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LAML and shared services. Free at last?

10 February 2011

It is rare that a judicial decision is so timely – given current economic and political pressures on the public sector to reduce costs and procure collaboratively, the Supreme Court’s decision to overturn LAML will be warmly welcomed. The Court of Appeal had held that several London Boroughs had acted unlawfully by setting up a company with the intention to generate savings on insurance costs. Amongst other things, the court found they should have gone through a procurement process.

In overturning this ruling, the Supreme Court has given comfort to public bodies seeking to share services. This comes at a time when case law in Europe is moving in the same direction – holding that public to public arrangements, with no profit or private involvement, are less likely to be covered by the procurement regulations.

Shared services can take a number of forms, and the Supreme Court has just removed one of the biggest risks to councils taking an enterprising approach to protect front line services.

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