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The future use of wellbeing powers could be under threat if the Court of Appeal rules against Brent LBC in the London Authorities Mutual Ltd (LAML) legal case, the mutual has claimed.

Council plans for efficiencies savings, shared services and charging and trading – including plans for municipal banks – could also face legal challenges under what is being described as a ‘major test case for local government'. 

Last week saw the latest stage in the legal battle between Brent LBC and insurer RMP over the council's involvement in LAML.

The Court of Appeal case followed a ruling by the High Court last year that Brent had breached procurement rules when it joined the local authority mutual, and the council had failed to justify the use of wellbeing powers because the benefits of LAML went to the council, and not to local people.

In the Court of Appeal last week, LAML claimed: 

* if it was illegal, other shared services might also be illegal

* wellbeing powers could be used for cash saving provided the money was used for the benefit of all residents

* councils had a duty to be efficient

* an insurance mutual was a prudent way of sharing risk

* under European law, councils providing services through a company they own did not have to go through formal procurement.

LAML chairman, and Croydon LBC deputy chief executive, Nathan Elvery, said: ‘We at LAML obviously have our own concerns, but we feel we are fighting on behalf of all of local government, and indeed, central government, to unleash millions of pounds of efficiency savings in collaborative arrangements which we have a duty to pursue.'

The progress of the mutual – and other efficiency programmes – has been stymied by the legal action. A judgement is yet to be announced.