesces in the order or it is considered on appeal.
	Clause 9 amends section 57 of the Justices of the Peace Act 1997 which makes provision about the payment of grants for local authority expenditure on magistrates' courts. The amendment will allow capital expenditure to be treated for the purposes of the payment of grants as not being capital expenditure, so that revenue grants may be paid in respect of it. This will promote the provision of, for example, court-houses and information technology by way of public/private partnerships.
	Clause 10 makes provision about regulations under the Bill.
	Clause 11 deals with commencement and extent. Clause 9 only extends to England and Wales. The rest of the Bill extends to England and Wales and Scotland but not to Northern Ireland.
	Financial effects of the Bill
	The Bill will not have any effect on central government expenditure.
	Effects of the Bill on public service manpower
	The Bill will not have any effect on central government staff numbers and is not likely to have any significant effect on local government staff numbers.