Free up councils by abolishing ultra vires principle, says think tank

The government should abolish the ultra vires principle and allow councils to implement actions unless they are expressly forbidden by law, a leading think tank has argued.

In its report, Going Nuclear? A general power of competence and what it could mean for local authorities, the New Local Government Network warned that the coalition's proposed power of general competence would only work successfully if councils are given clear legal freedom.

The think tan insisted that with local authorities set to lose a third of central government funding over the next four years, councils “must be freed to develop new revenue streams and income, and allowed to work more innovatively in partnership with the private sector, local community groups and other public bodies to drive out savings and re-design services”.

The NLGN said the government, when legislating, should consider a series of additional freedoms “to make the reform meaningful”.

These would include allowing councils to act as they like in the interests of their local communities as long as their action is not specifically illegal, permitting local authorities to flex and vary taxes within the existing tax regime and carrying out a thorough examination of current laws to remove inappropriate legislation.

The report suggested that if such a power of general competence were to be introduced, councils could:

• offer banking, insurance and credit services to local businesses and residents
• group together in partnerships to drive efficiencies and generate income or to devolve powers and responsibilities to the neighbourhood level
• trade and sell a wider range of products and expertise (such as recruitment services, energy, communication and business services) to the private sector as well as other public agencies
• vary charging rates for planning and licensing fees to reflect local circumstances and costs, and
• adjust tax rates and reliefs to incentivise behaviour on recycling, business development or property usage.

NLGN’s Head of Research Nigel Keohane, the author of the report, claimed the proposed power had the potential to be a major piece of reform, heralding a new era of localism.

He said: “For too long, democratically-elected councils have been restricted in what they can do and vulnerable to legal challenge for adopting innovative responses to local challenges. In the difficult financial landscape ahead, local authorities need full discretion to engage in new ways with their community, to save money through efficiencies and to develop income to safeguard frontline services.

“To work it will require a leap of faith from national politicians to give local areas the necessary latitude for innovation to thrive. It will then rest on the ambition and aspiration of local communities to determine how best to improve the lives of their residents.”