Consultation duty gets to the Supreme Court
29 October 2014
Lord Wilson posed the question, answered today by the Supreme Court, with concision. When Parliament requires a local authority to consult interested persons before making a decision which would potentially affect all of its inhabitants, what are the ingredients of the requisite consultation?
The judgments reveal the surprising fact that the core principles of consultation (named after Gunning, as public lawyers will know) have never been approved by the Supreme Court or its predecessor, the House of Lords. The Court was happy to endorse them as embodiments of fairness. But it went on to consider the duty to consult on rejected alternatives – as very recently debated by the Court of Appeal in the Rusal case – see my post here.
The Council Tax Reduction Scheme
The case concerned Council Tax Benefit (“CTB”). Originally, the Department for Work and Pensions came up with the scheme and local authorities were to operate it. From 1 April 2013, however, local authorities were told to come up with their own scheme, a Council Tax Reduction Scheme (“CTRS”). Before making a CTRS, local authorities were required to consult. In 2012 Haringey consulted on its draft CTRS, and then made the scheme in substantial accordance with its draft.
The twist, as far as Haringey was concerned, is that it had to swallow itself some of the reduction in Council Tax which flowed from its scheme – and that was important, because about one-third of all of its households was on CTB, most of which on full CTB. But the law said that the scheme should apply at the same level as had applied under the old CTB scheme.
Two Haringey single mothers, hitherto on full CTB, applied for judicial review of the lawfulness of the consultation.Their claims failed – until the case got to the Supreme Court.
A Haringey Councillor, lead for Finance, had sounded off about the iniquity of central government in devising the new system. As Lord Wilson pointed out, his words betrayed an assumption that the shortfall would have to be reflected by provisions in the CTRS reducing the level of CTB rather than that Haringey should absorb it in other ways.
The report before the Council considered various options, including absorbing costs (and reducing services), and exempting each of four classes of claimant for relief from any reduction below its existing level. In the end the report recommended that Haringey’s CTRS should provide that the shortfall be met by a percentage reduction in the amount of CTB payable to all claimants other than to pensioners. So non-pensioners, hitherto on full CTB, would now have to pay between 18% and 22% of their council tax liability.
In the interim, central government proposed some transitional mitigation of the scheme, in which those on full CTB would have to bear no more than 8.5% of their liability. Haringey were concerned that even taking account of this there would be an unacceptable net shortfall in its receipts of council tax.So it resolved not to amend its draft CTRS so as to comply with the TGS criteria and not to bring the TGS to the attention of those likely to be interested in the operation of its CTRS by means of any enlarged consultation exercise.
Come the end of the consultation, of which more anon, the Council adopted a modified CTRS scheme, in which the disabled joined pensioners with full CTB, but everyone else had to bear a 19.7% reduction in benefits.
Haringey had a statutory obligation to consult “such… persons as it considers are likely to have an interest in the operation of the scheme”. This applied to all those who might lose some benefit which they currently enjoyed. In terms of publicity, it did well, with 36,000 sets of documents sent out, and with its proposals on line as well.
The problem for Haringey in the Supreme Court came in the text, in particular,
This means that the introduction of a local….Scheme in Haringey will directly affect the assistance provided to anyone below pensionable age that currently involves council tax benefit.
As Lord Wilson pointed out, a CTRS did not necessarily have this effect – as Haringey’s own report pointed out, there were other ways of dealing with it, not least reducing services, albeit that this had been rejected by them. The consultation assumed that CTB beneficiaries would have to suffer the cuts, one way or another. And this deficiency was pointed out by an anti-poverty campaigner, Rev Paul Nicholson. Other councils were absorbing the cut and
Why cannot Haringey do the same? There is no consultation taking place about that central issue.
Lord Wilson sought to summarise consultation duties as a duty of fairness, linked to the purposes of the consultation. Citing R (Osborn) v Parole Board  UKSC 61 , the requirement “is liable to result in better decisions, by ensuring that the decision-maker receives all relevant information and that it is properly tested” (para 67). Second, it avoids “the sense of injustice which the person who is the subject of the decision will otherwise feel” (para 68). Such are two valuable practical consequences of fair consultation. But underlying it is also a third purpose, reflective of the democratic principle at the heart of our society. This third purpose is particularly relevant in a case like the present, in which the question, for Lord Wilson, was
Required, as we are, to make a taxation-related scheme for application to all the inhabitants of our Borough, should we make one in the terms which we here propose?
Now to Gunning (R v Brent London Borough Council, ex p Gunning) in which Hodgson J quashed Brent’s decision to close two schools on the ground that the manner of its prior consultation, particularly with the parents, had been unlawful. He accepted counsel’s submission (counsel, Stephen Sedley QC, who ended up in the CA) that (1) consultation must be at a time when proposals are still at a formative stage (2) the proposer must give sufficient reasons for any proposal to permit of intelligent consideration and response, and (3) adequate time must be given for consideration and response and (4) that the product of consultation must be conscientiously taken into account in finalising any statutory proposals.
As Lord Wilson said
The time has come for this court also to endorse the Sedley criteria. They are, as the Court of Appeal said in R (Royal Brompton and Harefield NHS Foundation Trust)… EWCA Civ 472….”a prescription for fairness”.
Now to the tricky point about rejected options, canvassed in the Rusal case, with rather different conclusions being drawn.
Lord Wilson thought that
Sometimes, particularly when statute does not limit the subject of the requisite consultation to the preferred option, fairness will require that interested persons be consulted not only upon the preferred option but also upon arguable yet discarded alternative options. For example, in R (Medway Council and others) v Secretary of State for Transport EWHC 2516 (Admin)… the court held that, in consulting about an increase in airport capacity in South East England, the government had acted unlawfully in consulting upon possible development only at Heathrow, Stansted and the Thames estuary and not also at Gatwick..
But even if the consultation was to be only on the preferred option, fairness may nevertheless require passing reference to be made to arguable yet discarded alternative options. In the Royal Brompton case (our post here), the defendant was minded to advise that only two London hospitals should provide paediatric cardiac surgical services, namely Guys and Great Ormond Street. The CA thought a decision-maker may properly decide to present his preferred options in the consultation document, provided it is clear what the other options are.
Application of the law to the facts
Lord Wilson agreed that consulting about a proposal does inevitably involve inviting and considering views about possible alternatives.It would not have been onerous for Haringey to make brief reference to other ways of absorbing the shortfall. Not to do so was unfair and unlawful.
Lord Reed, in a concurring judgment, was inclined to place more emphasis on the statutory context of this consultation.
But the present case is not in my opinion concerned with circumstances in which a duty of fairness is owed, and the problem with the consultation is not that it was “unfair” as that term is normally used in administrative law. In the present context, the local authority is discharging an important function in relation to local government finance, which affects its residents generally.
A duty to consult did not invariably require information about options which have been rejected. But in the present case, on the other hand, it is difficult to see how ordinary members of the public could express an intelligent view on the proposed scheme, so as to participate in a meaningful way in the decision-making process, unless they had an idea of how the loss of Council income might otherwise be replaced or absorbed.
Put more strongly,
The consultation document presented the proposed reduction in council tax support as if it were the inevitable consequence of the Government’s funding cuts, and thereby disguised the choice made by Haringey itself. It misleadingly implied that there were no possible alternatives to that choice. In reality, therefore, there was no consultation on the fundamental basis of the scheme.
So a difference in emphasis as to the application of this case to common law consultation cases. Lord Wilson, with whom Lord Kerr agreed, would favour a greater assimilation of common law and statutory fairness. Lord Reed put it slightly differently.
And the other two, Lady Hale and Lord Clarke?
We agree with Lord Reed that the court must have regard to the statutory context and that, as he puts it, in the particular statutory context, the duty of the local authority was to ensure public participation in the decision-making process. It seems to us that in order to do so it must act fairly by taking the specific steps set out by Lord Reed in his para 39. In these circumstances we can we think safely agree with both judgments. my emphasis
Hmm. There is going to be a bit of expensive argument about what means when a common law consultation case on rejected alternatives comes up for decision – like Rusal, for instance. Were they really agreeing with Lord Wilson, or being polite and actually agreeing with Lord Reed (in which case it is 3-2 against Lord Wilson)?
Sign up to free human rights updates by email, Facebook, Twitter or RSS
- Consultation process not unfair after all, says CA
- Backing just one horse in a consultation process can be unfair
- Backing no horses – and the importance of interim relief
- Successful challenge to closure of children’s heart surgery units
- Consultation on children’s heart surgery was lawful, rules the Court of Appeal
- Richard III on the move again – pitched into the current judicial review debate
- Back to basics – why a public authority cannot be an HRA victim