UK Government confirms that local authorities should not be able to sue for defamation
Since the case of Derbyshire County Council v Times Newspapers and others  2 W.L.R. 449, it has been well-established that organs of government – both central and local – cannot sue for defamation. In his leading judgment in that case, Lord Keith of Kinkel expressed the view that:
It is of the highest public importance that a democratically elected governmental body, or indeed any governmental body, should be open to uninhibited public criticism.
However, earlier this year, Rutland County Council suggested that it might test the principle. In response to allegations made by a group called "Rutland Anti-Corruption Group", the council revealed that it had obtained legal advice that the Localism Act 2011 (the "2011 Act") may now permit local authorities to bring defamation actions. The legal advice was said to be based on s. 1 of the 2011 Act, which sets out a "power of general competence", as follows:
A local authority has power to do anything that individuals generally may do.
However, before the fourth day of the Committee Stage of the Defamation Bill formally started, Lord McNally, the Minister of State for the Ministry of Justice, responded on the issue. Speaking in the House of Lords, Lord McNally made the following statement.
My officials have explored the issue with officials at the Department for Communities and Local Government, which is responsible for the 2011 Act. The Government are in no doubt that if a case were brought, the courts would still find that local authorities cannot bring action in defamation. The decision in Derbyshire was reached on public policy grounds, which we considered [sic] remain compelling. The House of Lords found that it would be contrary to the public interest for organs of government to be able to sue in defamation, and that it would be an undesirable fetter on freedom of speech. It must be borne in mind that Derbyshire was decided before the enactment of the Human Rights Act 1998. Consideration of Article 10 would only bolster the reasoning of the House of Lords in Derbyshire.
In any event, I can reassure the Committee that even if the issue was brought before the court and found to the contrary, the situation could be remedied by way of a statutory instrument under Section 5(3) of the Localism Act 2011. The power allows the Secretary of State to prevent local authorities using Section 1 powers to do anything specific in the order. In this case, an order could be made preventing any action being brought in defamation. I have already indicated in earlier debates our view that it is preferable for the courts to have the flexibility to continue to develop the Derbyshire principle, rather than to attempt to prescribe rigid boundaries in statute. That remains our view. In the unlikely event of any difficulty arising as a result of the provisions in the Localism Act, prompt action can be taken to address that without any need for primary legislation.
In the meantime, Rutland County Council made its own statement, announcing that "the option of taking legal action for defamation is not being pursued at this time".