A prosecution too far: the importance of local authority powers

Tiffany Cloynes, Geldards

The introduction of a general power of competence might have encouraged local authorities to think that the days of needing to consider powers in detail were behind them. However, a criminal appeal case in 2017 has shown it continues to be as important as ever for local authorities to be clear about what powers they are using, for all their activities, and to be sure that they comply with any requirements associated with those powers.

Local authority power for prosecution

The case of R v AB, CD and EF [2017] EWCA Crim 534 involved a prosecution against persons involved in a solicitors’ practice for offences which were alleged to have been committed through the submission of fraudulent claims made to the Legal Aid Agency. The prosecution was brought by Thurrock Council, following an investigation which the council had carried out on the agency’s behalf.

The council had a fraud investigation department, which employed officers who had been trained to high standards in investigating complex crime. The council had entered into an arrangement with the Legal Aid Agency to provide the services of officers from the fraud investigation department for the purposes of the agency’s investigations.

The persons who were being prosecuted argued that the council had acted outside its powers in bringing the prosecution. The power which the council had purported to exercise was section 222 of the Local Government Act 1972, which says that:

‘Where a local authority consider it expedient for the promotion or protection of the interests of the inhabitants of their area (a) they may prosecute or defend or appear in any legal proceedings and, in the case of civil proceedings, may institute them in their own name, and (b) they may, in their own name, make representations in the interests of the inhabitants at any public inquiry held by or on behalf of any Minister or public body under any enactment’.

However, 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 when it brought the prosecution. 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 raud investigation department sustainable. The council indicated that the department was likely to be disbanded if the expertise of its officers could not be offered to other public bodies.

The court did not accept the council’s arguments. It found that the council could not reasonably have thought that 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. Although other cases had shown that here were circumstances in which it would be in the interests of inhabitants of a particular area for a prosecution to be brought in respect of offences that were alleged to have been committed elsewhere, the council’s situation was not within the scope of these.

The court did not consider it sufficient that the prosecution could have an impact on UK taxpayers generally. It took the view that to meet the requirements of section 222 of the Local Government Act 1972, 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 did not accept the general financial justification put forward. It found that section 222 empowers a local authority only to prosecute in the specific interests of its own inhabitants and that the general financial justification put forward by the council did not come close to meeting this requirement. 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 case.

Exercise of powers

This case will be of particular interest to any local authorities which may be considering bringing prosecutions or other legal proceedings relating to matters outside their areas, but which have much wider significance. It provides a salutary reminder to all local authorities to ensure that they comply with any legal obligations and observe any particular requirements and constraints associated with the powers that they are exercising. In the case involving Thurrock Council, the council had not ignored the need to act within its powers: it thought that it had identified an appropriate power and had taken steps to observe the necessary formalities to exercise it. However, the council’s arguments as to why its action was in the interests of the inhabitants of its area were not sufficient to convince the court.

There are powers other than section 222 of the Local Government Act 1972 which require local authorities to have reached particular conclusions or to have taken particular action. The case involving Thurrock Council shows the importance of local authorities having evidence that any such requirements have been met. Although local authorities may regard it as impractical to include extensive details of legislation in the reports considered by members, persons who prepare and present those reports should be satisfied that the information put before members is sufficient to show that the local authority has complied with any relevant obligation.

Income generation

The need for a local authority to act within its powers, and the lessons to be learned from this case will be important for local authorities pursuing income generation activities. An ability to identify and respond effectively to such opportunities is important for local authorities which are continuing to strive to deliver services effectively within the resources available to them. Effective income generation will require a local authority to develop and implement a comprehensive income generation strategy, which identifies opportunities and any implications associated with them. The strategy will need to provide business cases identifying why the local authority should pursue the activities identified in the strategy. It should provide plans as to how the proposals will be implemented, including details of any consents which will be necessary and any other practical implications. The strategy will need to be consistent with the local authority’s constitution and any relevant policies.

It will be important for a local authority to be confident that it can implement its income generation strategy without acting outside its powers. A useful stage therefore in the development of a strategy will be to consider what powers will be appropriate for the local authority to exercise for the various activities proposed, and to identify any particular requirements associated with these. The local authority will then need to ensure that these requirements are met when the local authority takes decisions and actions to implement the strategy. Local authorities have powers which are useful for income generation purposes, but the case involving Thurrock Council has shown how difficult the consequences can be if a local authority is found deficient in the exercise of those powers.