Ask The Expert - Simon Lee from Hempsons

by Simon Lee 06/07/2015

Simon Lee is an associate at Hempsons Solicitors has provided legal advice to social enterprises, charities, and other community and voluntary sector bodies for over 10 years. He is passionate about the sector and is able to advise on a wide range of matters affecting such organisations including legal structures, contracts, funding and governance issues.

What is the most important recent change in legislation that people spinning out need to be aware of?

The Public Contracts Regulations 2015 (in force this February) have an impact on how procurement law applies to spinout projects. For instance, it's harder than before to justify awarding a contract on a single tender basis and this will lead either to more 'in house' options or more tender processes. The new Regulations do have a reservation of sorts for spin-outs but this still means you have to run a tender process. In the EU discussions on the EU Directive (which is reflected in these Regulations) we understand that the UK government was pushing for a right to simply directly award a contract to a spin-out, which of course would have been a real help for spin-outs, but that's not what we've ended up with.

What legal problem do you think is most common for spin-outs?

The issues that tend to come top of most people's lists on this type of project are procurement law (see above) and - understandably - staff terms and conditions, and access to the relevant public sector pension scheme.

How is this normally solved?

The solutions really vary from project to project as we'd look at the specific context before advising. Factors would include the nature of the services, the number and type of staff, the public body's approach to risk, and the level of savings the service is required to make going forward.

What could the new government do to make it easier to spin out?

The work the Cabinet Office has been doing but it would be good to get more of the other Departments picking up the key themes. A permissive framework is helpful but a clearer quality assurance framework along the lines of the Department of Health's Right to Request and the follow-up Right to Provide would be good. Staff would then know the quality assurance process they would need to follow and management would know what was expected of them too.

Does the ‘Right to Mutualise’ in the Government’s Manifesto add up to a legal right?  What are we to make of it?

Unfortunately, as it stands it's just a sentence in an 80 page document. However, it's encouraging to see it in there at all so we'll have to see how it develops or if any actual legislation is intended to follow.




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