PARLIAMENTARY WRITTEN QUESTION
Local Government Services: Small Businesses (21 January 2015)

To ask the Secretary of State for Communities and Local Government, what representations he has received from small business owners about unfair competitive practices from local authorities trading under the general power of competence granted by the Localism Act 2011.

Asked by:
Mr Toby Perkins (Labour)

We have recently received a number of letters from small business owners relating to the selling of memorials referring to the general power of competence.

The legislation only allows local authorities to provide and charge for discretionary services on a cost recovery basis and individuals must agree to that service being provided and choose to pay for it. Charging beyond cost recovery is trading. If a council is doing something for a commercial purpose (i.e. trading) it must be carried out through a company to ensure that the council does not have an unfair tax advantage over businesses. Furthermore a council cannot trade in services that they are required to provide, such as collecting household rubbish.

Local authorities are expected to make best use of resources by trading their expertise and ensuring that such action does not prevent growth of the private sector by distorting competition. Trading powers encourage councils to extend and improve the range of services offered, introduces new players into the market aiding competition, and helps increase the scope to provide business opportunities for the private sector.

Answered by:
Kris Hopkins (Conservative)
9 February 2015