Local Government Reorganisation

November 30th, 2018 by James Goudie QC in Best Value

MHCLG has on 29 November 2018, pursuant to the Local Government and Public Involvement in Health Act 2007, launched an eight week Consultation, for response by 25 January 2019, on a proposal from seven of the eight Northamptonshire councils (the exception being Corby Borough Council) for local government reorganisation in Northamptonshire. An independent inspection report, by Max Caller CBE, had found that the County Council, in this currently two-tier local government area, has failed to meet its “Best Value” duty under the Local Government Act 1999. MrCaller recommended that new single tier, i.e. unitary, authorities should be created. The Government accepted the unitary recommendation, and rejected the option of a single unitary covering the whole of Northamptonshire. Read more »

 

Local authority boycotts

February 22nd, 2016 by Peter Oldham QC in Best Value, Decision making and Contracts, Non Judicial Control

A House of Commons briefing paper of 19th February 2016, which can be found here, notes that the Government is introducing new rules and guidance to limit the extent to which local authorities in England and Wales can use boycotts in their procurement and pensions investment policies.

On procurement, the Government has published Procurement Policy Note 01/16 on 17th February 2016 here which says:-

“Public procurement should never be used as a tool to boycott tenders from suppliers based in other countries, except where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government.”

On pensions, the briefing paper refers to the DCLG’s consultation on the draft Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 (here), which closed on 19th February 2016, and to proposed guidance from SoS that environmental, social and corporate governance factors in investment decisions should reflect foreign policy.  The power to give guidance is in draft reg 7(1) and an authority’s investment strategy “must be in accordance” with it.

 

 

Redesigning The Library Service

October 26th, 2015 by James Goudie QC in Best Value

The decision of McGowan J in Draper v Lincolnshire County Council [2015] EWHC 2964 (Admin) was with respect to the second challenge Mr Draper brought to the Council’s proposed library changes and the process by which those changes were to be brought into effect.  The first challenge had succeeded, in part, before Collins J, and a second consultation process was commenced.  The second challenge failed.

The Judge followed the definition of a “comprehensive and efficient library service” within the meaning of Section 7 of the Public Libraries and Museums Act 1964 given by Ouseley J in the Brent Libraries case. She observed that before Collins J the fundamental decision to re-design services in an attempt to make savings of £2 million was not challenged. The challenge to the substance of the Council’s proposals did not succeed on grounds of irrationality, for breach of the statutory duty under the 1964 Act or for breach of the public sector equality duty. It was the consultation exercise and the method of considering alternative proposals for the provision of services that was under scrutiny. The Council failed in not being seen to be open to proposals which sought to make the required savings without reducing the number of static libraries provided. One such set of proposals came from Greenwich Leisure Ltd and the Council failed in not treating those proposals as a statutory expression of interest under the Localism Act 2011.

The second consultation period closed without challenge. The Council accepted one expression of interest as a qualifying one satisfying the statutory requirements, but rejected two others, because they did not meet those requirements.  The Council then duly commenced a procurement exercise.

There were 3 grounds for the second challenge. First, it was alleged that the second consultation process was flawed. This was on the basis that it failed adequately to deal with alternative proposals.  Second, it was alleged that the procurement exercise was flawed.  Third, it was alleged that the Council had failed to comply with its “best value” duty, under Section 3 of the Local Government Act 1999.

McGowan J rejected the first challenge upon analysis of the consultation document. It made clear that, although the Council had a preferred option, it was looking at and for alternatives, provided that they were within the budgetary limits. It was not challenged, or even complained about, when it was published.  She said (paragraph 26) that a consultation document “has to achieve an acceptable minimum standard” but “it is not a counsel of perfection”.

On procurement, the Judge accepted that the Council was bound only to conduct a procurement exercise for those services it was seeking to procure.

Finally, the Judge (paragraph 32) described the “best value” duty as a duty to seek improvement, that is a duty to seek to achieve a target. It is an obligation to try.  It is not an absolute duty to succeed in that attempt.

The Judge observed (paragraph 35) that it is not for the Court to place itself in the position of decision maker and to say that a particular issue, if decided in a different way might have brought about greater savings and/or an enhanced service. How the Council goes about seeking to try to achieve the “improvement” is a matter for the expert judgment of the Council. The report to the Executive was lengthy and detailed. It set out the issues, canvassed options and by reference to the financial information and the details of the various proposals made a recommendation. It drew on the expertise of the officers of the Council. The Executive then considered the matter and reached a decision. It was not for the Court to audit that process.

 

PFI Contract

July 23rd, 2015 by James Goudie QC in Best Value

In Portsmouth City Council v Ensign Highways Ltd [2015] EWHC 1969 (TCC) interpreted a PFI Contract between a local authority and a service provider and considered whether it is to be implied that the authority as a best value authority must act in good faith when dealing with breaches by the service provider. In the action the Council sought declarations in relation to the performance of certain of its obligations under a long term PFI Contract made with Ensign. The dispute was about the manner of awarding Service Points by PCC for breaches by Ensign of its obligations under the Contract, which concerns the long term rehabilitation, maintenance and operation of the Council’s highway network.

The Contract incorporated a regime for awarding Service Points for breaches by Ensign of its obligations under the Contract. Schedule 17 to the Agreement contained a table which set out a large number of Default Events for which Service Points could be awarded and, against each Default Event, a “Maximum Event Value”. The Maximum Event Value for each Default Event originally consisted of a single figure between 1 and 10. It was common ground that, until about December 2013, the Council treated the figures for the Maximum Event Value as the upper limit of a range. Accordingly, where the Maximum Event Value was greater than 1, the number of Service Points awarded would depend on the Council’s view of the gravity of the breach.

The Council assessed and awarded Service Points on a monthly basis and, initially, the system was operated in a manner that seemed to be regarded as satisfactory by both parties. However, after a few years cuts in central government funding to local authorities began to take their toll. In 2012 The Council began to form the view that if the Contract continued to be operated in the same manner for the remainder of its term it would become unaffordable. The Council embarked on a strategy of awarding Ensign large amounts of Service Points in order to force it to accede to the Council’s commercial demands in a renegotiation of the Contract. This involved, amongst other things, awarding the maximum amount of Service Points for every default, refusing to communicate with Ensign in relation to breaches, finding breaches in areas which Ensign might find hard to remedy and storing up Service Points over several months so that Ensign could be “ambushed” with a large award of Service Points at one fell swoop.

Ensign notified the Council that it intended to refer the dispute about the award of Service Points to Expert Determination in accordance with the terms of the Contract. The Expert issued a detailed and careful Determination in which she concluded, in fairly trenchant terms, that the Council had acted in bad faith, without mutual co-operation and unfairly. However, she did not conclude that Ensign’s performance was always as it should have been: her conclusion was that in general it was delivering the required service but that the Contract did not really provide any means of achieving long-term improvements. In addition, it seems that there was a view within the Council that the performance standards required under the Contract were unnecessarily high, and that it was therefore an unnecessary luxury.

The Council of course was under the “best value” duty imposed upon it by Section 3 in Part I of the Local Government Act 1999. Clause 44 of the Contract is concerned with best value and best value reviews. The Council relied strongly on the decision of the Court of Appeal in Mid Essex Hospital Services NHS Trust v Compass Group [2013] BLR 265.

Edwards-Stuart J in the Portsmouth case observed that failure of highway maintenance can take many forms. He concluded on the Service Points issue as follows:-

“70. … It does not in my view make commercial sense to have a system which requires the authority to impose the same number of points irrespective of the gravity or duration of the breach. In the absence of any specific indications to the contrary, one would expect the parties to have agreed a system that provided or permitted some flexibility in relation to the number of points to be awarded for any particular breach. …

71. I agree that the word “maximum” is a word with a clear meaning – namely, the upper limit of a range. It is therefore an inappropriate word to include in the heading of a column containing numbers if those numbers were intended to be single values, rather than the upper limit of a range. On PCC’s approach, the word simply has to be ignored.

72. In my view, the use of the word “Maximum” in the heading to the column showing the number of points was not the result of a drafting error but was there for a purpose. That purpose was to permit the PCC Representative, within the range provided for in the schedule, to award an appropriate number of points having regard to the gravity of the breach.”

“76. I therefore conclude that the Service Point values set out in Schedule 17 are maximum values that can be awarded for a particular breach and are not fixed “tariffs” that are to be applied irrespective of the gravity of the breach in question.”

As to the extent of the duty of good faith, the Judge began by observing as follows:-

“81. … It is clear to me that, in the context of this Agreement, PCC could not discharge its Best Value Duty unless it was in a position to negotiate improvements to the Service that might operate to Ensign’s financial detriment in circumstances where Ensign was obliged to discuss such changes in good faith – in other words, by giving proper and careful consideration to PCC’s needs and statutory obligations and balancing those against its own commercial interests. That, it seems to me, is the reason why, at least for the purposes of clause 44, Ensign is required by clause 44.4.1 to deal fairly, in good faith and in mutual co-operation with PCC. Since a duty of good faith is not usually implied into commercial contracts under English law, save in certain particular types of contract, it is necessary to provide for an express duty in appropriate terms. That is what clause 44.4.1 does.”

The Judge, however, rejected Ensign’s submission that the clause 44.4.1 duty applied to the Contract as a whole.  Nonetheless, he concluded, at paragraph 112, that when awarding Service Points (under clause 24) the Council was subject to an implied term, as follows:-

“When assessing the number of Service Points to be awarded under clause 24.2.1(c) of the Agreement, PCC’s Representative is to act honestly and on proper grounds and not in a manner that is arbitrary, irrational or capricious.”

 

Best Value Inspection

November 18th, 2014 by James Goudie QC in Best Value

As is well known, Part 1 of the Local Government Act 1999 (“LGA 1999”) relates to “Best Value”.  Section 3 imposes the general duty.  Section 3(1) provides that a “best value authority” must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.  As Underhill LJ observed in R (Nash) v Barnet LBC  [2013] EWHC 1067 (Admin), [2013] LGR 515, at paragraph 69(1), the core subject matter of the substantive best value duty is “the way in which” the authority’s functions are exercised; and that is “very general language” which connotes high-level choices about how, as a matter of principle and approach, the authority goes about performing its functions.

Sections 10-15 inclusive of LGA 1999 relate to best value inspections.  Section 10(1) authorises the Secretary of State (“the SoS”) to appoint a person to carry out an inspection of a specified best value authority’s “compliance” with the requirements of Part 1 of LGA 1999 in relation to specified functions.  Section 11 sets out the Inspector’s powers and duties.  Section 13 relates to Reports.  Section 15 gives the SoS further powers.

Pursuant to Section 10, the SoS decided that best value inspection should be carried out in the case of Tower Hamlets LBC.  On 14 November 2014 an attempt by the authority to bring a judicial review challenge against the SoS failed.  Goss J ruled that detailed reasons were not required, especially in the context of confidential material that had been received and where the authority already knew what the issues were and could not credibly claim to be in the dark.

 

Performance Indicators (WALES)

October 24th, 2012 by James Goudie QC in Best Value

The Local Government (Performance Indicators) (Wales) Order 2012, SI 2012/2539 (W.278) specifies performance indicators for the purpose of s8 in Part 1 of the Local Government Wales Measure 2009, by reference to which Welsh county and county boroughs’ performances will fall to be measured from 1 April 2013. Such “improvement authorities” must make arrangements to exercise their functions so that any applicable performance standard is met. The Order identifies by reference to Schedules which indicators will be used to measure the performance of which functions: Social Services, Housing, Education, Waste Management, Transport and Culture and Sport.

 

Council Tax and Public Procurement

May 14th, 2012 by James Goudie QC in Best Value, Council Tax and Rates

COUNCIL TAX

In Harrow LBC v Ayiku [2012] EWHC 1200 (Admin) Sales J held that the word “or” in the Council Tax (Exempt Dwellings) Order 1992, art 3 Class N, had a disjunctive meaning, therefore it was sufficient for the non-British spouse of a foreign student to satisfy one or other of the two conditions, namely being prevented from taking paid employment or being prevented from claiming benefits, in order to qualify as a “relevant person” who was exempted from liability to pay council tax.

PUBLIC PROCUREMENT

In Case C-368/10, Commission v Netherlands, Decision on 10 May 2012, the ECJ has reaffirmed, in the context of the supply to and management for a public authority of automatic coffee machines, that “both the principle of equal treatment and the obligation of transparency which flows from it require the subject-matter of each contract and the criteria governing its award to be clearly defined from the beginning of the award procedure … the formulation of the award criteria being such as to allow all reasonably well-informed tenderers exercising ordinary care to know the exact scope thereof and thus to interpret them in the same way”.

 

Public Procurement and Appearance of bias/Delay in Judicial Review

March 30th, 2012 by James Goudie QC in Best Value

Public Procurement

In Case C-599/10, SAG v Upro, the CJEU in a Judgment on 29 March 2012, reiterated (para 40) that the procurement regime “… does not preclude … the correction or amplification of details of a tender where appropriate, on an exceptional basis, particularly when it is clear that they require mere clarification, or to correct obvious material errors, provided that such amendment does not in reality lead to the submission of a new tender”.

However (para 41) on the exercise of the discretion thus enjoyed by the contracting authority, “that authority must treat the various tenderers equally and fairly, in such a way that a request for clarification does not appear unduly to have favoured or disadvantaged the tenderer or tenderers …”.  Moreover (para 42) a request for clarification of a tender may be made only after the contracting authority has looked at all the tenders.  Furthermore (para 43) that request must be sent in an equivalent manner to all undertakings which are in the same situation, unless there is an objectively variable ground capable of justifying different treatment of the tenderers in that regard; and in addition (para 44) that request must relate to all sections of the tender which are imprecise or which do not meet the technical requirements of the tender specifications.

The CJEU also (paras 27-34) addressed issues relating to abnormally low tenders.  Contracting authorities are required to examine the details of tenders which are abnormally low.  For that purpose they are obliged to request the tenderer to furnish the necessary explanations to prove that those tenders are “genuine”.  The existence of a proper exchange of views, at an appropriate time in the procedure for examining tenders, between the contracting authority and the tenderer, to enable the latter to demonstrate that its tender is genuine, constitutes a fundamental requirement, in order to prevent the contracting authority from acting in an arbitrary manner and to ensure healthy competition between undertakings.

Appearance of bias/Delay in judicial review

See R (Berky) v Newport City Council [2012] EWCA Civ 378, in which the Court of Appeal’s holdings included that (1) the decision not to require an environmental statement was not erroneous in law, (2) the appearance of bias on the part of one member of the Planning Committee was not sufficient, absent evidence that the member exercised an undue influence over the other members, to vitiate the Committee’s 8-1 decision, and (3) (by a majority) there had been undue delay leading to prejudice both to other interests and to good administration and relief should be refused.

 

Village Greens, Public Procurement & Freedom of Information

March 28th, 2012 by James Goudie QC in Best Value, Environment, Highways and Leisure

Village Green

In Newhaven Port and Properties Ltd v East Sussex County Council [2012] EWHC 647 (Admin) the claimant company and port authority applied for judicial review of the Council’s decision to register a tidal beach as a “town or village green” under s15 of the Commons Act 2006.  The beach formed part of the operational land of the port.  Ouseley J held that a tidal beach can be so registered, provided, however, that the nature, quality and duration of the recreational user satisfies the statutory test.

However, this beach could not be so registered, because that would conflict with its statutory function as operational port land.

Public Procurement

The Procurement Lawyers Association has issued a Working Group Paper on Framework Agreements, available on its website.

Freedom of Information

In Bailey v ICo and Nottingham County Council, EA/2011/0271, Decision on 27 March 2012, on the absolute exemption for personal data in FoIA s40, the FTT upheld non-disclosure about internal audit investigations and potential disciplinary proceedings involving employees in the Council’s Building Cleaning Service, on the basis that disclosure would be unfair and would breach the first data protection principle.  The FTT reiterated (para 18) what had been said in Waugh v ICo and Doncaster College, EA/2008/0038, that (para 40) there is a recognized high expectation that the internal disciplinary matters of an individual (even a senior member of staff) will be private and that the majority of the information will not be available to the public.

See also on Bolton v ICo and East Riding Yorkshire Council, EA/2011/0216, FTT Decision on 26 March 2011, on s40 and the remuneration and appointment of a Chief Executive, forthcoming blog by Anya Proops on www.panopticonblog.com.

 

Council Tax, Environment, Procurement/Land Sale

March 26th, 2012 by James Goudie QC in Best Value, Council Tax and Rates, Environment, Highways and Leisure

Council Tax

Note the Local Authorities (Alteration of Requisite Calculations) (Wales) Regulations 2012, SI 2012/521 (W.82).

Environment

Note the Controlled Waste (England and Wales) Regulations 2012, SI 2012/811; and the Environmental Protection Act 1990 (Commencement No. 19) Order 2012, SI 2012/898 (C.28), repealing on 1 April 2012 s1 of the Refuse Disposal (Amenity) Act 1978 (provision by local authorities for disposal of refuse).

Procurement/Land Sale

In R (Midlands Co-Operative Society Ltd) v Birmingham City Council [2012] EWHC 620 (Admin) Hickinbottom J held (1) that a land disposal by the Council to Tesco did not engage the public procurement regime, because there was no commitment by Tesco, legally enforceable by the Council, to perform relevant works, either in a Section 106 agreement or at all; and (2) that the Council had achieved the best consideration outcome required by LGA 1972 s123.