LGA ‘remains concerned’ bill will hit in-house deals

The Local Government Association (LGA) “remains concerned” that the procurement bill will impact the awarding of in-house contracts, despite “helpful discussions” with ministers.

Procurement bill
The report took aim at the lack of effective government planning to implement the 2018 Resources and Waste Strategy (picture: Shutterstock)

To be debated in parliament today (9 January), the bill aims to reform the UK’s public procurement regime and make it “quicker, simpler, more transparent and better able to meet the UK’s needs”.

The LGA, the national membership body for 328 of the 333 councils in England, has taken issue with the wording of the bill, which it says removes two important exemptions to procurement rules allowing local authorities to award in-house contracts.

Local authorities are able to bypass parts of the regulations through the use of ‘vertical arrangements’, which allow them to offer contracts to an in-house organisation. ‘Horizontal arrangements’ can also be used for partnerships with other local authorities.

The LGA says the bill as it stands introduces new wording which stipulates that these exemptions can now only be used if the contract “could not reasonably be supplied under a separate contract”.

‘Save public money’

The LGA says this change can be read as a requirement for the public sector to have to engage the market, “even for arrangements that are currently being delivered wholly within the public sector.”

This new wording could close down models of collaboration and efficient service delivery

  • LGA

In a statement, the LGA said: “If enacted, this new wording could close down models of collaboration and efficient service delivery which save public money.”

The LGA said that, at the report stage in the House of Lords, Baroness Neville-Rolfe agreed that these vertical exemptions “need to be preserved”, but stated the government believes the bill does not close them down.

The LGA said: “While the minister’s assurance is welcome, we remain concerned that the provision could be easily read in a way that will, in practice, close down the use of the exemptions.”

The government believes the amendments, contained within paragraph 1(2) of Schedule 2 of the bill, serve to “close a loophole, whereby contracts that are mixed (they contain both exempted activities and non-exempted activities) might, at present, be inappropriately exempted from tendering,” the LGA says.

In a statement issued today, the government said the bill would deliver “transformative new rules which rip up bureaucratic EU regulations”.


The LGA first warned about the bill’s impact on in-house services last July (see letsrecycle.com story).

The LGA called for the bill to be amended to “clarify” that each of the public sector exemptions would be retained and that the model of service delivery remains the choice of the contracting authority.

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