The Use of Farmers for Winter Service - A Code of Practice
3 Service Procurement
In Scotland a number of authorities are utilising well established services with farmers employing a number of different procurement mechanisms ranging from the application of a 'self-help' scheme through to a full tender process. Various cost structures also exist with a number of authorities setting hourly rates each year.
This code of practice recognises that authorities have a responsibility to secure best value for the services provided to them, and require flexibility in the procurement and delivery of services, and does not seek to impose a universal procurement approach on the authorities. It does, however, recommend that a standard model agreement is used by the authorities based upon the recommendations made within this code of practice and embedded within each authority's procurement process. The recommended standard model agreement can be found in Appendix A of this document.
The provision of appropriate insurance is an important element when considering and developing winter services supplied by third parties on behalf of an authority.
Authorities should consider the stipulation of public liability insurance when employing farmers to undertake winter service operations evaluating the activities for risk through their own risk management system and then ensuring that appropriate levels of insurance are in place.
It is recommended that farmers are required to make provision for public liability insurance to indemnify the authority when undertaking winter service operations, as they are best placed to purchase insurance as part of their own farming management. It is recommended that the minimum level of public liability insurance is set at £5 million in respect of any one incident. This level of cover is consistent with the levels required by the Employers' Liability (Compulsory Insurance) Act 1969 for employer liability insurance; however the authority should look carefully at the risks and liabilities associated with snow clearing to ensure an appropriate level of cover is in place. It should be noted that farmer's 'tractor insurance policies' usually provide at least £5 million of public liability cover so it is likely that the appropriate levels of cover are already in place.
However, it is acknowledged that placing a requirement on farmers to provide public liability insurance may, in some circumstances, impose an additional financial burden upon them that acts as a disincentive to provide services. The authority should consider this when evaluating the risk and may look to consider other options such as:
- risk being carried by the authority's insurance company
- risk capped by the insurance company with the authority self-insuring for lower value claims
- risk wholly carried by the authority i.e. self-insuring
- the agreed rates of payment made to farmers are set to allow for the overhead costs of their insurance premiums
In the circumstance that the local authority employs its own DLO it may wish to consider the DLO carrying the insurance for farmers undertaking snow clearing activities.
There is a general consensus that climate change is affecting weather patterns and the probability of extreme weather events has increased. In spite of the extreme winters experienced during 2009/10 and 2010/11 it is not certain whether the pattern of extreme winters will continue year on year. It is entirely possible, given the unpredictability of climate change effects, that a spell of relatively mild winters may follow with the result that a significant number of farmers are not deployed during the winter months.
For farmers who are considering investing in equipment to undertake winter service operations and to increase their insurance premiums to provide an appropriate level of public liability insurance, the unpredictability in revenue may act as a disincentive. The use of a retainer payable to farmers annually on confirmation of their operational readiness for the winter season would provide mitigation especially in more 'temperate' regions of Scotland, or where there is a shortfall in the number of farmers required. For example, a sum of £200.00 would, in the majority of cases, off set the increased insurance premium.