Select Committee on Merits of Statutory Instruments Twenty-Second Report


Additional information from the Department for Communities and Local Government

1.  We have been asked for a note clarifying the Department's decision not to require open competition for chief officer posts (beyond that of head of paid service) of the new single tier councils and - whether or not such a requirement were made - not to make specific provision as regards redundancy and access to pensions for other senior staff.

The Government's policy intention

2.  The Government's policy intention, as stated during the Parliamentary debates on the seven structural change orders, is that 1 April 2009 must mark a genuinely 'new start' for authorities of which local people will have wholly different expectations (see, for example, Official Report, 19 February 2008, column 303). More specifically, it is essential that, in each of the new single tier councils, there will be a new or 'refreshed' senior management team.

3.  Alongside this overarching policy aim is the equally important policy objective that it must be for each of the new single tier councils themselves to decide their senior management structures and to undertake the steps needed to put these in place. This is a key element in the Government's overall approach to local government restructuring following the Local Government White Paper 2006 and under Part 1 of the Local Government and Public Involvement in Health Act 2007: Government is creating a framework and putting in place the essential arrangements, allowing local leaders to make the majority of decisions in the light of local circumstances to implement the proposals for local government restructuring which were put forward by local councils themselves for their own areas.

4.  It is this context which has led the Government to conclude that the approach to senior staffing in each of the new single tier councils should be one which involves:

a)  In every case, the head of paid service - the most senior officer and leader of the senior management board and all the employees - should, by no later than twelve months after the reorganisation date (i.e. in the seven areas for which structural change orders have been made, by 1 April 2010 at the latest) be appointed through open competition. This reflects both the importance of this leadership position and that, without exception, this post will exist in each new single tier council. Moreover, the recognition that in different cases this competition may be undertaken at different times reflects the fact that, depending on local circumstances, the need for a fresh appointment may have to be balanced against the need at particular points in the transition process for some continuity of leadership.

b)  In relation to other senior management board posts, the number and responsibilities of which will almost certainly be different in each of the new single tier councils, the majority of such posts should, over a period of time, be subject to open competition. This less rigid policy objective than that for the post of head of paid service recognises both the overriding aim of a 'new start' for the authority and the importance of local flexibility to enable each new council to adopt the management structure it considers appropriate.

c.)  In addition, it is our policy intention that in this reorganisation, where any officer loses their position, they should be eligible for the normal redundancy compensation or severance arrangements.

Implementing the Government's policy intention

5.  The Government has adopted a twin-track approach to implement its policy intentions on senior staffing, which has met with the broad agreement of the Implementation Executives and Shadow Councils in each area. This twin-track approach is within the wider context where the transfer of functions to a new single tier council is to fall within the scope of a 'relevant transfer' under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE'), which is explained at paragraph 2.2 of the Explanatory Memorandum. In summary, the twin-track approach is to:

a)  make provision in the Local Government (Structural and Boundary Changes) (Staffing) Regulations 2008 ('the Staffing Regulations') to require an appointment to the post of head of paid service of the single tier council by means of open competition (and this includes eligibility for any appropriate redundancy compensation); and

b)  to set out in guidance the Government's intentions for the majority of other senior management board posts, highlighting the outcome which the Government expects and the rationale for this. Such other appointments should be made in accordance with the principles of TUPE, which in particular provides that an employee may be fairly dismissed where the sole or principal reason is a reason connected with the transfer that is an economic, technical or organisational ('ETO') reason entailing changes in the workforce of either the new or old employer before or after a relevant transfer (TUPE regulation 7). Therefore, new senior management appointments may be made through competition where this is needed on the grounds of an ETO reason entailing changes in the workforce.

6.  We have chosen this twin-track approach on the basis that we should make specific provision in regulations about senior management board appointments (beyond the TUPE provisions) only where this would both significantly facilitate the achievement of the policy intention for a 'new start' and would present no significant risk to the policy aim of local flexibility as regards the structure of the senior management board.

7.  In the case of the wider senior management board, the grounds of an economic, technical or organisational reason can be expected to present, in most circumstances, a basis for the achievement of the goal of the majority of senior management board posts being subject to open competition over a period. Moreover, we know that Implementation Executives and Shadow Councils intend to make wide use of open competition. Therefore, specific provision would not significantly enhance the scope for such competitive appointments being made. Furthermore, any specific provision would significantly increase the risk that local flexibility, as regards the structure of the senior management board, would be restricted. For example, some Implementation Executives or Shadow Councils might decide that the senior management board of the new single tier council should be structured according to the key areas of service delivery, with a director of children's services, a director of adult's services, a director of environmental services, a director of housing and so forth. Other Implementation Executives or Shadow Councils might wish to move to a radically different structure consisting of a director for place, a director for people, and a corporate director. Any specific provision to require the senior management board posts to be subject to open competition would have to define which posts constituted a senior management board, and would therefore restrict the flexibility for these decisions to be made locally.

8.  In contrast, without specific provision for the post of head of paid service of the new single tier council, there is a risk that there would be circumstances where - whatever the local intention - it would not be possible for an economic, technical or organisational reason to make an appointment to that post by open competition. Moreover, we can safely make specific provision without any significant risk to local flexibility (as there will always be a head of paid service who is both the leader of the senior management board and employees generally).

9.  In relation to the policy intention relating to eligibility for redundancy compensation and severance arrangements, wherever a person ceases in employment through the operation of an economic, technical or organisational reason, the expectation is that this will be by reason of redundancy. In these circumstances, the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 and the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 will apply. The person will therefore be considered eligible for redundancy payments in accordance with the employer's policy under the 2006 discretionary compensation regulations. In addition, the early receipt of Local Government Pension Scheme retirement benefits may be appropriate, i.e. where the officer is a scheme member aged 55 or over.

10.  In light of uncertainty that an incumbent head of paid service in a predecessor council, who was not appointed to that post in the new single tier council, might not be regarded as being dismissed by reason of redundancy, there is a risk they would not be eligible for any redundancy compensation. It was not the policy intention to preclude an outgoing head of paid service from eligibility for redundancy compensation, and provision has, therefore, been made for this circumstance. This provision ensures that such heads of paid service will have the same eligibility as other staff - being neither advantaged nor disadvantaged. In short, the provision ensures that an incumbent head of paid service in this position is not unfairly deprived of the opportunity to be considered for redundancy compensation in the same way as his counterparts in predecessor councils being dissolved and wound up, who are likely to satisfy the definition of redundancy as a consequence of the restructuring.

10 June 2008

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