Localism could leave councils facing £1bn Eurofines

20 January 2011

Local residents could end up footing the bill for more than £1bn in fines from Brussels if the Localism Bill is not amended, council leaders warned today.

In an unprecedented move the Government plans to make councils pay for fines levied by the EU against the UK for missing national targets on things like improving air quality and boosting recycling rates.

The Local Government Association (LGA) believes the move has the potential to unfairly cost hard-pressed councils millions of pounds, which would lead to council tax increases or cuts to services. Councils are facing 28 per cent cuts to their budgets over the next four years – cuts far deeper than those faced by any government department – and need all their money to deliver frontline services.

The impact on council budgets could be almost immediate. The Government is already exceeding air pollution targets and has less than a year to get an extension from the EU or face a potential fine of £300m, enough to add £15 to the average annual council tax bill or pay for more than 12 million hours of homecare for the elderly.

A number of other EU directives, with implications for local government, contain the potential for similar fines. Breaching the air quality limits, alongside a failure to hit targets on waste recycling, procurement and service delivery could see fines in excess of £1bn levied against the UK.

LGA Chairman, Baroness Margaret Eaton, said: “The potentially billion pound fines from Brussels are for breaching national targets, which were agreed by central government with the EU. Changing the goalposts now to make councils liable for fines is unfair to them and unfair to the local residents who may have to foot the bill. The Government must amend this unfair, unworkable, dangerous and unconstitutional legislation.

“With budgets being cut by 28 per cent over the next four years, if fines are levied councils will have no choice but to either cut services or pass the cost onto residents.

“At the moment too many of the factors which could lead the UK to miss the targets fall outside town hall influence. On air quality alone big polluters like motorways and bus operators are currently beyond our control. Councils can do good work locally, but making them liable for fines for failing to fix a problem they don’t have sufficient powers or money to fully address is demonstrably unfair.

“We are calling on the Government to talk to us about how national and local government can work together to ensure the UK does not become liable for fines in the first place.”

The LGA believes the proposed changes are unfair, unworkable, dangerous and unconstitutional for the following reasons:

• The targets were agreed by the national government. Retrospectively localising EU targets will be difficult and certainly unfair, leading to the possibility of lengthy and expensive legal battles between councils and central government.
• A number of factors which might cause the UK to miss a target fall outside the influence or control of local authorities.
• It will be impossible to apportion fines to individual councils in a fair way because targets were negotiated, agreed and signed off by the UK Government, in some cases more than a decade ago. In that time council boundaries have changed and powers to act have been modified.
• Local government has not had adequate opportunity to influence the formation of the targets or the way they have been transposed into UK legislation.

Notes:

The LGA has produced a report on the relationship between Europe and Local Government which sets out how the relationship could be improved. "Knowing me, Knowing EU" is available in the publications section of our website.

EU fines apply to a Member State when the European Court of Justice finds it in default of its obligations. If the European Commission believes a Member State has not complied with a piece of EU legislation, it will issue a warning letter. If the infringement persists, it is referred to the European Court of Justice (ECJ) for a ruling; this can take anything between 8 and 18 months. In the last resort, the Court may fine a Member State both a lump sum (depending on the severity and duration) and a daily rate (up to around €350,000 per day), until the infringement is corrected.

The European Union has levied fines against member nations on nine occasions in the past 20 years, three times against France, which with a similar population and GDP provides a good guide as to the size of the penalties the UK may face for any breaches.

In a recent ruling following a breach of fishery conservation law the Court of Justice (Case 304/02) fined France a €20m lump sum and set a €57.7m penalty for each period of six months from the date of judgement that the French Government failed to fully implement the EU directive into domestic law.

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