Harper Macleod News & Blogs

Shared Services are a topical issue given the pressure on public bodies to save money.  There are lots of different legal structures that can be used in shared services provision, including in-house service provision and setting up a company which may provide services to its member companies.  Public procurement is an essential consideration when setting up shared services arrangements as the fact that another public body is the proposed supplier does not automatically mean that the public procurement regime does not apply. 

The two main ways in which shared services arrangements are structured, in order to be compliant with the public procurement regime, are to rely on the Teckal ("in-house") exemption or the principles of the Hamburg Waste case.  For the Teckal exemption to apply, the purchasing body must exercise control over the proposed contractor which is similar to the control which it exercises over its own departments (the "control" criterion) and the proposed contractor must carry out the essential part of its activities with the purchasing public body (the "essential part" criterion).  Control can be exercised jointly by several public bodies but there must be no private sector involvement in the proposed contractor and it should also be remembered that the proposed contractor will itself most likely be subject to the procurement regime.

For the Hamburg Waste principles to apply, services must be provided by one public body to another, at cost, on the basis of a "shared community of interest", utilising its own resources and not receiving any remuneration or other benefit from such service provision (except reimbursement of costs).  In the recent Azienda case (case C-159/11, judgment of 19 December 2012), the Court of Justice considered whether arrangements between a local health authority and a university satisfied the Hamburg Waste principles and determined that they did not.  Although on the face of it this appears to restrict the scope of the Hamburg Waste principles, the facts of the case are very particular.  The local health authority had commissioned the university to assess the vulnerability of the local health authority's buildings to earthquakes.  Assessing the vulnerability of the local authority's buildings is clearly not implementation of a public task which the university was required to perform so there was no "shared community of interest".  The judgment may have been different if the university was also assessing the vulnerability of its own buildings at the same time and such assessment was considered integral to the public interest objectives of the two entities.

The particular circumstances of a proposed shared services arrangement will always be crucial in determining its treatment under the public procurement regime and apparently minor differences in structure and or contractual terms can be extremely important.

In March, the Court of Session in Edinburgh confirmed a previous ruling in the case of Healthcare at Home Ltd v The Common Services Agency that the agency for the Scottish Health Service had not breached procurement rules in relation to its award of a contract to BUPA rather than Healthcare at Home Limited.

The contract was for the dispensing and delivery of the breast cancer drug Herceptin and related nursing administration and support.  The CSA's Invitation to Tender had set out the award criteria which the CSA would use in evaluating tenders, as well as the various sub-criteria and the weightings to be given to each.

The Scottish Housing Regulator last month released a report which warns that Registered Social Landlords ("RSLs") must work diligently to protect their financial health.

The Report - 'Analysis of the Finances of Registered Social Landlords 2012' (March 2013) - concludes that the majority of Scottish RSLs are continuing to manage their finances but highlights the key financial risks and challenges facing landlords going forward, particularly lending difficulties, pension liabilities and welfare reform. It advises RSLs that: "There is a vital role for governing bodies to challenge management and to assure themselves that everything possible is being done to manage the risk to financial health".

Controversial changes to the Housing Benefit system, dubbed the "Bedroom Tax", have sparked a political furore and generated acres of media coverage. Here, Nadia Sirc considers the key points of the new regulations, who they will affect and what the consequences are likely to be for tenants and landlords.

Introduction

On 1 April 2013 a fundamental change to the Housing Benefit system was introduced across the UK.  The policy has been labelled "Bedroom Tax" though strictly speaking it is not a tax at all, but rather a penalty that will reduce the amount of Housing Benefit that a claimant will receive.

It can be very difficult to determine the point at which a failure of governance becomes an issue of misconduct, but a recent headline-grabbing example provides a cautionary tale for all charities.

Among its many regulatory functions, The Office of the Scottish Charity Regulator (OSCR) is charged with identifying and investigating apparent misconduct in the administration of charities.

Seasoned procurement personnel will be well acquainted with the "Teckal" exemption to the public procurement rules, where a contracting authority awards a contract for the provision of services or works to an "in house" provider. In this briefing note, we consider a European Court of Justice (ECJ) ruling – given on 29 November 2012 – which sets out the conditions for applying the "Teckal" exemption in circumstances where a local authority has only a minority shareholding in the service provider.

Teckal
The judgment in Teckal (Teckal SrL v Commune di Viano & Azienda Gas ((1999) ECR-I-8121)) established that where contracting authorities award contracts for providing services or works to an "in house" provider, the relationship falls outside the scope of EU public procurement law. 

In order to be regarded as an "in house" provider, it must:

Property factors – including local authorities, registered social landlords and private factors - will be aware that the Property Factors (Scotland) Act 2011 (the "Act"), and its relative Code of Conduct, which set out standards of practice for factors in Scotland, are now in force.

From 1st October, factors must be registered with the Scottish Ministers.  Upon registration, factors receive a registered number, starting with the letters "PF". 

In September 2012, the Office of Fair Trading (which is responsible for applying and enforcing competition law in the UK) issued new guidance as to the appropriate size of penalty for a breach of competition law.   

The OFT has discretion in each case as to whether to impose a penalty, but when it does it must abide by the terms of this guidance and the general principle of equal treatment. 

Leading law firm Harper Macleod LLP has announced the dates of its annual Housing Law Update seminars which will take place on Tuesday 19th June 2012 in the Loch Ness Country House Hotel, Inverness and Tuesday 26th June 2012 in The Corinthian, Glasgow.

Speakers at the conference will consider some of the key legal issues for housing providers and recent developments in the housing sector, including an overview of the key terms of the new Regulatory Framework and the implications of the Property Factors (Scotland) Act 2011 which comes into force on 1 October 2012. The availability of public funding and issues for lenders and borrowers in the traditional debt finance market will also be discussed in addition to developments in relation to alternative funding structures.

Registered Social Landlords (RSLs) will be familiar with the terms of section 66 of the Housing (Scotland) Act 2001, which required RSLs to obtain written consent from the Scottish Ministers (acting through the Scottish Housing Regulator) for certain disposals of land or property. On 1 April 2012, section 107 of the Housing (Scotland) Act 2010, (the "Act") came into force and replaced the former section 66.

At first glance the terms of section 107 are similar to those of section 66: RSLs must seek the consent of the Scottish Housing Regulator (the "Regulator") to dispose of land or other assets ("disposals"), unless that disposal is exempt. However, section 107 differs from section 66 in two significant ways.

The Scottish Government's District Heating Loan Fund opened for the submission of 'expressions of interest' in May 2012. The loan fund aims to support the development of district heating networks in Scotland through the provision of capital loans.

District heating - a system for distributing heat generated in a centralised location for residential and commercial heating requirements – aims to improve efficiency and cut carbon emissions.

In the case of R v NHS Shared Business Services Ltd and another, trade union Unison sought to challenge the decision of ten primary care trusts ("PCTs") to enter into contracts with NHS Shared Business Services Ltd ("SBS") for the provision of family health services. Previously, the services were provided in-house, but as part of an effort to reduce costs the decision was taken to outsource.

The basis of the challenge was that the PCTs had acted in breach of the Public Contract Regulations 2006 ("the Regulations"). It was argued by SBS that the Regulations were inapplicable on the basis that the contracts were entered into pursuant to a Framework Agreement already in place. This was not, however, the substantive issue to be considered by the court: Unison's interest in the matter to satisfy the conditions for judicial review had first to be determined.

Leading law firm Harper Macleod LLP, collected two awards last night at the Scottish Legal Awards which was held at a ceremony in the Edinburgh International Conference Centre. The firm won Public Sector Team of the Year and Employment Team of the Year.

This is the second consecutive year Harper Macleod's Public Sector Group has won Team of the Year. In 2011, they became legal advisers to Glasgow 2014 Commonwealth Games and their client list includes Accountant in Bankruptcy, Child Support Agency, Edinburgh Leisure, the Scottish Government, Scottish Court Service and Loch Lomond & Trossachs and Cairngorm National Park Authorities.