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.”