On 18 February 2012, the law on local authority powers was turned on its head. Now, instead of trying to find a statutory power to rely on before taking any action, local authorities can assume they have full power to act unless there is anything in legislation specifically preventing them.
In this way, local authorities are to be treated like individuals. And that is what the power says:
“A local authority has power to do anything that individuals generally may do (section 1(1), Localism Act 2011).”
Of course, local authorities are not like individuals. After all, individuals cannot usually be sued for acting irrationally, as public bodies frequently are through the mechanism of judicial review. And it is hoped these public law restraints will act as a safeguard to, as Jack Straw famously suggested, Islington developing a nuclear bomb! In other words, councils may have been given the power to do some crazy things, but how they exercise that power will still be subject to the requirement to act rationally and reasonably.
So what will the new general power of competence enable councils to do now that they can’t do already?
At the moment, this isn’t very clear. It has been suggested that pre-existing powers provided councils with as much freedom as they needed to innovate and provide services in new ways in order to improve them and save money. However, apparently councils just weren’t being innovative enough, in some measure due, according to Eric Pickles MP, Secretary of State for Communities and Local Government, to their over-cautious lawyers. But when considering the case of London Borough of Brent Council v Risk Management Partners Ltd  EWCA Civ 490, it’s easy to see why. In that case, the Court of Appeal held that saving money in general did not necessarily lead to an improvement in the economic, environmental or social well-being of the councils’ areas, a pre-requisite for relying on the well-being power (see Legal update, Court of Appeal ruling on well-being powers). This led to confusion around what exactly councils needed to evidence to rely on the power.
To ensure this problem doesn’t arise again, the general power of competence makes it clear that the action contemplated need not benefit anyone, it can be “for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area” (section 1(4)(c), Localism Act 2011).
This seems rather odd. After all, councils exist for the benefit of their residents and rate payers. However, assuming any off-the-wall decisions to plough council money into a sailing school in the Bahamas can be challenged under judicial review, the need to benefit the area, or at least the council’s finances overall, should always figure large in the council’s decision-making process.
Get rid of all the lawyers?
Will the general power of competence require less consideration of specific powers? Probably not. Councils will still need to be sure their proposed action isn’t prevented or limited by any other legislation. For post-commencement legislation, this should be easier, as the legislation must expressly reference the general power of competence for it to apply. But many restrictions and limitations are contained in pre-commencement legislation, and lawyers will still be called on to provide guidance on whether they impact on the proposed action. And, as mentioned before, the usual requirements of rational decision-making apply.
Did the issue of powers ever really stifle innovation?
“The new power is wide-ranging, and enables local authorities to improve the quality of life, opportunity, and health of their local communities … The breadth of the power is such that councils can regard it as a ‘power of first resort’.”
This does not refer to the general power of competence. Instead it is taken from the guidance originally issued to accompany the introduction of the well-being power the Local Government Act 2000. You could argue that this power failed spectacularly, however its use was only ever challenged successfully in Brent and while this decision did dampen enthusiasm for the well-being power significantly, there are still many examples where the power was used successfully.
What has probably been over looked in the rush to acclaim the new power are the other factors, aside from concern over powers, that regularly cause councils to err on the side of caution when contemplating innovative projects, for example:
- Already stretched resources leaving little space for blue sky thinking.
- Service user impact and employment implications arising from reducing or redesigning services.
- Procurement costs and risks involved in engaging with outside bodies.
- Risk of offending the rules against state aid when providing support to external organisations.
Most of these issues arise in any significant project and the expertise to navigate these issues, whether internal or external, is expensive.
There is a drive from both the public and private sectors to simplify procurement processes, including more collaboration between public bodies and better engagement with private and community sector providers. It is hoped that greater standardisation, clear guidance and pooled expertise will overcome some of these hurdles to innovation but expecting the new power to be a panacea for all these issues is a little optimistic to say the least.
For more information, see Practice notes, Localism Act 2011: the general power of competence and Localism Act 2011.