Acquiring Rights — Losing Power: A Case Study in Ministerial Resistance to the Impact of European Community Law

AuthorAllan Kerr,Mike Radford
DOIhttp://doi.org/10.1111/1468-2230.00064
Published date01 January 1997
Date01 January 1997
Acquiring Rights — Losing Power: A Case Study in
Ministerial Resistance to the Impact of European
Community Law
Mike Radford* and Allan Kerr**
Introduction
Governments of the United Kingdom expect to get their own way in matters of
domestic policy. Negotiation and a degree of compromise may be necessary but, in
general, the potent mix of Parliament’s legislative supremacy, an overall majority
in the House of Commons and strict party discipline combine to ensure that the
executive’s will prevails. Moreover, should the law as enacted not achieve the
desired ends, or judicial interpretation differ from the initial intention, ministers
can always introduce amending legislation to effect the original purpose. Or such
was the case until the United Kingdom became a member of the European
Community.
It is trite to observe that, so long as the European Communities Act 1972 remains
in force, providing for the incorporation into UK law of European Community
(EC) law (which itself embodies the principle that, where there is a conflict, it
takes precedence
1
), Parliament’s legislative supremacy, and hence the executive’s
autonomy, are significantly compromised in respect of those matters which fall
within the Community’s competence. A quarter of a century after its enactment,
the implications of this situation continue to reverberate throughout the body
politic. This is obvious from the passionate debate engendered by issues such as
changes to the Treaty of Rome or the effect of joining a single currency but, in
addition to these high-profile matters, the day-to-day business of the European
Union continually gives rise to less publicised situations in which the
government’s perception of what is desirable conflicts with the views of Union
institutions or a majority of other Member States. Historically, most of these
disputes have been resolved in the political arena, but increasingly they involve a
legal dimension and are falling to be determined by the courts. This development
not only changes fundamentally the traditional relationship between the judiciary
and other governmental institutions, it also raises new questions about what
constitutes proper conduct by the executive in a situation where an entirely
domestic policy to which it attaches considerable political importance is threatened
by developments in EC law. Such an example is provided by the impact of the
Acquired Rights Directive
2
on the government’s attempts to promote competition
in the provision of public services. In our view, the episode raises issues of
constitutional importance.
At the end of the 1970s, most public services were provided ‘in-house,’ using
staff employed directly by the relevant authority, but the election in 1979 of a
The Modern Law Review Limited 1997 (MLR 60:1, January). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA. 23
*School of Law, University of East Anglia.
**Services and Development Department, Unison.
1Costa vENEL [1964] ECR 585; Amministrazione delle Finanze dello Stato vSimmenthal SpA [1978]
ECR 629; RvSecretary of State for Transport, ex p Factortame Ltd (No2) [1991] 1 AC 603.
2 Council Directive No 77/187/EEC (February 1977).
Conservative administration committed to reducing the role of the state challenged
this practice, as it explored ways in which activities could be transferred from the
public to the private sector. In some situations, a change of ownership was
considered appropriate and such undertakings were subsequently sold off. In
others, the strategy was to encourage increased private sector involvement in the
provision of services, while leaving ultimate responsibility for them in the hands of
public authorities. One of the principal means used to achieve this end was the
introduction of greater competition, by means of market testing in the case of
central government services and the imposition of compulsory competitive
tendering (CCT) upon local government.
Market testing and CCT held several attractions for the government: a reduction
in the size of the public sector; an opportunity to undermine both national
collective bargaining and the power of the public sector trade unions; and, by no
means least, the chance to cut costs. It is unsurprising, then, that ministers became
increasingly enthusiastic about them and, by the beginning of the 1990s, they
represented a central tenet of the government’s approach to the provision of public
services.
3
In both the civil service and the National Health Service, market testing
could be introduced administratively, but legislation was necessary in respect of
local government and, against a background of considerable opposition (across
party lines) from councillors, ministers were concerned to ensure that the statutory
regime would be adequate to counter any attempt to frustrate the underlying policy.
To this end, local authorities have been prohibited from continuing to provide
defined activities themselves unless they have been put out to competitive tender in
accordance with conditions specified in the legislation.
4
These include a general
duty on authorities to avoid acting anti-competitively in awarding work to their
own staff.
5
The scope of anti-competitive behaviour was widely drawn to include
anything which the Secretary of State considers has the effect, or is intended or
likely to have the effect, of restricting, distorting or preventing competition.
Administrative guidance has been issued to local authorities indicating what they
should do to avoid ministerial intervention
6
and, latterly, legislation has authorised
the Secretary of State to define in regulations conduct what may amount to anti-
competitive behaviour, thus giving his ‘advice’ the status of law.
7
In addition, local
authorities are required to ignore what are characterised as ‘non-commercial
3 See, for example, HM Government, Citizen’s Charter (London: HMSO, 1991) Cm 1599; HM
Treasury, Competing for Quality: Buying Better Public Services (London: HMSO, 1991) Cm 1730;
Department of the Environment, Competing for Quality. Competition in the Provision of Local
Authority Services: A Consultation Paper (London: DoE, 1991).
4 Radford, ‘Competition Rules: The Local Government Act 1988’ (1988) 51 MLR 747. The Local
Government, Planning and Land Act 1980 imposed CCT on construction, building maintenance and
highways. The Local Government Act 1988 extended it to building cleaning, grounds maintenance,
vehicle maintenance, school meals, other catering, refuse collection and street cleaning, and provided
for other services to be added by way of regulations; to date, these have included management of
sport and leisure services, on-street parking, security, vehicle fleet management, housing
management, legal services, construction and property services. The Local Government Act 1992
provides that professional, financial and technical services are also subject to CCT.
6 For example, Department of the Environment Circulars 19/88 and 1/91. The Local Government,
Planning and Land Act 1980, ss19A, 19B, and the Local Government Act 1988, ss13, 14, provide
that if the Secretary of State considers that an authority may have acted anti-competitively, he can
require it to justify its actions to him and, ultimately, direct that the work be re-tendered under such
conditions as he may impose, including a ban on bidding by the in-house service.
7 Local Government Act 1992, s9. See further Department of the Environment Circular 5/96, and
formerly Circular 10/93.
The Modern Law Review [Vol. 60
24 The Modern Law Review Limited 1997

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