Bilingual Legislation

December 23rd, 2020 by James Goudie QC 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.

 

Coronavirus

December 1st, 2020 by James Goudie QC 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

 

Directions

November 23rd, 2020 by James Goudie QC 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.

 

Pay Policy

November 12th, 2020 by James Goudie QC in Local Authority Powers

An employer’s need to reduce staff costs is capable of being a legitimate aim. That May if the measures are proportionate justify what would otherwise be indirect age discrimination. In Heskett v SoS for Justice (2020) EWCA Civ 1487 the Court of Appeal held that a limit on pay increases had been justified, notwithstanding that it resulted in a significant slowing of pay progression for employees under 50 as compared with those over that age.

 

Anti-Social Behaviour

November 11th, 2020 by James Goudie QC in Local Authority Powers

An Injunction pursuant to Section 222 of the Local Government Act 1972 to restrain anti-social behaviour, “street cruising”, was upheld in Sharif v Birmingham City Council (2020) EWCA Civ 1488, notwithstanding the alternative remedy for community protection of making a Public Spaces Protection Order under Part 4 of the Anti-Social Behaviour etc Act 2014. There was a widespread problem in the Council’s area and the Council’s attempts to deal with it by means short of an injunction had been unsuccessful. Bean LJ said, at para 42, that it was “a classic case for the grant of an injunction”.

 

Public Sector Exit Payments

September 7th, 2020 by James Goudie QC in Local Authority Powers

Both Houses of Parliament are back in session, but there are still no draft Regulations before them for a £95K cap on exit payments. Indeed it is now apparent that this will not happen before November at the earliest. On 7 September 2020, MHCLG has issued a Consultation Paper, for response by 9 November 2020, “ Reforming Local Government Exit Pay”. This is on exit pay for local government workers in England, and specifically for those who are eligible to be members of the LGPS, with entitlement to early access to pension and to redundancy compensation pay. The consultation includes proposals for limiting pension strain cost. There are 12 consultation questions.

 

Welsh Text

August 3rd, 2020 by James Goudie QC in Local Authority Powers

R ( Driver ) v Rhondda Cynon Taff CBC ( 2020) EWHC 2072 ( Admin) concerns the reorganisation by the Council of reorganisation of education in the Pontypridd area, and in particular the implications for 6th forms. Fraser J found the Council to be in breach of Section 50 of the School Standards and Organisation ( Wales) Act 2013, and of the Welsh Government School Organisation Code 2013, in relation to assessing the impact of the proposals upon the Welsh language.
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