Navigating the Brave New World of Subsidy Control

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by Kate Hiller, Legal Services Team Manager

At NWL Legal we’ve been looking at how we ensure that our council is compliant with the new Subsidy Control Act 2022 provisions that came into force this month.  Although a lot of it has not come as a surprise, getting your head around the new rules and what you do and don’t need to think about is a big task.  We have been focusing on the following:

  • Projects in the pipeline and whether they have subsidy control considerations;
  • Projects already begun and whether a subsidy has been given yet or not; and
  • Regular grants and smaller subsidies that were previously justified on de minimis grounds.

New projects

With new projects coming up in the near future which may involve giving subsidies, there was always going to be a need to consider the new subsidy control rules – even if just to rule something out as a subsidy at all – however, we are now thinking more carefully about how we do that.  It is not simply the case of giving some legal advice and holding that on a file somewhere.  The new rules require clear audit trails for sharing with potential challengers, notification in certain circumstances and referrals to the Competition Markets Authority when specific criteria are met.  The steps to go through to assess whether a subsidy is lawful or not are also far more detailed than we have seen before.

At NWL Legal we have pulled together a single Subsidy Control Assessment Form that can be used to assess potential subsidies when they come up.  It walks you through the steps of assessing whether something is a subsidy, deciding whether any of the permitted routes apply and if not, determining whether the proposed subsidy would comply with the subsidy control principles.  It also takes you through the requirements around notification and referral to be clear what next steps need to be taken in cases where a subsidy has been deemed to be lawful.  Having a framework like this in place sets us up for when our next subsidy control query comes through rather than waiting for a project to come up where a subsidy may be given and trying to work out what to do next.

Existing Projects

It is not just upcoming projects that we have been thinking about but also those that are already in train.  The new rules apply to subsidies that haven’t yet been given and therefore it is important to understand whether a subsidy decision was made before or after the provisions came into force.

The timing of a subsidy is therefore key.  It is easy to think that advice may already have been given on a particular subsidy so it is ok to proceed but that advice may be out-of-date if the subsidy has not yet been awarded.  With the rules changing and new requirements introduced, it is also not just a case of taking the view that it was compliant before so it is likely to be compliant again, as the groundwork needs to be done to confirm that it fits within the new rules.  We would recommend reviewing any projects ongoing where a subsidy may be about to be given to make sure you are still compliant.

Smaller subsidies

The de minimis rules under state aid were relatively straightforward and it was easy to take the view that: if aid had been granted under de minimis before; nothing had changed; and the value was still below the threshold; then it would be fine to keep giving similar aid (e.g. repeated smaller value grants to support community benefits).  Now there are the new minimal financial assistance provisions to consider though and other considerations to think about, for example, are they one off subsidies or do you want to set up a scheme?  Or even are they still a subsidy caught by the rules?  As it has now been made clear that if the recipient is engaged in both economic and non-economic activity, it should be considered an enterprise only in relation to its economic activity, it has made it potentially easier to give subsidies to charities.  Consequently, subsidies that were once the subject of the old state aid regime may no longer be a concern under the new Act, so it is worth looking into that, particularly if you give regular grants to community organisations.

At NWL Legal we are also looking at the templates we need in place to notify and confirm minimal financial aid to ensure compliance.  These requirements mean that even if the subsidy is justifiable on the same basis under the new rules, there are more steps to take to document it, as well as considering the notification requirements too.

All in all it seems like we now have a clear framework for what the subsidy control rules look like for the foreseeable future and now is the time to work out how that fits in your organisation, so that you can be compliant going forward and make this part of business as usual.  If there is anything we can help you with in navigating your way through this, do get in touch.

Common Sense Advice for Defending Disrepair Claims

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by Kerryn Woollett, Senior Solicitor

Disrepair claims can be brought when part of a property has fallen into disrepair and the landlord has been put on notice of that disrepair but the landlord has failed to carry out the repair in a reasonable period of time. What is reasonable will depends on a number of factors, for example, the extent of the disrepair, the landlord’s ability to carry out the repairs and whether the landlord was able to gain access to the property.

When a landlord gets a claim for disrepair it should first check the tenancy agreement to determine whether the disrepair claimed is something the landlord has agreed to carry out.

The landlord should then consider s.11 of the Landlord and Tenant Act 1985. S.11 provides that there is a covenant implied into the lease that the landlord will:

  • keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes);
  • keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity); and
  • keep in repair and proper working order the installations in the dwelling-house for space heating and heating water.

Structure and exterior also includes plasterwork on internal walls and ceilings (Grand v Gill [2011] EWCA Civ 554)

However, a defective extractor fan is unlikely to be considered disrepair because it’s a fixture, fitting or appliance for making use of electricity (rather than an installation for the supply of electricity). However, if the extractor fan is assisting in reducing damp from condensation, this could affect the tenant’s health and therefore there could be a different avenue for bringing a claim against the landlord.

The landlord should also consider s.9A of the Landlord and Tenant Act 1985 which requires properties to be fit for human habitation. This only applies to tenancies granted on or after 20 March 2019, therefore, if this is included in the claim, check the start date of the tenancy.

As early as possible the landlord should keep records of the landlord’s view, not only on whether the disrepair exists, but on who is liable for that defect, for example, if there is a broken window, it’s easy to see that it’s broken, however, who broke the window? Was it the landlord when carrying out other repairs, was it the tenant by throwing something at it or was it someone else e.g. an attempted burglary.

The landlord should also record what work needs to be done to remedy the disrepair and the landlord should remember that this is not something the tenant’s expert can dictate. The landlord should provide its view on what needs to be done and how much it’s likely to cost, as the landlord may have ways of doing the repairs cheaper.

Something that is often overlooked is the impact the disrepair is having on the tenant. Again, the impact of a broken window is fairly obvious – e.g. wind and rain can blow in and the property cannot be secured.

However, the impact of dampness or crumbling brick work on the tenant is less apparent. The court will be assisted by comments about how this impacts the tenant’s way of life, e.g. the tenant may claim that they are ashamed to bring people to property. However, if the landlord has attended the property and noticed a large number of alcohol containers outside the property in the recycling, the landlord should record this, as this tends to show that the tenant has had people at the property, therefore, the disrepair is not affecting them as they are claiming.

In determining the standard of repair the landlord is required to reach, consideration must be given to the age, character and prospective life of the property and its location. Local authority houses can be as good as private sector houses, but there is no obligation to make a 50 year old house look like it was built yesterday.

When carrying out repairs, there is an obligation on the landlord to make good or redecorate after the works are complete. It is true that the tenant is obliged to do internal decorations, but when the landlord has carried out repairs, those repairs are not complete until the area repaired looks as good as it did before.

The landlord is not required to do repairs in the way the tenant demands. The landlord may perform repairs in whichever manner is the easiest and can choose the cheapest option if it wishes.

The obligation when replacing installations, is for a like for like replacement. There is no requirement to upgrade installations or bring these in line with current standards, unless the law requires this in order to comply with regulations.

S.11 does not mean:

  • that the landlord guarantees there will never be disrepair – s.11 is only breached if the landlord is given notice of disrepair and has failed to repair it within a reasonable time and the entitlement to damages only runs from the point in time the landlord is in breach;
  • the landlord will carry out improvements;
  • the landlord will carry out the tenant’s job to use the property in tenant like manner e.g. tenants are supposed to clean the chimney, change lightbulbs, bleed radiators – do the things an owner/occupier would do rather than get a repair person in.
  • the landlord will repair everything in the property e.g. window sills and skirting boards are not included.

Using the property in a tenant like manner means doing the little jobs around the property, not causing damage to the property, keeping the property ventilated and heated to avoid condensation dampness and to allow access.

How can a landlord prove the tenant is causing the disrepair? It must keep good records.

The landlord should make sure it has evidence:

  • of the disrepair;
  • of how the tenant lives in the property;
  • of all the things the tenant could do to avoid living in the property in the way they are;
  • to eliminate the possibility that the disrepair is being caused by other sources (e.g. if damp is alleged, get evidence to show it is not being caused by rising or penetrating damp); and
  • to show the disrepair could be avoided if certain steps where taken.

For example, if damp is alleged, take photos of the areas affected, however, also take photos of any closed ventilation strips in windows, of the tenant’s property up against walls, of washing being dried inside, of unvented tumble dryers being used etc.

The landlord should also keep records of:

  • the state of the property generally, not just the disrepair;
  • anything said by tenants in the course of inspections;
  • attempts to gain access that are not successful and what was done about them e.g. was a calling card or letter left, was contact made with the tenant to arrange another date. This will help show the court the landlord had done all it can to do its job.

Landlords will also need to keep records of any notice given about disrepair. These will often be computerised records and an explanation should be given of these records, for example, they will often contain abbreviations which require explanation, they may contain a number of dates which need to be explained – are these the date notice was given, the date of an inspection, the date works were carried out, the date works were completed or the date an invoice paid? The date of paying an invoice is of no use when trying to determine the date notice was given, but it could be useful to try to prove that works were carried out.

Landlords will also need evidence to show their records are accurate e.g. if a tenant says they reported some disrepair but it is not recorded on the landlord’s computer system, the landlord needs to be able to show that its records are complete and accurate. This would be supported if the landlord is able to provide evidence of how the system and its processes work i.e. there is a process in place whereby all telephone calls and emails received are logged on the computer system, therefore, it’s not possible or is highly unlikely that a report of disrepair could have been made and not be recorded on the computer system.

To protect its position a landlord should:

  • Comply with the Pre-Action Protocol for Housing Conditions Claims (England);
  • Carry out any repairs quickly and efficiently;
  • Flag any issues timeously e.g. has access been given, does the landlord need permission from another landlord or the owner or a neighbouring property to gain access to areas to carry out repairs;
  • Make appropriate offers of settlement but not excessive offers; and
  • Keep a record of what works are done.

Register of Interests

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Rebecca Elliott, Solicitor

by Rebecca Elliott, Solicitor

Ahead of the upcoming local elections I have spent some time looking at the interests that members are required to declare upon taking office.  These are requirements of Parish, town and District Councillors.

Pecuniary Interests

Section 30 of the Localism Act 2011 states:

“A member or co-opted member of a relevant authority must, before the end of 28 days beginning with the day on which the person becomes a member or co-opted member of the authority, notify the authority’s monitoring officer of any disclosable pecuniary interests which the person has at the time when the notification is given.”

Not only does this cover the member’s own interest but also the interests of their:

-Spouse of civil Partner

-Someone they are living with as spouse or civil partner

-Family member

-Close associate

Pecuniary Interests are defined in the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 and include the following:

-Work

-Money received towards expenses either acting as Councillor or election expenses

-Contracts with the Council which you have beneficial interest in

-Interests in land in your Council’s area

-Licences to occupy land within your Council’s area

-Tenancies where your Council is the landlord

-Beneficial interests in securities of a body where –

  1. That body has a place of business or land in your Councils area; and
  2. Either –
  3. Value of securities exceeds £25k or 1/100 of the total issued share capital of that body; or
  4. if the share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class.

Failure to register pecuniary interest is a criminal offence and may be punished by a fine of up to £5,000 and/or disqualification for up to 5 years.

Where the requirement to register a pecuniary interest is also included in your Council’s Code of Conduct, your Monitoring Officer may also take corrective action as a result of a breach of the code.  A challenge may be mounted against any decision made that the failure to declare could effect.

Sensitive Interests

There are sometimes items that fit within the list above that a Member may feel they do not wish to disclose where to do so could lead to them being subject to violence or intimidation.  For example if their partners employment was a Police Officer.

With the Monitoring Officer’s agreement these can be treated as sensitive interests.  They still have to be kept on the Council’s register but would be omitted from any copy of the register which is open to members of the public.

Non pecuniary Interest

In addition to the requirements of the legislation, Councils will detail other interests that if feels need to be disclosed for transparency. These are often referred to as non-pecuniary interests.  The requirements to disclose are usually found within the Council’s Code of Conduct.

Failure to disclose interests in accordance with the Code of Conduct could result in corrective action being taken by the Monitoring Officer.  Further a challenge may be mounted against any decision that this failure could affect.