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The future use of the power of wellbeing is in question after a Court of Appeal ruling which could make councils review their use of the power. The Court of Appeal claimed the London Authorities' Mutual Limited (LAML) had acted outside its statutory powers when it attempted to set up its own insurance group. The authorities involved used the power of wellbeing to justify acting outside their usual procurement methods. Following the judgement in the case of insurer RMP v Brent LBC, LAML will cease underwriting activities immediately, and now enter into a ‘run-off' phase. But the ruling will mean councils will have to reconsider some of the cost-cutting measures they plan to introduce under the power of wellbeing. LAML chairman, Nathan Elvery, described the judgement as ‘disappointing'. ‘Central government's strategy for local government is to deliver efficiencies and savings through innovation, shared working and utilising its enhanced powers. This judgment takes us back to the late eighties and there will be enhanced nervousness about the extent of local authorities' powers – the very thing the introduction of wellbeing powers were intended to resolve.' Director of think-tank the NLGN, Chris Leslie, accused the courts of going back to the days of ‘ultra vires' and he urged new communities secretary John Denham to act immediately to counteract the judgement. ‘At a time when councils should be encouraged to join forces and bulk purchase goods and services, this judgement may scare off council solicitors from going near mutual initiatives.' ‘Unless ministers act immediately and amend the current Local Democracy Economic Development & Construction Bill to clarify that councils do, in fact, have the power to join forces and save money, then we will suffer inefficiencies and lack of ambition for years to come.'

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WHITEHALL

Wellbeing threatened by Appeal Court ruling

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