THE GOVERNMENT is shooting itself in the foot by refusing to do away with the doctrine of ultra vires, a seminar staged by specialist commercial chambers Verulam Chambers heard.
Derek Wheatley QC, the former chief legal adviser to Lloyds Bank, told the seminar on current banking problems that the existence of the doctrine was threatening the private finance initiative.
Wheatley, who is now a tenant at the set, said the doctrine had allowed local authorities to escape the consequences of entering into loss-making derivatives deals which were later declared to be “ultra vires”.
He said: “The government has recognised the dangers of ultra vires for those dealing with limited companies and building societies but is, apparently, happy that those dealing with local authorities are left at risk because this acts as a restraint on local authority spending, even though it also results in great injustice for innocent third parties.”
The MP and barrister Nick Hawkins also spoke at the seminar, held on 17 October.
Hawkins, who chairs Parliament's all party group on financial services, said the ultra vires doctrine should stay, but in a modified form to give banks greater protection.