Among the pile of correspondence in new communities and local government secretary John Denham's red boxes this week, the Appeal Court ruling over London Authorities' Mutual Limited should be stamped ‘urgent: action this day.' This otherwise obscure ruling over the legality of a new insurance consortium of London boroughs threatens to undermine the entire direction of public sector partnership working by blocking the use of long-established wellbeing powers. Indeed, ‘total place', the next big idea created to grapple with the public sector deficit, is a non-starter if this Appeal Court ruling is upheld. Both the Government and the Opposition are agreed that councils need to be given freer rein to be more innovative, especially in pooling resources and working with other public sector partners. The Conservatives in their Green Paper have also called for a power of general competence. The message is clear: councils can be more efficient and save money if they are allowed to take risk. However, the Appeal Court maintains that councils do not have the powers to set up such an entity as LAML, even though it has the support of the CLG, and says that neither the 1972 nor the 2000 Local Government Acts give such legality. Critics in turn argue that this is a narrow interpretation of this legislation and is a return to the 1980s when councils needed express powers to act and if they did not were ruled ultra vires. The whole point of wellbeing is to allow councils to do anything which is not expressly forbidden, precisely to allow them to be more pro-active and innovative. John Healey, before he was moved to housing, made a point of telling councils they have these powers, and should just get on and use them, especially when grappling with the recession. Some lawyers said it was not quite as simple as that and the Appeal Court agrees with them. It has turned the clock back and done councils, and residents, no favours. Its ruling must be overturned. Michael Burton, Editor, The MJ
