LGC understands the Prime Minister feels councils are making insufficient use of the wellbeing power and, in his first major speech about local government, will seek to encourage them to be more creative in using it.
The speech next week could also address the rules around capital finance to ensure council-backed infrastructure projects do not fall through.
Giving evidence at the communities and local government select committee, communities secretary Hazel Blears admitted changes to the wellbeing power may be necessary.
Quizzed about the London Authorities Mutual Limited (LAML) - an insurance company set up by a group of London boroughs that ran into legal difficulties when attempting to use the power last year - Ms Blears said: “I would want to look very closely at the power that exists, how much it is being used and what it is stopping people from doing more.
“If it is stopping people from doing things that would be beneficial, then obviously I’d want to examine whether any changes would be necessary.”
The wellbeing power - which was introduced in the Local Government Act 2000 - allows councils to do “anything they consider likely to promote the economic, social and environmental wellbeing of their area unless explicitly prohibited elsewhere in legislation”.
However, in the LAML ruling last year, a High Court judge claimed councils could not use the power if the sole purpose was to save money (LGC - 01/05/2008) .
James Hulme, head of communications at the New Local Government Network thinktank, claimed fresh legislation could be necessary.
“We think the government needs to clarify the power and perhaps even put an amendment into legislation that stipulates what it means,” he said.