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Harrow wins landmark case

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Harrow LBC has won a landmark court case which gives certainty to councils looking to share services.

Supreme Court judges have overturned a Court of Appeal decision that a local authority had broken European Union procurement law by setting up a mutual insurance company with other London authorities.

The case began after a number of London boroughs set up London Authorities Mutual Limited (LAML) in order to pool insurance risks and costs and were challenged by insurance firm Risk Management Partners Ltd.

In 2009 the Court of Appeal ruled on the case, at the time led by Brent LBC, and found that not only had EU procurement law been broken but that councils had acted beyond their powers - ultra vires - when setting up LAML.

After Brent decided to withdraw from the case last year, Harrow took the appeal to the Supreme Court which announced today that Harrow had not breached EU laws. The court gave no leave for appeal to the European Court.

Harrow leader Bill Stephenson (Lab) said the decision cleared the way for councils to share services and save tens of millions of pounds.

“At a time when we need to find huge savings, this case is an important win for all public bodies. It liberates us to cut operational costs in areas such as insurance, so we can direct a greater portion of our money to delivering front line services for our residents,” he said.

“It provides some much needed clarity in the complex area of procurement law and has removed some of the contradictions between the domestic and European Courts.”

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Readers' comments (2)

  • As a director of FRAML, the Fire Authorities' insurance mutual, which was also prevented from trading by this case, I congratulate Harrow on its victory and look forward to the freedom to deliver the large savings made possible by this judgement.
    Andrew Vallance
    Treasurer, Royal Berkshire Fire Authority

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  • Dominic.Wallace@sharedservicearchitects.co.uk

    I agree with Andrew that Harrow did well to overturn the ruling. It felt like the judge got a bit carried away after he established that Brent were allegedly using the 2003 act without drafting its use into their annual plan. Maybe we could have some more info on this ruling? Didn't F&R form their mutual under the 1972 Act and LAML was formed under the 200/2003 Well Being acts?
    What we need is a Shared Service Act that clearly establishes what can and cannot be done. The power of general competency cannot overrule data protection, EU or TUPE law so has limited use in shared services.
    Dominic Wallace
    Lecturer in Shared Services Canterbury Christ Church University. Shared Service Architecture Ltd.

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