The dog that didn’t bark?

The Government introduced a number of ‘community rights’ through the Localism Act. Stephen Pearson examines their take-up

The Localism Act 2011, when it was passed, seemed to promise a widespread increase in local participative democracy. As an Act of Parliament, it was ‘spun’ to an unusual degree. To quote from the DCLG guidance issued at the time of the Act becoming law:

‘For services which are used individually, putting power in the hands of individuals

‘Where services are enjoyed collectively, to be delivered by accountable community groups

‘Where the scale is too large or those using a service is too dispersed, delivered by local institutions subject to democratic checks and balances, enabled by full transparency’.

Two cornerstones of this were the so called ‘Right to Bid’, by which employers and community associations would be empowered to take over local buildings or other assets of community value, and the ‘Right to Challenge’, under which (or so it was claimed) community groups and local authority employees would be able to take over local services for the benefit of their communities.

A shortage of bids
In practice, as demonstrated by the survey of local authority lawyers conducted for this publication, the actual use of these powers appears to have been, to say the least, somewhat patchy.

For example, the Right to Challenge has not been used at all, according to respondents in 87% of cases. In terms of the Right to Bid, 51% did not record it as being used at all, 49% have indicated that is used a little and no respondents indicated that the right had been used widely.

There is no reason, from anecdotal experience, to suppose that the survey results are in any way misleading. For example, in terms of the Right to Bid (which is actually something of a misnomer, as what it does is create a scenario where there is a moratorium on sale for a period of six months while a community association sees if it can decide to put together a proposal for taking over a building, raising the necessary money etc), experience is that community groups are frequently not aware of the provisions, and where they are they are not used broadly.

In practice, as demonstrated by the survey of local authority lawyers conducted for this publication, the actual use of these powers appears to have been, to say the least, somewhat patchy

The original intent to require authorities to create and maintain a register of assets appears to have been quietly dropped in favour of a reactive approach, i.e. where the relevant authorities respond to nominations by community groups. One large authority with, one would imagine, a number of community assets, the City of Oxford has, according to its website only listed four assets of community value. One of these is a post box (really!), two are licensed premises and one is a sports stadium.

Challenging times
In terms of the Right to Challenge, this is inevitably subject to a number of limitations. While we believe that a number of authorities are involved in transferring individual assets into the hands of community associations, for example under the auspices of ‘Community Asset Transfer’, the regulations themselves which anticipate a potential service provision by a community organisation do nothing more than create a situation within which a local authority will consider the possibility of undertaking a full procurement process.

The Community Right to Challenge (Expressions of Interest and Excluded Services) (England) Regulations 2012 provide additional hurdles by requiring that any expression of interest must be accompanied by:

•    information about the financial resources of the relevant body submitting the expression of interest;

•    evidence that demonstrates that the body will be capable of providing or assist in providing the service;

•    Information about the outcomes to be achieved by the relevant body in providing or assisting in the provision of the service;

•    details of how the relevant body is going to engage other employees of the authority affected by the expression of interest.

In our view, this is setting a high standard. For an organisation merely expressing an interest to be able to set out its financial resources before a tender exercise has
even commenced is, it would seem, difficult and requires a degree of research to be done.

In any event, the challenges of a procurement exercise are such that the pre-qualification part of any procurement might well be expected to exclude a new organisation that cannot show it has three years of filed accounts demonstrating an appropriate turnover to take over the service concerned.

Given the above, it would appear that although some organisations and employees are willing to come forward to try to take over a service, to actually be able to provide assurance that they can manage such service provision effectively and economically is likely to be challenging in practice, particularly where large commercial outsourcing organisations are in competition.

Where there is a small ray of hope is within the provisions of the new draft EU Procurement Directive (11745/13) which, although not fully finalised yet is due to indicate that Employee Mutual Bodies may be awarded contracts of up to three years by local authorities without a competitive process being mandated under the usual ‘OJEU’ procedure. Hope from Brussels – whatever next!

Stephen Pearson is a partner and Local Government specialist at Freeth Cartwright LLP. He can be contacted on 0845 274 6900 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it.