Councils get new powers to create mutual insurance companies

Published by Jon Land for 24dash.com in Local Government

Councils are to be given new legislative powers to establish mutual insurance companies in light of the recent London Authorities Mutual Limited (LAML) court judgement, Local Government Minister Rosie Winterton announced today.

Urgent new amendments have been laid on the Local Democracy, Economic Development and Construction Bill that will give 'best value' authorities legislative power to join together to set up and participate in mutual insurance companies. The amendments will be debated at the report stage of the Bill set for October 13 2009.

These steps follow the recent court ruling that Brent council did not have the necessary powers to set up LAML. Member councils participating in LAML claimed to have saved 15 per cent on insurance premiums as a result.

The Government is determined to support councils who are identifying new efficiencies and innovative ways to make taxpayers' money work harder than ever. In July, Communities Secretary John Denham consulted on introducing new legislation so councils could set up mutual insurance companies as an important way to deliver value for money.

The consultation responses showed that 82 per cent of respondents agreed with the proposal to introduce a mutual insurance power. The Strengthening Local Democracy consultation also asked if there were other beneficial activities were potentially outside the scope of existing powers. Government is still reviewing those responses and whether further action is necessary.

Rosie Winterton said: "Councils have shown they are willing to make efficiency savings and are trying to think creatively about how achieve them. We will support them in their efforts to make every taxpayer's pound work even harder in the current economic climate.

"Councils have shown that creating their own mutual insurance companies can deliver savings, but following the LAML judgement we have taken the necessary legislative steps to ensure they have the specific powers needed to do this."