Community Right to Challenge (Fire and Rescue Authorities and Rejection of Expressions of Interest) (England) Regulations 2012

Lord McKenzie of Luton Excerpts

Wednesday 13th June 2012 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her very full explanation of this order. As the noble Baroness has said, this is in a sense an affirmative order, which has come before us in parallel with a negative order. I have a couple of questions on that order, which I am going to tuck away at the end of my presentation, and I hope that she will be able to deal with them. In a way, this is a return to the Localism Act, which I thought was going to be just a happy memory but clearly is not. I have some questions for the Minister, which is how I would like to deal with this matter.

First, have any other bodies or persons been specified, or are they planned to be specified, under Section 81(2)(d) of the Localism Act 2011? This affirmative order, as the noble Baroness has said, is about the fire and rescue authorities, some of which are already included because they are county councils. I would like to understand a little better the relationship between functions and services and excluded activities. Perhaps I can take her back to paragraphs 2.4, 2.5 and 2.6 of the consultation to which she referred.

Paragraph 2.4 says that certain services are required,

“to be delivered by the authority. These will not be subject to the Community Right to Challenge, and will be listed as excluded services in regulations”.

Paragraph 2.5 says:

“For example, in relation to Fire and Rescue, the 2004 Fire and Rescue Services Act effectively requires that certain core activities are specifically delivered by employees of Fire and Rescue Authorities, some of which are the County Council … The following activities will be excluded from the Community Right to Challenge”.

Those activities concern employing,

“firefighters to put out fires and undertake rescues from fires”,

and how,

“Fire and Rescue Authorities respond to road accidents—fire-fighters undertake this role, jointly with fire fighting”.

Can we have some clarity as to whether these activities are excluded because they are specified in some regulation or because they are deemed to be functions and therefore outwith the right to challenge in the first place under the primary legislation?

Paragraph 2.6 states:

“There may also be other reasons why there is a case for excluding particular activities from the Community Right to Challenge. This may relate to those integrated with services that are excluded due to existing legislation, such as Fire and Rescue Authorities responding to other emergencies, including collapsed buildings and hazardous materials”.

Again, is that within the scope of the community right to challenge under this order or is it excluded? If it is excluded, is that because it is specifically excluded somewhere or because it is deemed to be a function and therefore not within the scope of the primary legislation?

All this is leading me to try to get a much clearer idea of the services that are likely to be within the scope of the order. If these other activities, one way or another, are excluded, what is included? Perhaps the noble Baroness can give us one or two more specific examples of that. If the issue of fire and rescue authorities dealing with emergencies such as collapsed buildings and hazardous materials are not automatically outwith the scope of the order and are therefore potentially within the operation of the community right to challenge, can the noble Baroness specify why those particular activities have been included? It was clearly thought during the consultation that they would be excluded. They are obviously very important and, in some respects, highly technical services.

On grounds for rejection, the noble Baroness referred to paragraph 3. What happens if there are changes in the consortium or changes in subcontractors during the course of a contract? Is that simply a matter that has to be dealt with within the contractual arrangements, or are there other provisions which enable a rethink or review in those circumstances?

Paragraph 5, to which the Minister referred, is something with which we instinctively agree, but can we hear a little more about the specific type of services which are envisaged being excluded under that paragraph?

Paragraph 7 is, presumably, in part about making sure that what is being conducted is evidenced. It talks about it being committed in writing. Would the position not be the same if, although not actually committed in writing, there was some other evidence that suggested that there was a negotiation under way?

What is the position if a community right to challenge involved, as might well happen, the disproportionate cost of a procurement activity? I can see nothing specific in the order which would take that, of itself, outside the scope. Similarly, what about repeated challenges? Each one might not, of itself, be frivolous or vexatious; indeed, they might come in a succession of challenges from different organisations or consortia. Is there not, or should there not, be provision, which says: enough is enough, we have had, within this time period, too many challenges under these provisions and this is consuming a lot of important and valuable time? I understand that there is no appeals process, because a lot of this is the judgment of the relevant authority, and I think that that is the right thing to do, but presumably it does not preclude the authority from acting reasonably, because there would be other legal challenges if it did not.

The noble Baroness referred to the consultation and the paucity of responses from fire and rescue sector respondents. I think that only six responded positively in favour of these authorities becoming relevant authorities. The noble Baroness referred to consultation with representatives of the sector. Was the Fire Brigades Union one of the consultees in that process?

I refer finally to the negative order which has been brought out in parallel, because the clock is ticking, if we are to do something by way of a take note or other Motion; we have to think carefully about that. Paragraph 7.18 of the Explanatory Memorandum, refers to the exclusion from community right to challenge of,

“services that are: jointly commissioned by a relevant authority and the NHS; that are commissioned pursuant to a partnership arrangement between the NHS and a relevant authority; or are commissioned by the NHS on behalf of a relevant authority”.

That is only until 1 April 2014, as the Explanatory Note to the order says—namely, during the critical period of major changes to the NHS commissioning architecture. My specific question is on what basis it is considered that the deadline of 1 April 2014 is sufficient for those other arrangements to bed in.

Paragraph 7.10 talks about the requirement to carry out a procurement exercise if the relevant authority accepts an expression of interest. I do not think that anywhere in the arrangements the cost itself—I refer to it in relation to the other instrument—would be a reason in itself for rejecting an expression of interest from a relevant authority. I would be grateful if the Minister could deal with those matters. Our full support for these instruments depends in part on understanding the scope of what remains within them for fire and rescue authorities and what is outside for one reason or another.

[Baroness Hanham]

My Lords, I thank the noble Lord for his usual searching questions and being well briefed. I start with the provision that fire and rescue services and any other public body could be included, but they are not at the moment. Beyond the fire and rescue authorities, other public bodies could be included if that seemed right, but that would have to come through in regulations. We would consider such an extension, which could also include an extension to central government services; so this could be widened. We know that a number of respondents to the consultation supported the extension to implement the right as currently constituted. I hope that that covers that.

On what would be subject to challenge, as I am sure the noble Lord appreciates, fire and emergency services are subject to primary legislation, part of which says that fires must be fought by recognised firefighters. Anything that would be suitable for a contract or a bid would be outside that, unless some form of mutualisation were being considered. That would mean something such as procurement and the maintenance of fire appliances, training, emergency call handling, IT or administration. Those are the areas where the challenge could be effective and could take place.

The noble Lord asked whether the Fire Brigades Union was a consultee. The consultation was open to all interested parties, which included the union. It did not respond, but as I said in my opening remarks, because it did not the department went out to further consultation with the fire brigades and their representatives, and they were broadly supportive of what was being considered.

On the reasons for rejection, vexatious rejections can include expressions of interest on the grounds of being frivolous or vexatious, and that can be interpreted quite widely. If something was considered to be being put forward without very good grounds, it could probably be rejected on that basis.

Right at the end of his remarks, the noble Lord asked whether costs could be taken into account once a bid had been put forward. My gut reaction is that it is only an expression of interest at that stage; it is not a bid with a fully worked-out contract. If there is an application or consideration that a voluntary organisation could do the job better, having put forward the bid, as it is entitled to do, at the next procurement, either triggered by that or at the normal stage, it would be invited to put a bid forward and the costs would then have to be taken into account. Clearly, if it was not competitive, it would not win the bid.

[Lord McKenzie of Luton]

As I understand it, if there is an expression of interest, the relevant authority has either to accept it or to reject it on some grounds. If there are no grounds for rejection but the cost of a procurement exercise might be wholly disproportionate to the service sought, that of itself does not seem to be a reason to reject the offer. If it is, perhaps the noble Baroness can explain within which of the provisions it is covered.

[Baroness Hanham]

As I understand it, the cost to the authority of accepting a bid is not covered, because this is a challenge that triggers a procurement exercise, and the procurement exercise would include other bids from other people; so it would be a normal tendering process. The cost of that would be normal expenditure. Am I missing the point?

[Lord McKenzie of Luton]

With respect, if the bid were rejected in the first place, procurement costs would not arise. That is the point that I am pressing. If there are no other reasons to reject the bid and there therefore has to be a procurement exercise incurring costs, the pass is sold. Should the potential costs of procurement themselves be a reason to be able to reject the offer?

[Baroness Hanham]

The answer to that, on projected costs, is no, because, as I said at the outset, the initial challenge is on the standard or quality of service. The question of cost would come subsequently when the bid was being considered. I am hearing much from my officials behind me. Is that correct? They think that it is, unless I misunderstood the noble Lord’s question. If that is not correct, I will come back to it.

This note gives me the other side of the story. The procurement exercise might actually lead to savings for the authority. We are still on the same level. Any cost to the authority comes if and when the procurement process takes place. The cost to the bidder or the local authority at the challenge stage is not taken into account. I think that that is all right.

The noble Lord also asked whether, once a bid has been put in process and contracted by a consortium, any change to the consortium would affect the contract. As with any other contract, it would jeopardise the contract. It cannot just change people mid ship. I think that one issue behind this is concern that a voluntary organisation could put forward a bid and then end up being hijacked or taken on by a bigger company. The answer is no, we have to take it as it starts. If there were any changes to that, the contract would have to be dealt with.

On the National Health Service and the 24-month time-limited exemption, only a short deferral to 2014 is being asked for to enable the new National Health Service commissioners—both the clinical commissioners and the NHS commissioning boards—sufficient time to bed in, because they are not bedded in yet. Subsequently, contracts will need to be considered and, if need be, retendered. The NHS also needs to develop relationships, including with co-commissioners and providers or potential providers. That time gap will enable it to do that. Without it, the NHS may not have the capacity to do everything that is being asked of it and there could be considerable disruption to the system if a procurement exercise has to be undertaken within that period. That is the reason for the delay.

Any social care or health-related service provided by a relevant authority in its own right will be included as services. That includes children and adult mental health services, including those associated with dementia and learning disabilities. If they are integrated with health services, continued integration is critical. Therefore, they can be challenged as well. I hope that that covers the noble Lord’s questions.

[Lord McKenzie of Luton]

On potential repeat processes under the community right to challenge from different people but in succession, does there comes a point whereby the accumulation of having to deal with them of itself ought to be a reason to say, “Look, hang on. There ought to be a pause. We cannot forever go through this process.”?

[Baroness Hanham]

A series of bids would automatically trigger a procurement process so that they could be taken into account.

[Lord McKenzie of Luton]

I hear what the noble Baroness is saying.