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Local government in the UK has launched a sustained attack on the European Union (EU), warning a wave of legislation from Brussels could impose hefty new costs and bureaucracy on town halls, just as Britain is seeking to slash red tape. New rules from the EU could mean large fines for councils Photo:Rockcohen Local Government Association (LGA) officials today (26 November) described as ‘Draconian', EU procurement rules which could force UK public bodies to pay out £600m in annual fines. Separate LGA documents also warn Whitehall's implementation of the EU agency workers Directive – referenced in last week's Queen's Speech – could increase town hall staffing costs. A third EU-inspired regime, which would see councils fined for failing to meet strict waste targets to reduce landfill, could create a ‘critical mass' of new burdens – just as Britain's political parties are preparing the tightest public spending squeeze for decades. Many of the new costs, local government insiders have warned, could fall directly on to local taxpayers, because pressure to retain vital services during the downturn will intensify. David Parsons, chair of the LGA's improvement board, claimed bureaucrats and lawyers would benefit at the expense of taxpayers and services, if new EU fines were imposed on public bodies should they fail to pay suppliers' invoices within 30 days. The EU's ‘late payments Directive', due to be introduced next year, will force public organisations to pay fines, even if suppliers have addressed invoices incorrectly, failed to include order numbers, or provided poor descriptions for services on their bills. Public bodies could be charged 5% of the value of each invoice, plus interest and recovery costs, if they do not pay on time. One senior civil servant this week described the plan as ‘daft, at a time when we're trying to reduce red tape'. Council leaders claimed businesses were not subject to the same fines, while an LGA briefing note warns ‘the relationship between public bodies and the private sector could be jeopardised by such a Draconian set of proposals'. Cllr Parsons warned: ‘When a company can fine a public sector organisation, even if it has its details wrong on the invoice, it gives it a licence to draw up badly-written bills to get more money out of the taxpayer. ‘The EU seems to be sleepwalking into an unfair and grossly-disproportionate system that hits key public services.' Whitehall has estimated the annual cost to the public sector could be £170m. But, drawing on research suggesting £12bn worth of public sector invoices are paid late, healthcare bodies believe costs could be has high as £600m. Elisabetta Zanon, director of the NHS Confederation's European office, said: There is already a system of penalties in place for late payments, and to extend and increase it… will place additional and unnecessary costs on the health service at a time when budgets are already under pressure.' Councils are also concerned about the final cost of the agency workers Directive, which will give temporary staff similar employment rights to permanent staff after 12 weeks. Ministers appear to have delayed implementation of the law until the latest-possible date – December 2011 – to avoid increasing unemployment and destabilising economic recovery. But a Local Government Employers' consultation submission to Whitehall, seen by LocalGov.co.uk's sister title, The MJ, points to fears over ‘additional administration costs', ‘new training costs', and ‘concerns about the costs of providing… increased holiday entitlement for agency workers'. ‘Many authorities anticipate the regulations will result in a substantial increase in agency worker costs and therefore, authorities need enough time to plan for implementation to ensure service delivery is not adversely affected by the regulations,' the submission concludes. A spokeswoman for the European Commission said: ‘There is no concerted campaign to deflect costs on to local government in the UK, or elsewhere. These rules are designed to improve the way local government operates, financially and environmentally.'

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WHITEHALL

LGA warns of fines 'bombshell' under EU billing rules

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