Local authority - General Power of Competence: consultation

Comparison with Local Authority Legislative Powers in England, Wales and Northern Ireland

General provisions

The Localism Act 2011 provides local authorities in England with a general power of competence, described as “power to do anything that individuals generally may do…even though they are in nature, extent or otherwise unlike anything the authority or other public bodies may otherwise do… in any way whatever, including:

(a) power to do it anywhere in the United Kingdom or elsewhere,

(b) power to do it for a commercial purpose or otherwise for a charge, or without charge, and

(c) power to do it for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area.

In England, the General Power of Competence sits alongside local government’s existing powers to trade and charge. New powers contained in the Localism Act also provide the ability to charge for discretionary services on a cost recovery basis.

The Local Government and Elections (Wales) Act 2021 and The Local Government Act (Northern Ireland) 2014 provide similar powers to local authorities in those areas.

Unlike in England where the general power operates alongside the power to advance well-being, in Wales the well-being power will no longer apply to Welsh local authorities once the general power is commenced.

Boundaries of the general power

In England, Wales and Northern Ireland, the general power does not enable a local authority to do anything which the authority is unable to do by virtue of a any prohibition, restriction or other limitation expressly imposed by a statutory provision.

The general power does not confer power for a local authority to:

a) make or alter arrangements for the discharge of its functions by committees, joint committees, officers etc);

b) make or alter arrangements for local authority governance;

c) make or alter any contracting-out arrangements.

Limits on charging in exercise of general power

Limits apply, in England, Wales and Northern Ireland, where a local authority provides a service otherwise than for a commercial purpose.

The Localism Act 2011 provides that the general power confers power to charge a person for providing a service to the person only if—

a) the service is not one that a statutory provision requires the authority to provide to the person,

b) the person has agreed to its being provided, and

c) the authority does not have an existing power to charge for providing the service.

Under the Localism Act, a local authority cannot trade in services it has a statutory duty to provide.

A local authority also cannot use the general power to introduce new local taxes or to undertake borrowing out with the existing rules. As such, a local authority cannot use the general power primarily to raise money but they can receive income as a consequence of using the power for a different primary purpose.

The Localism Act also states that a local authority cannot use the general power to profit from charging for services. “The general power is subject to a duty to secure that, taking one financial year with another, the income from charges as permitted by the general power does not exceed the costs of provision. This provision applies separately to each type of service.”

The Local Government and Elections (Wales) Act 2021 and the Local Government Act (Northern Ireland) 2014 contain similar provisions.

Limits on doing things for commercial purpose in exercise of general power

The general power in the Localism Act 2011 confers power on a local authority to do things for a commercial purpose only if they are things which the authority may, in exercise of the general power, do otherwise than for a commercial purpose.

When undertaking activity for a commercial purpose, the Localism Act requires that a local authority must do them through a company.

A local authority may not do things for a commercial purpose in relation to a person if a statutory provision requires the authority to do those things in relation to the person.

The Local Government and Elections (Wales) Act 2021 contains similar provisions but includes a further requirement that local authorities have a duty to have regard to guidance issued by the Welsh Ministers about exercising the general power of competence to do anything for a commercial purpose.

The Local Government Act (Northern Ireland) 2014 contains no express limitations on doing things for a commercial purpose in exercise of the general power.

Power to make supplementary provision

Each of the Acts set out similar requirements with regards to supplementary provisions. The Acts are described more fully in Annex B.