Tread warily when it comes to the general power
The perceived difficulties in pointing to a power for local authorities to participate in innovative projects has long been a point of discussion on the local authority circuit. Is a general power of competence the solution to these problems and have we really thought about the consequences? asks Shaun Jamieson.
Power of General Competence
Following the case of Brent LBC v Risk Management Partners Ltd and LAML last year there has been a surge of support for local authorities, finally to be given a power of general competence. It is expected that the government will set out proposals for such a power as part of the Decentralisation and Localism Bill in the Autumn. But are we sure we need it and more importantly are we prepared to accept some of the consequences which might flow from receiving it?
The Local Government Association’s draft Bill
The Local Government Association proposed a draft Bill in March 2010 which was based on a mixture of the Human Rights Act and provisions in the 1972 Local Government Act regarding renouncement of existing private local government legislation.
Questions remain as to whether the bill, as drafted, would have been able to achieve what was intended and some of the provisions had not been adequately developed. More importantly, it also highlighted some significant issues which, it is suggested, require much wider debate.
The Bill would have enabled the government for the time being to repeal other existing powers (which were no longer needed) and subsequently to restrict the new general power. The restrictions on the general power could also potentially be introduced so as to discriminate between authorities.
Should we encourage such practices? Recalling the anxiety that existed in respect of similar provisions used in respect of the trading powers in the Local Government Act 2003 it is, perhaps, surprising that the LGA should now be promoting this practice. Also one has to bear in mind the general uneasiness with the increased usage of so-called “Henry VIII” clauses, most recently remarked upon with distaste by the Lord Chief Justice.
Further, the power proposed in the draft Bill would not necessarily have overcome all the concerns expressed in Brent. Indeed it was for similar reasons that the Labour Government chose to deal with the mutual insurance company issue specifically through section 34 of the Local Democracy, Economic Development and Construction Act 2009.
Brent
The Brent case found that the London Borough of Brent Council had not identified sufficiently how the actions they had taken would be likely to promote the well-being of their area (as opposed to potentially benefitting the authority with the result that it would then have more money available to benefit the area if that is how it chose to spend the money).
It is also worth remembering that the action involved complex and, potentially, risky financial arrangements (ie a mutual insurance which could in theory make losses as well as savings). Perhaps it should not have come as such a great surprise (when viewed against the courts’ historical reticence vis-à-vis authorities undertaking such transactions) that the courts would take some persuading that this could be classified as “well being”.
Parliament had undoubtedly intended to place limits on the powers being given to local authorities by linking them to the promotion of well-being. The court in Brent concluded that it was inconceivable in those circumstances that the legislature had nevertheless accepted that any benefit, however remote, and whether properly considered and identified or not, would be sufficient to pass that test.
Some of the obiter comments may have unfortunately appeared to be raising the spectre again of matters such as “comprehensive codes” and “implied limits”. Hopefully if the appeal to the Supreme Court goes ahead, as currently planned in December, then the ghosts and fears which appear to have been given new life can be put firmly back in their box. Surely it would be worth waiting for this to happen before rushing into new legislation on the point?
With Great Power Comes Great Responsibility
The initial influx of cases (such as Enfield and Theophilus) following the introduction of the well-being power based on claims that the powers should be used for the benefit of individuals is a salutary lesson in the law of unforeseen consequences. The introduction of greater powers may give rise to an even greater call on authorities to use them.
At a time of decimated (in the wider sense) budgets and an increase in the likely needs of people and businesses within their administrative area resulting from the recession and current “austerity” measures, do the benefits of having greater powers outweigh the pressures from the additional responsibility? There are potential liabilities, if only from having to defend actions, that local government needs to consider further before giving a final affirmation.
Lack of Resource
So long as the power of general competence is not framed so as to constitute or include duties, it should be possible for authorities to take into account limitations on their available resources when making decisions as to whether to exercise this new power. Nevertheless authorities will still have to properly consider in each case (and will be subject to the rules on Wednesbury unreasonableness) whether and how to exercise their power and this may require robust evidential systems to demonstrate that all aspects were properly considered and balanced.
Whilst courts have been reluctant to interfere with operational decisions as to how to allocate resources when considering exercise of discretionary powers, there are signs that this may be changing. Certainly, the combined impact of a wide general power, the Human Rights Act and the Equality Act might encourage greater intervention in the future.
Human Rights
The Human Rights Act imposes positive duties on a local authority as well as negative ones. The positive obligation under Article 2 requires them to take appropriate steps to safeguard the lives of those within its jurisdiction and under Article 3 to take measures designed to ensure that individuals within their jurisdiction are not subjected to ill-treatment. In each case the question of proportionality will arise.
In the recent case of Watts v UK, the ECtHR (though finding against the claimant) appears to have relied heavily upon the authority having demonstrated that it had fully considered all options, fully consulted residents on them and that the action would actually maintain or even improve the services to the residents. Retention of the existing home (which needed considerable work and would have resulted in a decrease in the number of residential places) would not have done so. The court had indicated that if the decision and implementation had been badly managed then the claimant’s Article 2 rights might have been breached.
If a decision of an Authority is more demonstrably focussed on cutting costs and/or services than on maintaining efficient provision of services, it may not be so easy to achieve a successful defence.
In the Court of Appeal decision of R (Turner and others) v Southampton City Council [2009], Sedley LJ appeared to approve comments in the earlier judicial review hearing of R (Watts) v Wolverhampton City Council that the court would intervene “if there were any firm evidence that moving [the resident] was going to shorten her life”. In other words, in accordance with the proportionality principle, the greater the risk of harm or ill-treatment, the greater the expectation on a local authority to act so as to reduce such risk – if it has the power to do so.
Equality Act 2010
Whilst largely a consolidating Act, the new Act does extend the promotion of equalities duties on each local authority. Specifically, when taking strategic decisions it must consider how their decisions can help reduce inequalities and it must exercise its functions having due regard to the need to eliminate discrimination.
The Emergency Budget has already been challenged on the basis that the government contravened its duty to assess whether the provisions would impact on women unfairly.
It doesn’t require much imagination to see, how someone, aggrieved by a failure of an authority to exercise its powers of general competence in their favour, might wish to use the duties under this Act (possibly together with the duties under the Human Rights Act) to challenge the authority.
Other Constraints
It is essential not to forget that local authorities are governed by common law restrictions (such as rationality of decisions, fairness in procedures and fiduciary duties) as well as those imposed by statute.
The Coalition Government (through the redoubtable Eric Pickles) has demonstrated no reluctance to impose fresh restrictions on local authorities (such as the intended prevention of lobbying and the local newspaper issue). One should perhaps question whether the “one in, one out rule” will apply in ways we hadn’t initially expected.
The imposition of referenda on local authorities following receipt of petitions from 5% of the public was part of the Coalition Agreement and appears likely to be taken forward in the Decentralisation and Localism Bill. The intention however is that this won’t just be restricted to issues of capping of Council Tax (as appears to be the initial focus of debate).
How then will a power of general competence fare if this can always be undermined by the submission of a petition resulting in the need to undertake a referendum. Even if it eventually does not prohibit the authority from taking the action, the ability to do so may, by then, have been lost.
Even the power of general competence to be included in the Decentralisation and Localism Bill will, based on comments from Ed Pickles, be subject to limits and restrictions. Yet it is the interpretation of such limits and restrictions which have generally caused uncertainty in the past.
Conclusion
As this briefing paper hopefully demonstrates, the issue of expanding local authority powers is not straightforward.
It would be better to take the time to consider in more detail exactly what further powers are required and the implications of obtaining such powers. A starting point would be to consider whether clarifications to the well-being power would be a more advantageous approach.
Shaun Jamieson is a partner in the construction, energy and projects team at Hugh James. He can be contacted on 029 2039 1053 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..
