Tread warily when it comes to the general power
06 | 10 | 10
Shaun Jamieson
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 .