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LAML fight goes to Supreme Court

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Two councils are set for a landmark appearance in the Supreme Court after being granted permission to take their battle over the use of the wellbeing power to the final court of appeal for civil cases in the UK.

Brent and Harrow LBCs have been offered a date in December to appear in the court, which was set up last October, to contest the infamous London Authorities Mutual Ltd (LAML) ruling.

The case will be closely watched after the original ruling was widely perceived to be a huge blow for the local government shared services agenda.

The Court of Appeal ruled in June that councils had acted ‘ultra vires’ (beyond their statutory powers) when they liaised to form LAML, a mutual insurance company, as well as violating European Union procurement laws.

Potentially the most damaging part of the judgment was that Harrow was not able to join LAML under Section 2 of the Local Government Act (2000),which gives councils a broad power to act to improve the “economic, social or environmental” wellbeing of their areas.

Councils have said a wider interpretation of the wellbeing power is needed to facilitate shared services.

Harrow’s head of legal and governance services, Hugh Peart, said: “We are confident the Supreme Court will interpret the wellbeing power as broadly as we believe it should be.”

A Brent spokeswoman said: “Brent and Harrow have been granted permission by the Supreme Court to appeal against the decision of the Court of Appeal in the LAML case. We will be discussing the appropriate way forward.”

LGC also understands Harrow faces being sued by insurance company Risk Management Partners (RMP), which brought the case against LAML. Council sources suggested the claim could reach six figures.

RMP managing director Kaz Janowicz said “no proceedings have been commenced against Harrow” but refused to rule them out.

The appeal decision will be welcomed by local government but senior figures still hope councils will secure a power of general competence.

A survey of council leaders and chief executives commissioned by the Local Government Information Unit thinktank found much support for such a power.

The majority (83%) called for a power of general competence, which would allow councils to do anything as long as it was not illegal.

Current laws restrict councils from “maximising their income potential, financing infrastructure and influencing the use of business rates”, respondents said.

Jonathan Carr-West, head of the LGiU’s Centre for Local Democracy, said: “Councils do not have confidence in their powers to deal with two of the most pressing issues on the local government agenda: taking action to mitigate the impact of the recession and Total Place.”

Mr Carr-West said it was significant that more than 50% of the survey’s respondents were leaders, suggesting issues around general competence powers were gaining traction with members and officers.

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