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1. This Explanatory and Financial Memorandum has been prepared by the Department of Environment to assist the reader of the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.

2. The Memorandum needs to be read in conjunction with the Bill. It is not, and is not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any particular explanation or comment, none is given.

3. When the government came to power in May 1997, it gave a commitment to replace existing arrangements for the compulsory competitive tendering (CCT) of specified council services in Great Britain with a new regime of Best Value in the delivery of all services. In England and Wales, the Local Government Act 1999 repealed CCT (effective from January 2000) and provided the legislative framework for Best Value.

4. In Northern Ireland the Department has worked in partnership with district councils to introduce Best Value on a voluntary basis. This Bill therefore provides the legislative framework for existing Departmental policy and requirements. The proposed Bill:

• repeals existing provision for the compulsory competitive tendering of specified council services, as contained in the Local Government (Misc. Provisions) (NI) Order 1992

• establishes a legislative framework for a new regime of Best Value in the delivery of all district council services

• outlines arrangements for the audit of Best Value

• includes discretionary powers to amend the existing definition of issues that are deemed to be "non-commercial" in the awarding of council contracts.

5. In December 1997, the Department issued a consultation paper outlining proposals to replace the existing system of CCT in NI with a new duty on councils to achieve Best Value in the delivery of all their services. The proposals contained in the paper were broadly consistent with government proposals for a new Best Value regime in GB and received wide acceptance from all district councils.

6. The Department has worked in partnership with councils to introduce Best Value on a voluntary basis, in advance of legislation. A joint Department/Local Government Steering Group has monitored the process, assigning key tasks to a number of joint working groups. However, full implementation of Best Value requires primary legislation. The draft Bill was issued for consultation, prior to its introduction to the Assembly.

7. Best Value replaces existing statutory provision for the compulsory competitive tendering (CCT) of certain specified council services. In Northern Ireland, the experience of CCT highlighted the absence of real competition for councils in the delivery of those services. The statutory duty to achieve Best Value provides councils with an opportunity, and a challenge, to investigate more flexible and innovative ways to improve service performance in the future. All district councils in Northern Ireland have voluntarily endorsed the Department's proposals for the implementation of the new regime. The Bill was subject to extensive consultation and the attached clauses reflect comments received from all interested parties.

8. The Bill contains 11 clauses. The Bill also provides for the consequential amendment of the Local Government Act (NI) 1972 and repeal of Part II and Schedule 1 to, the Local Government (Miscellaneous Provisions) (NI) Order 1992.

Clause 1 describes the Best Value duty, and applies it to all district councils in Northern Ireland. Councils are specifically required to undertake a systematic review of each of their functions ("Best Value Reviews") and prepare plans designed to address any deficiencies highlighted in the review process ("Performance Improvement Plans").

In fulfilling their duty of Best Value, councils are required to consult widely with local people, and to adhere to any guidance circulars issued by the Department.

This clause empowers the Department to issue guidance to councils on how the duty of Best Value is to be discharged. In particular, it is anticipated that such guidance will address the Best Value review process and performance improvement plans. It is also expected to outline performance indicators and standards, against which council performance can be measured. These performance indicators and standards will be developed in consultation with local government.

This clause requires the local government auditor to undertake an audit of a council's Best Value performance improvement plan. This audit would check whether the plan was consistent both with the legislation and with any guidance issued by the Department. As a result of this audit, the auditor may, at his discretion, decide to examine in more detail any or all aspects of a council's approach to Best Value.

On completion of the audit, the auditor should produce a report of his findings. The report should highlight any areas of concern, and may make recommendations for either the council or the Department to action. Copies of the auditor's report should be forwarded to both the Department and the council concerned within specified timescales.

This clause gives the auditor reasonable rights of access to council premises and any relevant information and documents. In carrying out his duties the auditor is required to observe any code of practice that has been approved by the Department. Any expenses incurred by the auditor as a result of the audit process shall be recoverable from the council.

This clause sets out councils' responsibilities on receipt of an auditor's report. Where the report contains recommendations, the council is required to prepare a statement outlining how and when it proposes to address the issues raised. Statements should generally be forwarded to the Department within 6 weeks, and should be included in the council's next performance improvement plan. Councils are also required to publish an auditor's report.

Article 19 of the Local Government (Miscellaneous Provisions) (NI) Order 1992 specifies a list of matters which should not feature in the contractual process and this has been identified as a potential equality issue. This clause therefore provides the Department with powers, subject to Assembly approval, to specify matters, which cease to be "non-commercial matters" in subordinate legislation. Councils would be required to adhere to any Departmental guidance on this issue.

This clause allows the Department to disapply councils' statutory obligations under Best Value, either for individual councils, or local government as a whole. This power is exercisable through subordinate legislation.

This clause explains the meaning of words and expressions used in the Act.

This clause lists the changes to primary legislation resulting from this Bill. These include the repeal of Part II of the Local Government (Miscellaneous Provisions) (NI) Order 1992, which compelled councils to subject many of their functions to a process of compulsory competitive tendering. The clause also extends the role of the local government auditor to incorporate a Best Value audit.

The proposed legislation will be known as the Local Government (Best Value) Act (NI) 2001 and come into force on 1^st April 2002.

9. The Bill will not unlawfully, unfairly, or unjustifiably discriminate, directly or indirectly, against specified sections of the community.

10. The Department has undertaken equality screening of the Best Value legislation. No potential inequalities were identified, and therefore an impact assessment was not undertaken.

11. The Bill would have no direct impact on employment and would not lead to additional costs or savings to businesses. While the powers within this Bill repeal the obligation of councils to subject certain functions to compulsory tendering, the principle of competitive service delivery is a pre-requisite of Best Value.

The Minister of the Environment has made the following statement under section 9 of the Northern Ireland Act 1998: