The MJ and law firm Trowers & Hamlins earlier this month organised a debate with chief executives to discuss some of the legal issues arising in the Localism Bill. Phil Cooper reports.

If a SWOT analysis had been called for on the relative merits of the Localism Bill at The MJ/Trowers & Hamlins round table discussion the legislation would clearly have occupied both the ‘opportunities’ and the ‘threats’ columns with ‘threats’ scoring more heavily.

It could, suggested a Trowers & Hamlins executive, be characterised more accurately as the Paralysis Bill in view of the scope for community empowerment to disrupt the development of new ways by which councils could be doing business. Proper regulation and governance was needed from central government or processes involving private sector partnerships for the provision of public services could grind to a halt.

Asset-backed vehicles would not make progress if the assets, challenged by a use of the community right to bid, were effectively sterilised. ‘An asset-backed vehicle is not a panacea but linked to TIFs can provide an interesting means of regenerating communities,’ commented the executive.

Taking part: Paul Blantern, Chief executive ,Northamptonshire CC Robert Hardy, Interim head of policy and partnerships, Tunbridge Wells BC Susan Law ,Chief executive, Wokingham BC Fiona Ledden, Director of legal and democratic dept., Brent LBC Laura McGillivray, Chief executive, Norwich City Council Simon Warren, Chief executive, Wolverhampton City Council Stephen Weigel, Chief executive, Tandridge DC Malcolm Iley, Partner, public sector commercial dept., Trowers & Hamlins Helen Randall, Partner & head of sector commercial dept., Trowers & Hamlins Paul McDermott, Partner public sector commercial dept., Trowers & Hamlins Michael Burton, Editor, (chair of debate) The MJ Phil Cooper, Reporter, The MJ

Incentives were needed for a private company to come in and take risks. A community right to bid could take some assets out of the mix and attacked the very exclusivity that would attract the private sector. The level of risk would also be altered and such considerations could cause a private sector company to withdraw from a partnership arrangement. ‘The localism objective is colliding with the market,’ added the executive.

One council chief felt this knowledge could and would be used by elected members, let alone communities, to scupper plans deliberately. ‘The right to bid, is not the same thing as the right to succeed,’ he said. Another added: ‘ The right to bid could also become the right to stall.’

There was general agreement on the need to lobby government to persuade it to relax the law on some types of procurement although the prospect of procurement rules being altered fundamentally was acknowledged to be highly unlikely because of the European dimension, the Remedies Directorate and the accelerating requirements for greater transparency all of which made it easy for legal challenges to be mounted.

The discussion also highlighted the plans to provide councils with a general power of competence. Waiting for this to be enshrined in law would however inhibit councils from moving ahead with what was needed in order to address the new service provision landscape. There were, said a Trowers & Hamlins executive, plenty of existing legal powers to enable authorities to move forward on the subject of procurement and commissioning.

But a niggling worry emerged with a number of those present questioning the consequence of a service being mutualised or passed to a social enterprise to run. ‘What do you do if it falls flat on its face. What provision do you have to make and what are you willing and able to do?’ asked one council chief.

Another said: ‘ I’m having to make tens of millions in savings this year. Am I still to be a provider of last resort? As a business I should not have to be.’

Although there was sympathy for this predicament the fact, underlined by another participant, was that local government’s role as provider of last resort was enshrined in all relevant legislation and could not be set aside.

It was with this fear in mind that the chief executives of two authorities present had established social care trading companies in acknowledgement of the fact that the marketplace locally could not provide a credible alternative and that market failure was a real concern.

Developing this argument one chief said: ‘Social enterprises are about making a profit however that profit is disposed of but this concept is alien to many people starting social enterprises, especially if they are coming from the social care world.’ Whereas a social enterprise or mutual could, and had already, succeeded in areas such as leisure and arts provision, social care was a completely different animal.

Time was needed to build up both a viable supply chain and also to acquire the appropriate skills and acumen to run enterprises. ‘Think back,’ said one participant, ‘to the amount of time, effort and resource needed in the early days of community care. A social enterprise needs to find a market.’ Success would also only come if there was commercial aptitude and this was not a given.

‘I think the biggest problem for officers,’ said one chief: ‘Is to re-imagine services as if they were businesses. People are used to doing business plans - internally playing shops as it were – rather than seeing that it pays its way in the world.’

In this regard, the concept of HR spending to help people prepare for redundancy by helping them sharpen up their CVs might usefully be diverted to providing those who wished it with the skills to set up their own enterprises.

The attitude of elected members towards the radical overhaul in service provision produced a range of responses. Some with a disposition to keep as much as possible in house had shifted their ground in the light of present realities but still wanted to retain a measure of control.

Others, more pragmatically, were in theory supportive of commissioning, of social enterprises and of mutuals but expressed concern that staff who took over a service would suffer from having less employment protection than under existing terms and conditions.

In one case, a participant explained that members had paid a heavy political price at the hands of the electorate for their support of an asset-backed vehicle even though it made good commercial sense in an area where such considerations might be thought to hold sway.

All such considerations could affect the blossoming of social enterprises and mutuals to the extent hoped for by the government.

One authority was working with a local university to promote social enterprise by establishing a leadership academy to provide the appropriate skill set and was also setting up social care provision training. But, said one chief executive, ‘if we are to allow for innovation, we must allow for the possibility of failure!’

Underpinning the discussion of how to respond to the new realities were the various accounts round the table of how councils had thus far met the need for savings with several of those present indicating that they had already shed up to 25% of staff. ‘We have had no compulsory redundancies yet but that option is running out because the people aged between 55 and 60 are running out,’ said one chief, to overall agreement.

‘The question is what do you do when that has been done?’ he asked. In addition to future cuts required was the wider realisation of the effects of what had already been done. ‘Budget cuts will be needed next year just as the stories of this year are coming out. What was just a headline then will now have become a reality.’

As well as fears for the possibly unseen effects of the Localism Bill there was also some criticism of the private sector taking commercial advantage of, rather than assisting, the provision of shared services.

One chief execuitive gave an example of the licensing problem in regard to technology which, he said ‘stops shared services in its tracks.’ Describing a shared service arrangement between three or four authorities he said the software provider ‘actually licenses us as separate legal entities so each of us has to pay for the same seven or eight licenses.’

Other issues emerging included the likely future for PFIs with a prediction that they would return in about 12 months’ time but re-branded. It was also generally felt that there would be an increasing number of judicial reviews of council decisions to cut funding, aided by the community’s right to challenge.

Summarising the brave new world emerging for service provision and localism a chief executive said: ‘It’s whether we are looking at moving the journey forward rapidly or trying to paint what the destination looks like, which is more time-consuming.’ He added: ‘Up to now we have been enormously successful which makes it look as though we are shroud waving and that what we have achieved is easy. But this is not the case.’