A local authority General Power of Competence

Page 1 of 7

Closes 28 Mar 2025

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Questions - Part 1

Currently, local authorities may do only those things which statute empowers them to do. Anything else is ultra vires, meaning "beyond the powers” and is commonly defined in law as an action that exceeds the legal scope of an entity’s authority.

A general power of competence is commonly defined as a statutory power to do “anything that individuals may generally do”, providing freedom for local authorities to operate without restriction (unless a restriction is specified in this or another statute).

The General Power of Competence introduced by the Localism Act 2011 enables councils in England to do things:

  1. an individual may generally do
  2. anywhere in the UK or elsewhere
  3. for a commercial purpose or otherwise, for a charge or without a charge
  4. without the need to demonstrate that it will benefit the authority, its area or persons resident or present in its area (although in practice councils will want to realise such benefits).

However, limits apply where a local authority provides a service otherwise than for a commercial purpose.  The general power confers power to charge a person for providing a service to the person only if:

  1. the service is not one that a statutory provision requires the authority to provide to the person
  2. the person has agreed to its being provided
  3. the authority does not have an existing power to charge for providing the service

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.

Whilst there appear to be no limits on charging for commercial enterprises, a local authority cannot use the general power to profit from charging for services – this power is instead conferred by the Local Government Act 2003. 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.

As well as including restrictions on profiting from charging for services, the General Power of Competence can also not be used to levy taxes or to borrow beyond existing statutory powers and the requirements of the prudential framework.

The Local Government Act 2003 enables councils to trade in activities related to their functions on a commercial basis with a view to profit through a company. In addition, the 2003 Act empowers councils to charge for any discretionary services on a cost recovery basis.

1. What are the perceived barriers and risks to fully exploring the scope of the ‘Power to Advance Wellbeing’ contained in section 20 of the Local Government in Scotland Act 2003?

Note: Section 20 of the Local Government in Scotland Act 2003 provides a broad power for a local authority to “do anything which it considers is likely to promote or improve the well-being of its area and/or persons within that area”.

2. What are the limitations of the Power to Advance Wellbeing and how do these limitations restrict the aspirations of local authorities, for example, to explore new and innovative ways of delivering public services?
3. Would the removal of the restriction imposed by paragraph 7 of section 22 of the Local Government in Scotland Act 2003 (see note below) facilitate the aspirations of local authorities to increase local revenue generating powers?

Note: Paragraph 7 of section 22 of the Local Government in Scotland Act 2003 says expressly that the power under section 20 of the Act does not enable a local authority to do anything for the purposes of raising money, whether by levying or imposing any form of tax or charge, by borrowing or otherwise. Only the specific power in the 1970 Act can be relied upon to generate revenue through the supply of goods and services.

4. Are there any further existing legislative barriers to the delivery of public services and to a broader range of activity that local authorities would wish to undertake?
5. Would a broadening of the scope and meaning of ‘wellbeing’ contained in the 2003 Act (see note below) provide an effective alternative to a General Power of Competence?

Note: The Local Government in Scotland Act 2003 contains a provision that allows the Scottish Ministers to widen the definition of wellbeing and therefore the scope of the power of local authorities to advance wellbeing, under section 20 of the 2003 Act. Given the continued reluctance in England, Wales and Northern Ireland to rely on the general power due to concerns over legal challenge, it may be more effective to either broaden the scope and meaning of ‘wellbeing’ within the 2003 Act or to create further specific statutory powers within the 2003 Act to explicitly permit the greater freedoms local authorities wish to have.

6. Would the provision of specific greater powers within the 2003 Act (see note below) provide an effective alternative to a General Power of Competence?

Note: The Local Government in Scotland Act 2003 contains a provision that allows the Scottish Ministers to widen the definition of wellbeing and therefore the scope of the power of local authorities to advance wellbeing, under section 20 of the 2003 Act. Given the continued reluctance in England, Wales and Northern Ireland to rely on the general power due to concerns over legal challenge, it may be more effective to either broaden the scope and meaning of ‘wellbeing’ within the 2003 Act or to create further specific statutory powers within the 2003 Act to explicitly permit the greater freedoms local authorities wish to have.

7. Does the provision within the 2003 Act, which states that the Power to Advance Wellbeing cannot be used to unreasonably duplicate the functions of another person, restrict a local authority’s pursuit of service transformation, other income generating activity or any other activity?

Note: Paragraph 4 of section 22 of the Local Government in Scotland Act 2003 prevents local authorities from unreasonably duplicating the functions of other bodies or people. The subsection states that local authorities must consider whether any proposed action is reasonable. The subsection also makes it clear that the exercise of power would not be considered unreasonable if the other person had consented.

8. Would the removal of the restriction on duplication of functions, contained within section 22 of the Local Government in Scotland Act, provide an effective alternative to a General Power of Competence?