Exercise of powers in accordance with public law and fiduciary duties

January 5th, 2023 by James Goudie KC in Local Authority Powers

Croydon LBC v Oasis Community Learning (2023) EWHC 2 ( Ch ) is a debt claim by the Council acting as “ administering authority “for the London Borough of Croydon Pension Fund, which is part of the Local Government Pension Scheme ( the LGPS ). The defendant is a “ scheme employer “ for the purposes of the LGPS. The Court observes, at para 27, that the interaction between the public law and fiduciary duties of an administering authority for the purposes of the LGPS is not clearly established by authority, and is a “ a matter of some uncertainty “. It states, at para 33, that the LGPS does not constitute a trust, but that an administering authority does owe fiduciary obligations, as a quasi-trustee, to at least members of the LGPS.


Strikes and Other Industrial Action

June 29th, 2022 by James Goudie KC in Local Authority Powers

The Secretary of State for Business has laid before Parliament two Statutory Instruments: the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022, and the Liability of Trade Unions in Proceedings in Tort (Increase of Limits on Damages) Order 2022.

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August 9th, 2021 by James Goudie KC in Local Authority Powers

The General Power of Competence under the Localism Act 2011 enable a local authority to grant an indemnity to both officers and members. If the authority has adopted a Policy, as to the circumstances in which an indemnity would be granted, and the terms of such indemnity, then that Policy provides the framework for a decision as to whether a particular indemnity should be granted. In R (Anderson) v Liverpool City Council (2021) EWHC 2205 (Admin) Yip J considered the application of such a Policy in its application to the facts relating to an indemnity for legal costs incurred in relation to the defence of criminal allegations against a former Mayor.


Work of Equal Value

June 4th, 2021 by James Goudie KC in Local Authority Powers

Employees have the same employer. However, they carry out their work in different establishments. Moreover, they are not carrying out the same work. Can a claim for equal pay. By female employees  nonetheless be pursued against the common employer on the basis that the work if of equal value to the work of male colleagues at a different establishment of the same employer? Yes, says the ECJ in Case C-624/19, K v Tesco, Judgment on 3 June 2021. The male employers were an appropriate comparator. Retained EU law was clear and precise and had direct effect.


Bilingual Legislation

December 23rd, 2020 by James Goudie KC in Local Authority Powers

Welsh language legislation is considered in R ( Driver) v Rhondda Cynon Taff CBC (2020) ECCA Civ 1759, at paragraphs 11/12. The best approach to the interpretation where different language texts have different meanings, and where it is not possible to reach an interpretation consistent with the literal meaning of both language versions, is to discern the legislative intention by reference to the purposes or objects of the legislation as they appear from the texts, rather than by searching for a shared meaning. The Court should apply normal principles of statutory interpretation to its analysis of the meaning of both texts equally.



December 1st, 2020 by James Goudie KC in Local Authority Powers

SI 2020/1374 imposes a framework of 3 Tiers of restrictions, with different tiers applying in different areas. SI 2020/1375, in force for 6 months, amongst other matters introduces local authority enforcement powers by means of a Coronavirus Improvement Notice (Regulation 3), a Coronavirus Restriction Notice (Regulation 4) and a Coronavirus Immediate Restriction Notice (Regulation 5), which can be issued to any business whose premises or practices breach specified requirements of named Coronavirus Regulations, and which are subject to appeal (Regulation 9).


S 114 – (3) PWLB terms

November 26th, 2020 by Peter Oldham QC in Capital Finance and Companies, General, Judicial Control, Liability and Litigation, Local Authority Powers

Unlinked to any particular LA’s situation, the Government consulted earlier this year on revised Public Works Loan Board lending terms and guidance. The background was LAs’ involvement in the commercial property market as a means of increasing income, which had been the subject of much controversy over the years.  The extreme financial pressures now faced by LAs as a result of the pandemic brings this issue into particular focus. Yesterday (25th November 2020) the Treasury published its response to the consultation, and it can be found here.

As the consultation response explains:-

“In recent years a minority of local authorities have borrowed substantial sums from the PWLB to buy investment property with the primary aim of generating yield. The National Audit Office estimates that LAs bought £6.6bn of investment property between 2016-17 and 2018-19. The government is clear that this is not an appropriate use of PWLB loans.”

The response explains that from today, 26th November 2020, the PWLB (i.e. the Treasury) will apply a new approach to deciding whether to lend for a proposed project.  These include the following:-

“b) the PWLB will ask the finance director of the LA to confirm that there is no intention to buy investment assets primarily for yield at any point in the next three years. This assessment is based on the finance director’s professional interpretation of guidance issued alongside these lending terms.

c) It isn’t possible to reliably link particular loans to specific spending, so this restriction applies on a ‘whole plan’ basis – meaning that the PWLB will not lend to an LA that plans to buy investment assets primarily for yield anywhere in their capital plans, regardless of whether the transaction would notionally be financed from a source other than the PWLB.”

The response also announces that, now a workable system is in place to ensure that loans will “not be diverted into debt-for-yield activity”, PWLB lending rates from today for new Standard Rate and Certainty Rate loans will be reduced by 1%.

Peter Oldham QC


S 114 – (2) Croydon

November 26th, 2020 by Peter Oldham QC in Capital Finance and Companies, General, Judicial Control, Liability and Litigation, Local Authority Powers

On 11th November 2020, Croydon LBC’s s 151 officer wrote a report to the authority under s 114(3) of the LGFA 1988, which can be found here.  For the purposes of this series of posts, the interesting point is that the Council obtained clarification from CIPFA of the meaning of its guidance of June 2020, which I discussed in my earlier post today.

The s 151 officer’s report explains that in early September she issued a draft s 114 report to the Leader and others in the Council, and also sent it to the MHCLG, the LGA and the Council’s external auditors.  She explains that she did not issue a formal s 114 notice “as the conversations with MHCLG were ongoing”.  As we have seen, this was in accordance with the CIPFA guidance of June.

She reports that, on 6th November:-

“the Chief Executive of CIPFA clarified in a letter to Croydon Council that the modified guidance regarding the issue of S114 notices was as a direct result of costs incurred by the Covid19 pandemic. Croydon’s financial pressures are not all related to the pandemic.”

Stopping there, this clarifies the purpose of the CIPFA guidance of June 2020: that it was directed to pressures arising as a result of Covid. It was not meant to apply to situations where the financial crisis arose for other reasons, or other reasons as well.

The S 151 officer went on to explain that the financial pressures in Croydon also arose because of a misidentification of in-year savings as “new” savings; a greater risk of a group company, Brick by Brick, not making interest and dividend payments; a failure to identify medium term budget savings; and the continued incurring of non-essential costs. She also referred to the October report in the public interest under the Local Audit and Accountability Act 2014 from the Council’s auditors (s 24, Sched 7), which had detailed its deteriorating financial resilience.  She said:-

“I am not seeing the necessary level of pace, urgency or radical options to be presented to members to take decisions upon to give me confidence that the Council can make the level of savings required to deliver a balance budget in year, without external support in the form of a capitalisation direction.”

Peter Oldham QC


S 114 – (1) CIPFA’s approach

November 26th, 2020 by Peter Oldham QC in Capital Finance and Companies, General, Judicial Control, Liability and Litigation, Local Authority Powers

This is the first of a short series of posts about s 114 of the Local Government Finance Act 1988. They look at (1) CIPFA’s approach announced in June 2020, (2) the s 114 notice in Croydon and (3) yesterday’s Treasury response to consultation about PWLB lending terms.

Under s 114(3) of the LGFA 1988:-

114(3)     The chief finance officer of a relevant authority shall make a report under this section if it appears to him that the expenditure of the authority incurred (including expenditure it proposes to incur) in a financial year is likely to exceed the resources (including sums borrowed) available to it to meet that expenditure.

In the light of the pandemic, and its impact on LAs’ finances, CIPFA put out this statement in June 2020 – and note the words “due to COVID-19” which I’ve put in bold, and whose significance I will pick up in my next post:-

“The role of S.114 in the current crisis has been the subject of understandable debate. This statement confirms that the statutory responsibilities of the CFO has not changed. However, CIPFA proposes that there should be a temporary modification to existing guidance in order to create an opportunity, within existing statutory limits, to enable an exploration of what further options and/or financial assistance may be available.

The proposed modifications are as follows:

  • At the earliest possible stage a CFO should make informal confidential contact with MHCLG to advise of financial concerns and a possible forthcoming S.114 requirement
  • The CFO should communicate the potential unbalanced budget position due to COVID-19 to MHCLG at the same time as providing a potential s 114 scenario report to the council executive (Cabinet) and the external auditor

In practice this means it should not normally be necessary for a s.114 report to be issued while discussions with the government that would address the issue are in progress.

It is important to note that this modification does not change the statutory responsibilities of S.151 officers.

Where there is any doubt the CFO should of course revert to the statutory requirements of S.114.”

Rob Whiteman, Chief Executive of CIPFA, was quoted on Room 151 as follows on 23rd June 2020:-

“These temporary changes are designed to facilitate dialogue between local and central government. Prior to these changes, difficult conversations remained both internal and informal, and councils were able to issue notices without involving central government beforehand. Due to current pressures, this can no longer be the case.

The additional breathing room created by these amendments should ensure that more finance directors are able to meet their statutory responsibilities, while avoiding a premature S.114 notice, and the resulting freeze on local spending that inevitably follows.

The modifications do not change the statutory duty of the Section 151 officer. Our hope is that they support local authorities to impress upon government both the urgency of the need for additional funding to deal with the current crisis, as well as the thorny issue of local government funding in its entirety.”

Private Eye ran the following story in early summer 2020:-

“According to a senior figure in local authority finances, the local government ministry feared that if one council issued a S114 notice, many others would swiftly follow. They said that Robert Jenrick’s Ministry of Housing, Communities and Local Government, “…could cope with one or two S114 notices, but they wouldn’t be able to deal with 20 or 30”.”

CIPFA’s guidance was aimed at putting a buffer between LAs and the need to issue a s 114 notice, by strongly encouraging LAs to talk to the MHCLG “at the earliest possible stage”, as those discussions might “address the issue”.  But it made clear that – as was of course the case – this approach did not, and could not, alter the s 151 officer’s duties under s 114.

Peter Oldham QC



November 23rd, 2020 by James Goudie KC in Local Authority Powers

Where there is a statutory power for a Secretary of State to give a Direction, that power does not extend to the giving of a Direction not to comply with statutory duties, under that or another statute, absent clear words to that effect. So held in VIP Communications Ltd v SSHD (2020) EWCA Civ 1564.