Recent case law has shown the importance of local authorities acting within their powers and meeting any associated requirements.

The case of R v AB, CD and EF [2017] EWCA Crim 534 involved the use of section 222 of the Local Government Act 1972 by Thurrock Council. The council had entered into an arrangement with the Legal Aid Agency to provide the services of officers from the council’s Fraud Investigation Department for investigations. Following an investigation, the council prosecuted persons involved in a solicitors’ practice for offences relating to alleged fraudulent claims made to the Legal Aid Agency.

The persons who were being prosecuted argued that the council had acted outside its powers in bringing the prosecution. Section 222 of the Local Government Act 1972, provides power for a local authority to prosecute or defend or appear in legal proceedings 'where a local authority consider it expedient for the promotion or protection of the interests of the inhabitants of their area'. It was suggested that the council had not shown that it considered the prosecution to be expedient for the promotion or protection of the inhabitants of Thurrock.

The council considered that it had met the conditions of section 222 of the Local Government Act 1972. It argued that it was in the interests of the inhabitants of Thurrock that the legal aid system, from which everyone may benefit, should not be defrauded.

Furthermore, the income which the arrangement with the Legal Aid Agency brought to the council could be used to fund other cases which would benefit the inhabitants of Thurrock and it would help to make the continued existence of the Fraud Investigation Department sustainable. The council indicated that the department was likely to be disbanded if the council could not offer its expertise to other public bodies.

The court found that the council could not reasonably have thought there were any proper grounds to consider that the prosecution was expedient for the promotion or protection of the interests of the inhabitants of Thurrock. It was not sufficient that the prosecution could have an impact on UK taxpayers generally. The court decided that the interests of the inhabitants of Thurrock needed to be engaged over and above their interests as ordinary citizens of the nation.

Furthermore, the court found that the council’s general financial justification did not come close to meeting the requirements of section 222. The court therefore found that the council had acted outside its powers and that the prosecution proceedings had been commenced unlawfully. However, the prosecution was able to continue, as the director of public prosecutions exercised power to take over the conduct of the prosecution.

The case gives local authorities an important reminder to comply with any legal obligations and observe any particular obligations and constraints associated with the powers that they are exercising. The introduction in the Localism Act 2011 of the wide and flexible power of general competence for local authorities in England may have encouraged them to think that they no longer need to consider the details of their powers.

However, the case involving Thurrock Council has shown that it is as important as ever for local authorities to show how they meet the particular requirements associated with any power they exercise.

Local authorities which are developing and implementing income generation strategies should note the failure of the general financial justification put forward by Thurrock Council in this case. They should consider the powers they will exercise to carry out income generation activities and identify and meet any associated requirements. This will help local authorities to minimise their risks of challenge and operate effective income generation strategies.

Tiffany Cloynes is partner and head of Geldards’ regeneration and public services team in England.