Court ruling "very disappointing"
The London Authorities Mutual Limited (LAML) will cease its underwriting activities today and go into “run-off” mode following a Court of Appeal ruling that local authorities could not participate in an insurance mutual under their statutory powers.
The Court of Appeal also ruled that the London Borough of Brent had awarded its insurance contracts to LAML in breach of the Procurement Regulations 2006.
LAML’s Chairman, Nathan Elvery, said: “Clearly this is a very disappointing outcome not just for the mutual and its member authorities, but for the wider local government community. 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.
“Contrary to assurances we have received from central government that the wellbeing powers were sufficient for our purposes, it is now time for them to do what they said they would do and urgently clarify the powers that are available to local authorities. It is important that the uncertainties that this judgment has introduced are eradicated once and for all.
“In these difficult economic conditions taxpayers may well ask why we have legislation which prevents local authorities innovating, sharing costs and pooling risk to save public money, when this is a standard way for municipalities to organise their insurance affairs in countries such as the United States, Canada, Australia and Scandinavia, to name just a few."
“If nothing else, LAML has shown what can be achieved when a small group of like-minded people work together to try and deliver innovation and efficiency savings”.
Martin Fone, of LAML’s managers, Charles Taylor & Co Ltd, said: “We are all surprised and bitterly disappointed that the courts have decided to take such a narrow view of the powers available to local authorities”.
