On Tuesday 13 October 2009, the House of Commons passed a series of amendments to the Local Democracy, Economic Development and Construction Bill which will, if approved by the House of Lords, give certain qualifying local authorities the power to set up mutual insurance companies.
These amendments seek to overturn a Court of Appeal ruling from June 2009 which ruled against the London Authorities Mutual Ltd (LAML). The Court of Appeal judgment stated that the local authorities that set up the mutual did not have the legal power to do so, and that they did not follow the appropriate competitive procedures.
The amendments were tabled at the last possible stage of the Bill's consideration in the House of Commons and will now pass to the House of Lords for consideration. Concerns were raised during the debate in the House of Commons over whether the risks to local authorities were considered before these new powers were granted, and Zurich echoes these concerns.
Setting up of insurance companies can be complex, with costs attached.
While there are undoubtedly benefits to the mutual approach there are also significant risks which need to be fully discussed and understood.
Commenting on the development, Zurich Municipal's Head of Local Government, Andrew Jepp, said:
"Pushing these amendments through in this fashion means parliamentarians will not be able to have the full debate that this issue deserves. The fact that these proposals do not address the wider issues concerning the well-being powers and that the Strengthening Local Democracy consultation has only just closed and cannot have been analysed in detail should also be considered. Therefore we would question why this is being rushed through."
Follow the link to read the full article:
http://www.lgcplus.com/finance/latest-finance-and-partnership-news/ministers-table-mutual-insurance-amendment/5007266.article
The DCLG impact assessment can be accessed here:
http://www.communities.gov.uk/publications/localgovernment/bestvalueauthorityia
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