LAML bid rejected by Appeal Court

Author: Local Government Chronicle - Jun 9, 2009

An attempt by a group of London boroughs to club together to set up a mutual insurance company powers has been crushed by Appeal Court judges.

The London Authorities Mutual Limited (LAML) will cease underwriting activities today and go into "run-off" mode, pending any fresh legislation.

The Court of Appeal ruled that the participation of local authorities in an insurance mutual in this manner was beyond their statutory powers.

LAML 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".

Mr Elvery added that LAML had been given assurances from central government that the well-being powers were sufficient for their purposes.

He added: "It is now time for [government] 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."

The Court of Appeal also ruled that Brent had awarded its insurance contracts to LAML in breach of the Procurement Regulations 2006.

The concept of LAML had been financed and encouraged by the Department for Communities & Local Governments London Centre of Excellence – now Capital Ambition, a LAML spokesman said.

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