Public Sector Update - November 2011Wednesday 16th November 2011
DCLG consults on plans affecting neighbourhoods
The Department for Communities and Local Government ("DCLG") has begun consulting on a number of proposals born out of the Government's localism agenda that will have significant impacts on neighbourhoods.
Neighbourhood Forums, Plans and Development Orders
The consultation launched on 13 October aims to consult on the proposed new regulations governing:
- the process for establishing neighbourhood areas and forums;
- the preparation of neighbourhood plans and neighbourhood development orders;
- the requirements of Community Right to Build organisations; and
- Community Right to Build Orders.
Groups wanting to become a 'neighbourhood forum' for a neighbourhood area must make an application to the Local Authority containing:
- the name of the proposed neighbourhood form and relevant neighbourhood area;
- a copy of the written constitution;
- contact details of at least one member of the proposed neighbourhood forum; and
- a statement that the group is capable of being a qualifying body.
For a neighbourhood plan, the neighbourhood forum must publicise the plans in a manner that "is likely to bring it to the attention of people who live, work or carry on business in the relevant area". The application itself to the Local Authority will include amongst other things a consultation statement containing details of the persons/bodies consulted, summarises the main issues and concerns raised and how these concerns have been addressed in the plan. The Local Authority will publicise the plan and invite responses to be made within 6 weeks.
It is proposed that further requirements will be necessary to approve neighbourhood development orders. These include a greater duty on neighbourhood forums to consult interested parties and providing further details on the nature of the order.
The Bill provides powers to modify or dis-apply certain enfranchisement rights which would allow a community organisation to specify in its application for a Community Right to Build order that it intends to dis-apply enfranchisement rights in respect of the property.
For more details see:
The consultation on neighbourhood planning regulations closes on 5 January 2012.
Community Infrastructure Levy ("CIL")
The Localism Bill is proposing changes to the operation of the CIL. The DCLG is consulting on proposals to require charging authorities to allocate "a meaningful proportion" of the revenue generated from the levy to the local elected council for the area i.e. town or parish Councils. They are also inviting comments on proposals for Local Authorities to use the CIL to deliver affordable housing.
For more details see:
EmploymentSpecific public sector equality duties
The Home Office has published guidance on the Equality Act 2010 (Specific Duties) Regulations 2011 (the "Regulations"), which came into force on 10 September 2011. The Regulations require public bodies and other organisations carrying out public functions to take certain steps in order to help combat discrimination and equality. The steps must be taken by either 31 January 2012 or 6 April 2012, depending on the type of public body.
The first requirement is for public bodies to publish information to show that in its decision making the body consciously thought about achieving the aims of section 149(1) of the Equality Act 2010, that is, the need to:
- eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Equality Act 2010;
- advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; and
- foster good relations between persons who share a relevant protected characteristic and persons who do not share it.
- The make-up of the overall workforce;
- The gender pay gap and pay equality issues more generally for the public body;
- Recruitment and retention rates for staff with different protected characteristics;
- Applications for flexible working and their outcomes for different protected characteristics;
- Applications for learning and development opportunities and their outcomes for staff with different protected characteristics;
- Grievances and disciplinary issues for staff with different protected characteristics;
- Details of policies and programmes that have been put in place to address equality concerns within the workforce, and information from staff surveys;
- The number of people with different protected characteristics who access and use services in different ways;
- Customer satisfaction levels and informal feedback from service users with different protected characteristics and results of consultations;
- Complaints about discrimination and complaints from people with different protected characteristics; and
- Service outcomes for people with different protected characteristics.
The Regulations do not make clear exactly what information must be published, however it is clear that it is up to each public body to decide for itself what information it publishes, there is no prescribed format. Therefore this will depend on the size of the body, the range of functions it performs and the extent to which those functions could affect equality.
Collateral Contracts may be used at any time to clarify or vary terms in a principal contract and may be oral or written (for example, in the form of a letter). 'Collateral Contracts' can exist in parallel with a principal contract in a number of situations, for example there could be a collateral contract to the effect that a certain brand of render should be used; or an agreement by a Contractor to accept payment on terms other than those specified in the written contract.
What happens when terms in collateral contracts are disputed?
Courts have consistently taken the view that where one party makes assurances that they will refrain from enforcing proposed contractual rights prior to written execution, these assurances can override terms in the main written contract. In Hanoman v Southwark  EWCA Civ 624 the court considered that oral assurances "evidenced in writing" could be enforceable. The judge emphasised that collateral contracts must incorporate all key elements required of contracts generally:
- Offer and acceptance;
- Intention to create legal relations;
- Certainty; and
- Consideration (i.e. something of value, often expressed as a benefit or detriment).
1. Entire Agreement Clauses
Such clauses seek to restrict parties' rights to those contained in the written contract. In The Inntrepreneur Pub Company v East Crown  2 Lloyd's Rep 611, an oral promise was defeated by an entire agreement clause in the written agreement.
Similarly, in the recent case of Carey Group v AIB Group  EWHC 594 (Ch), the contract contained a clause prohibiting "variation, supplement, extension, deletion or replacement" otherwise than in writing and signed. The judge rejected the argument that oral assurances made prior to the written contract should override the written terms and considered that although collateral contracts are generally distinguished from variations, the writing requirement was "designed to serve substantially the same purpose as an entire agreement clause."
Where assurances are made prior to the written agreement, the act of entering the written agreement often constitutes good consideration by the promisee.
Chitty on Contracts, a leading contractual handbook, indicates that there should be "no reason why… a collateral agreement should not be held to exist even if entered into after the conclusion of the main agreement, provided that there is present (and not merely past) consideration". In other words, consideration must go beyond what parties are already bound to do under the principal contract (e.g. by an additional payment), as it is well-established that compliance with existing duties is not sufficient consideration in respect of new promises.
How can disputes be avoided?
- Where possible, all necessary terms should be incorporated in the main contract, or annexed as amendments to standard form contracts.
- Consider the effect of entire agreement clauses or similar restrictions in the main contract and ensure that formalities are observed (e.g. by making a formal, written variation rather than a verbal one).
EducationSchools/LEA's can delegate their duty of care to independent contractors
In Woodland-v-Essex County Council  EWHC 2631 (QB), a school pupil suffered severe brain injury when she nearly drowned during a school swimming lesson. The school was maintained by the Council, but the lessons were arranged through an external provider. This provider employed the life guard and swimming teacher, and the lessons took place at a pool owned by a different authority. It was alleged that the school, and therefore vicariously the Council (owing a duty to take such care of a pupil as would a reasonably careful parent), was liable for any negligence on the part of the external providers, as it owed a non-delegable duty of care to pupils. In rejecting this claim, key points noted by the High Court included:
- The school had a general duty to take reasonable steps for the safety of those in their charge, which included ensuring the venue was suitable for pupils, and that any contractors were reasonably competent to carry out the particular tasks;
- A restrictive approach should be taken when establishing a non-delegable duty;
- To hold that this duty could not be delegated to an independent contractor would represent a significant extension to the common law, particularly as the events occurred outside the reasonable control of the school. Mr Justice Langstaff noted "even if -which for these purposes I am prepared to assume - a school may be liable on a non-delegable basis for the actions of non-employee contractors providing educational services directly to children within its premises, this would in itself be an extension of the present common law. It would be a double extension beyond that for those who are non teaching (but life-guarding) and in premises under the regular control of others, well away from the school itself, to be held liable".
- The general rule that the employer of an independent contractor is not vicariously liable for the contractor’s negligence applied. Such a duty had not been imposed on hospitals, where their core function is the health and wellbeing of patients;
- There were no compelling policy reasons to justify such an imposition on the particular facts; and
- As regards the 'in loco parentis' argument, parents might similarly delegate the duty of care to a lifeguard at a swimming pool.
Local authorities will want to keep a watching brief on the development of this line of case law. The level of control by the council was clearly a factor in this case, and courts will need to consider these factors again where there is closer proximity to the provision on the part of the school/authority. One example might be where local authorities 'buy back' services from contractors who were formerly employees of the authority, delivering the same services, on the school site. If the authority were to be found liable for harm in relation to those services, this could have significant ramifications in terms of financial exposure and insurance.
Personal InjuryHighways Act 1980 claims
Two recent cases have increased the burden of responsibility on local authorities to maintain a thorough and meaningful repair and inspection policy.
Thomas v Warwickshire County Council  EWHC 772 (QB)
The claimant suffered a severe head injury following a fall from his bicycle when he hit a small spillage of concrete that had set and become fused to the road. The main issue for the court to decide whether or not the spillage of concrete formed 'part of the fabric of the highway'.
Under s41 Highways Act 1980, a local authority has an obligation to maintain the 'fabric' of the highway. Previous cases have held that obstructions or surface lying material have not been deemed to be within the scope of 'the fabric' of the highway.
The local authority in this case argued that the spillage of the concrete was a 'contaminant' and was in the same category as either oil or mud. The fact that the concrete had solidified into a mechanical bond did not alter that position. There was no intention on the part of the local authority that the concrete should become part of the fabric or surface of the road because it was common ground that it was spillage which was caused accidentally.
The court, however, accepted the claimant's argument that the spillage was not surface lying material. Once the concrete had hardened and bonded to the road, it became part of its 'fabric'. The spillage became permanent, or at least, long-lasting and as such, the local authority had an obligation to maintain and/or repair under s41.
Comment: This case has new implications for local authorities as concrete spillages are not uncommon. This ruling adds further definition to 'the fabric of the road,' now adding spillages and deposits that may become permanent by way of bonding to the already defined potholes and physical defects. The courts in this case have given a clear warning that local authorities need to review and amend inspection and repair policies.
Wilkinson v City of York Council  EWCA Civ 207
The claimant was injured when she fell from her bicycle as the front wheel hit a pothole in the road. The local authority pleaded a defence under s58 Highways Act 1980 which allows a council or highways agency to defend claims on the basis that they had taken reasonable measures to ensure that problems such as potholes are found and dealt with swiftly.
The prescribed frequency of inspection under the local authority's code was annual. The local authority inspected the road approximately ten months prior to the accident and no defect was recorded. However, the national code of practice suggested that the road in this case was a type that ought to have been inspected every three months. The local authority's s58 defence argued that the deviation from the national code was a matter of limited manpower and financial resources. The deviation was not based on any risk assessment, as the national code suggested it ought to be.
The Court of Appeal found that financial considerations are not a factor when looking at whether the local authority had done what was "reasonably required." Under s58 this required "an objective judgment based on risk." The s58 defence was not designed for a local authority which decided that it was preferable to allocate its resources in other directions because other needs were more pressing than doing what was reasonably required to make the roads safe. Consequently, the Court of Appeal found in favour of the claimant.
Comment: It would be advisable for local authorities to ensure that the frequency of inspections are set following a process of risk assessment based on locality, traffic levels and other relevant factors so that any deviation from the national code of practice is readily explicable. Financial considerations in itself will not fall to be considered when deciding whether the local authority has done what is reasonably required to ensure the highway is not dangerous.
Public ProcurementLocalism Bill: Government Publishes Proposed Approach to "Community Right to Challenge"
The Localism Bill (the "Bill") has now been sent by the Commons for Royal Assent. The Bill devolves greater powers to councils and communities and is set to introduce a community right to challenge. This gives voluntary and community bodies, parish councils and employees of local authorities the right to express an interest in running a service provided by their local authority.
A local authority would be required to consider any expression of interest it receives, and if the local authority accepts that expression, it must carry out a procurement exercise for the provision of the service.
The Government has recently published guidance in response to a consultation carried out earlier this year on its proposed approach to implementing the community right to challenge, and the Government's proposals are set out below:
- Expressions of interest must be submitted by a "relevant body" which is defined in the Bill and includes those set out above.
- An authority that accepts an expression of interest is required to carry out a procurement exercise which must be appropriate, having regard to the value and nature of the contract that will be awarded as a result. The Government has stated that the provisions in the Bill do not make any changes to procurement law, and it remains the position that where the Public Contracts Regulations 2006 (the "Regulations") apply, the procurement process must comply with the Regulations.
- The Secretary of State has the power to provide assistance to a relevant body exercising its right to challenge. The Secretary of State also has the right to exclude services from the community right to challenge.
- Expressions of interest should include details of the relevant body, their financial situation, the relevant service to which the expression of interest relates, the relevant body's case that it will be able to participate in a procurement exercise, their case that it is capable of providing the service and details of the outcomes to be achieved.
- An expression of interest may only be rejected on the grounds specified by the Secretary of State in the Regulations. These grounds may be extended by the Government in the future.
- The grounds in the Bill include: the relevant body is not suitable to provide the relevant service; the service is exempt from the right to challenge; the relevant service is already subject to a procurement exercise or negotiations for a service agreement; or the relevant body provides unsatisfactory, frivolous or vexatious information and/or the expression of interest is submitted outside of the period specified by the authority.
- There is also set to be an additional ground that allows for assessment of whether the expression of interest will improve the quality of service and better meet service users' needs.
- The Bill requires relevant authorities to set and publish timescales associated with the process of the right to challenge.
- The Government has proposed that relevant authorities should have regard to several factors with respect to the minimum period for expressions of interest. These include: the need to provide relevant bodies with sufficient time to prepare and submit their expressions of interest; the nature, scale and complexity of the service for which a period is being specified; and the timescale for any existing commissioning cycle relevant to the service for which the period is being specified.
- Also proposed are factors for the minimum timescales within which relevant bodies should be notified of a decision on an expression of interest. These include the need to notify within a reasonable period; the nature, scale and complexity of the service as well as the complexity of the interest received.
- The Government is proposing that relevant authorities be required to notify relevant bodies of the timescale for a decision within 30 days.
Although relevant bodies may welcome the opportunity of the offer of the right to challenge, in practice it seems that a successful expression of interest will only confer a right on the relevant body to compete in a procurement process. It remains to be seen how many relevant bodies will actually find themselves running local services as a result of the exercise of their right to challenge. With increased interest being shown by relevant bodies in running local services, the proposals in the Bill, together with proposals in other legislation, are likely to have the knock-on effect of increased workloads in local authority procurement departments.
Electronic "Public Procurement Passport" Proposal Passed by European CommitteeThe European Parliament's Committee on Internal Market and Consumer Protection has unanimously backed a non-legislative resolution proposed by rapporteur Heide Rühle, to introduce an EU-wide electronic "public procurement passport" that could make tendering for public procurement contracts less cumbersome and costly for SMEs.
While SMEs comprise 52% of combined turnover in the economy, they win only 31-38% of public procurement contracts by value. The proposal is designed to redress the balance and is supported by many MEPs who think the process should be more flexible and the rules should be simplified so that SMEs have better access. This proposal is just one part of the EU's "Modernisation of Public Procurement" Report. As public procurement accounts for roughly 17% of EU GDP, getting value for taxpayers' money is seen by MEPs as vital to relaunch the European economy and create jobs.
Ms Rühle's resolution was adopted by a show of hands at the October plenary session.
Compulsory data protection audits in local government and healthcare sector
The Information Commissioner, Christopher Graham, has called for the power to conduct compulsory data protection audits in local government, the health service and the private sector. The call for wider compulsory audit powers comes as a result of the Information Commissioner's Office (the ICO) being blocked from auditing the organisations that are causing the most concern over their handling of personal information.
The ICO has agreed 47 undertakings with organisations that have breached the Data Protection Act 1998 (the DPA) since April. Over 40% of these were in the healthcare sector with the most serious personal data breaches having occurred in local government organisations, including local authorities.
Although the DPA provides the ICO with the power to conduct compulsory data protection audits, this only applies to central government departments. The DPA identifies audit as a central tool for assisting and ensuring organisations meet their data protection obligations and consequentially the ICO undertakes consensual audits with the aim of providing practical advice and recommendations. However, the ICO has seen a general reluctance to undergo a consensual audit.
At the 10th annual data protection compliance conference, Christopher Graham said "Something is clearly wrong when the regulator has to ask permission from the organisations causing us concern before we can audit their data protection practices."
The overall number of new data protection complaints is up by 2% compared to the same period last year and Christopher Graham has highlighted that "With more data being collected about all of us than ever before, greater audit powers are urgently needed to ensure that the people handling our data are doing a proper job".
There are many benefits to undertaking a consensual ICO audit. The process will take approximately one month and the focus is very much on assisting the organisation to mitigate the risks of non compliance. The organisation will benefit from the ICO's resources at no expense and achieve independent assurance of data protection policies and practices.
The current call from the ICO for wider audit powers coupled with the ICO's power to issue fines of up to £500,000 highlights the importance for organisations, especially those within the local government and health service sectors, to ensure that they have proficient and well established data protection policies and practices.
Flexible tenancies - the new kid on the block
Introduced following the Government's 2010 consultation, looking at how the 'scarce commodity' of social housing should be used in future, the Localism Bill provides the framework to allow both local authorities and housing associations to use fixed term tenancies as an alternative to the secure or assured 'tenancy for life.'
For local authorities, the flexible tenancy will take the form of a secure tenancy for a fixed period of not less than 2 years. The housing strategy which local authorities will be required to publish will set out what is the expected norm for flexible tenancy periods - all of the current indications are that tenancies will be fixed for a period of 5 years, unless there are 'exceptional circumstances.' With the new type of tenancy comes a new means of termination. There will be 2 notices which will need to be served on flexible tenants - one served not less than 6 months before the end of the term and a second that needs to be served 2 months before the end of the term. The tenant will however have a right to seek a review, both of the initial decision to offer a flexible tenancy and then a separate right to review after the service of the 6 month notice. Further legislation will follow to set out exactly what form these reviews will take, but its likely to be similar to the review processes which are already in use in introductory tenancies.
Fixed term tenancies for housing association tenants will operate in a slightly different manner and will take the form of a minimum 2 year fixed assured shorthold tenancy. These fixed term ASTs would need to be terminated by a 6 month notice, rather than the current 2 month notice. Note however that currently there is no statutory right to review to mirror the proposed secure fixed term tenancy regime.
Opinions differ regarding the introduction of flexible tenancies. One of the key difficulties could well be obtaining possession orders from the Courts; in light of recent case law, obtaining a possession order at the end of a fixed term could well prove to be less than straightforward. No doubt further guidance will be given by the Court between now and when the first of the flexible tenancies are coming to an end in the coming years.
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