Recently the issue of shared services has been high on the agenda for many local authorities. The benefits of working together are irrefutable and may provide valuable gains in efficiency and resource terms. However, there is still much debate about the mechanisms for shared services and how the legalities of these can be clarified and simplified.
In some areas, statutory joint arrangements were established by the government. There are many examples of this, such as in relation to airports and buses; in the area of waste management, statutory arrangements accompanied the abolition of the metropolitan county councils in the mid 1980s.
It is in the area of waste that this issue has come back to the fore. Most authorities are not covered by the statutory arrangements and in the interim couple of decades, waste management has become much more politically difficult, has had its status enhanced by its clear link to the climate change agenda and devours substantially more resources, with landfill tax and other charges escalating. So joint working in waste management is becoming more attractive.
One of the perceived barriers in this area, however, is the legal mechanism of joint arrangements, bearing in mind that there are very substantial value contracts in play, significant assets and a large workforce. Under administrative arrangements, therefore, a 'lead authority' role is onerous.
The government has recognised this and therefore consulted in March of this year on a proposal which first emerged last year to enable the creation of new statutory Joint Waste Authorities. These would be new statutory corporations, with legal status and therefore the ability to enter into contracts and employ staff. The argument that enhanced legal mechanisms would stimulate the move by local government to more joint arrangements had been won; the government then needed to put those measures in place.
It did this by Part 11 of the Local Government and Public Involvement in Health Act 2007, where s205 allows two or more authorities to apply to the Secretary of State to establish a joint waste authority to discharge some or all of their waste functions. It was made clear that which functions are included is a matter for the authorities concerned, although the full complement would be refuse collection, waste disposal and street cleansing combined. It was made clear that these new authorities were 'operational' in nature and could not be created merely for strategic positioning.
The 2007 Act provisions came into force and the government then consulted on the draft regulations and guidance by which they would work. The proposal is that once an application is made and approved, the JWA would operate in accordance with general regulations and have regard to the statutory guidance. There would be a specific Statutory Instrument establishing each JWA. Last month, the government published the summary of responses to the consultation.
It is interesting to note that the principal reason that local authorities cited for not supporting these measures was that the new JWA's would not have precepting powers. Obviously, these bodies will command sizable budgets and the financing will be a major issue. Upon creation, there will be a TUPE transfer of staff across, contracts will also transfer from each authority and there will be a major consolidation of assets required. In these circumstances, it may be seen that the new organisations would be vulnerable to the fluctuations of local government finance, unless they had power to precept the authorities directly.
This is a complicated issue, as the individual authorities will still receive revenue support from the government for their waste functions, notwithstanding their transfer to the JWA; however, the funding delegated to the JWA under current proposals will be at the discretion of the authorities concerned. There appears to be a mix of measures here, as JWA's will themselves be able to raise money directly via the Prudential Borrowing regime, provided that they can demonstrate the capacity to fund the repayments. How that will impact on the authorities that provide the day to day funding is not clear and furthermore it is not clear how bidders will respond. They like the creditworthiness of local authorities which must balance their budgets and are likely to look for extra protection and guarantees if contracting with bodies with limited funds.
This is a key issue and one that threatens to delay the move towards new JWA's. Perhaps the government should look again at this issue and consult further, because it has clearly not persuaded a large number of local authorities that the benefits of a new JWA outweigh the operational difficulties that might ensue.
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