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Local Democracy, Economic Development and Construction Act 2009

Chapter 2: Mutual Insurance

96.On 9 June 2009 the Court of Appeal, in its consideration of Brent London Borough Council v Risk Management Partners Ltd [2009] EWCA Civ 490, ruled that the participation of councils in the London Authorities’ Mutual Ltd was beyond their statutory powers. On 21 July 2009, the Department for Communities and Local Government published the consultation paper Strengthening Local Democracy which proposed specific new powers to enable councils to set up and participate in mutual insurance arrangements. This Chapter confers these powers on local authorities and other best value authorities in England and Wales and also permits insurance to be provided to other bodies specified by regulation. “Best value” authorities are defined in section 1 of the Local Government Act 1999.

Section 34 – Mutual insurance

97.Section 34 provides that a qualifying authority (listed in section 35(2)) may become a member of a body corporate whose objects must be those set out in subsection (2) and all of whose members are other qualifying authorities. In addition, it provides that a qualifying authority may do anything that is required by, or is conducive or incidental to, being a member of such a body corporate.

98.Subsection (3) provides that the power of a qualifying authority to do anything that is required of it as a member of the mutual insurance body corporate includes a power to pay premiums and other payments to the mutual insurance body, to agree to make any such payments and to assume financial obligations in relation to prescribed persons.

99.Subsection (4) provides that the Secretary of State, in relation to qualifying authorities in England, and Welsh Ministers, in relation to qualifying authorities in Wales, may by regulations impose restrictions or conditions on the use of the powers conferred on qualifying authorities.

100.Under subsection (5), qualifying authorities are required to have regard to any guidance issued by the Secretary of State or Welsh Ministers and to any guidance or document specified in regulations.

101.Subsection (6) provides that the Secretary of State and Welsh Ministers may, by regulation, amend the list of authorities that are qualifying authorities.

Section 35 – Mutual insurance: supplementary

102.Section 35(2) lists the qualifying authorities that are being provided with the power to become members of a mutual insurance body corporate.

103.The section defines the appropriate national authority, for the purpose of making regulations or issuing guidance, as the Secretary of State in relation to England and Welsh Ministers in relation to Wales.

104.The section provides that regulations under section 34 are to be made by statutory instrument and lays down the procedures to be followed. Regulations that (i) prescribe persons to whom mutual insurance bodies may provide insurance (ii) impose restrictions or conditions on the use of power by qualifying authorities or (iii) specify any guidance or document to which qualifying authorities must have regard are by negative resolution procedure in Parliament or the National Assembly for Wales, as appropriate. Regulations changing the authorities that are qualifying authorities are by affirmative resolution procedure in Parliament or the National Assembly for Wales, as appropriate.

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