R (Buck) v Doncaster MBC (2013) EWCA Civ 1190 raises important issues as to the division of powers between a directly elected executive and the full council of a local authority.  At first instance Hickinbottom J made the general observation that, if, by an appropriately worded budget amendment, the full Council could override executive decisions of the Mayor, and replace those decisions with their own, the ultimate executive decision-making power would not lie with the Mayor, but with the full Council, contrary to the intention of the Local Government Act 2000 governance scheme.  The Court of Appeal agreed.  The Master of the Rolls said (at para 17) that, in view of the objective of the relevant provisions of the 2000 Act, it would be extraordinary (and frustrate the evident intention of Parliament) if the full Council could direct the Mayor whether and, if so, how to spend the money which had been authorised by the budget.  It would mean that the full Council could take over responsibility for almost any executive matter, simply by writing some sufficiently specific provision about it in the annual budget.  If the budget-setting powers of the full Council extend to prescribing exactly what expenditure is to be incurred in what specific respects, then it can use those powers to determine exactly what the executive authority will do.  Nor is there any limit to the degree of detail into which such prescription could descend.  This kind of micro-management by the full Council was plainly not intended by the 2000 Act. 

Full Council has no power to interfere with the executive function of the Mayor, except where the Mayor proposes to exercise the function in a way that is (i) contrary to, or not wholly in accordance with, the authority’s budget, or (ii) is contrary to a plan or strategy adopted or approved by the authority.  So what does determining a matter in a manner “contrary to or not wholly in accordance with the authority’s budget” mean?  At para 20, the Master of the Rolls, with whom McCombe LJ and Gloster LJ agreed, said: “In my view, it means determining a matter which will result in incurring expenditure in excess of that for which budget approval has been given by the full council.  That does not only mean that the executive may not incur expenditure in excess of the aggregate of the entire budget, although it certainly includes such a restriction  on the executive’s spending power.  …  it also means that the executive may not incur expenditure in excess of heads of expenditure specified in the budget.” 

To summarise, the full Council may allocate more or less funds than are requested by the Mayor in his proposed budget.  It is the final arbiter of what goes into the budget.  The budgetary process is geared to avoiding any budget deficit by ensuring that the revenue expenditure will not be exceeded.  But it does not allow the full Council to micro-manage the authority’s functions and interfere with the executive functions of the Mayor.  The full Council cannot require the Mayor to expend money in a particular way, or, unless he proposes to act in a way contrary to the plans and strategies reserved to the full Council, to expend money on a particular function. 

As regards “contrary to a plan or strategy”, the Master of the Rolls said:

“24.       … The language of “plan or strategy”,  read in the context of the Functions Regulations, denotes something that operates at a general level.  It cannot embrace any and every decision that may be taken on an individual issue.  If it did, it would undermine the basic distinction between executive and non-executive functions which lies at the heart of the relevant part of the 2000 Act.  The basic idea is that the full council may in certain respects set the policy framework for the authority, but its detailed implementation is a matter for the executive (provided that what it does is not contrary to and is wholly in accordance with the budget).” 

In R (T) v Sheffield City Council [2013] EWHC 2953 (QB) 4 mothers challenged by judicial review the decision of the Council to stop paying subsidies to 20 nurseries.  They did so on 5 grounds: (1) failure to consult fairly; (2) breach of the PSED; (3) breach of the best value duty; (4) breach of duties imposed by the Childcare Act 2006 (“CA 2006”); and (5) irrationality.  All the challenges failed.

As regards flawed consultation, Turner J observed (para 30) that whether consultation is undertaken at a formative stage “is bound to be fact sensitive” and that “the important point” is that “when the process starts the ultimate decision should still be fully capable of being moulded and influenced by the response”.  At paras 32 and 35 he stated:-

“32. It is also important to put the issue of consultation into context. There will be many cases in which it will not be possible precisely to time the beginning (or even the end) of the consultation process. For example, it is by no means unusual for particular proposals to have been preceded by earlier different but related proposals upon which there has already been some level of pertinent consultation. The existence of the prior period of consultation does not, of course, obviate the need to consult further but it may have an important influence on the timing, content and duration of the process of consultation which follows.”

“35. The time reasonably to be allowed for a response to a consultation process is, again, a highly fact sensitive issue. Once more, context is important. Where, as here, the issue upon which consultation is to take place is one in which interested parties have already been recently engaged the time reasonably required for any formal consultation period may well be shorter than in circumstances where the proposal is without precursors.

As regards the PSED, under Section 149 of the Equality Act 2010, Turner J said (para 53):-

“Of course, a mere generic, background level of concern is not of itself sufficient to comply with the requirements of the Act but it is not insignificant that those responsible for taking the decision in this case were not approaching their responsibilities from a position of ignorance about the social and demographic context in which they were operating. Further, Cabinet members were engaged in the process of assessing and developing proposals as part of a continuous process and the records of meetings are snapshots only of the route which they are following.

As regards the best value duty under Section 3 of the Local Government Act 1999, and Guidance issued by the Secretary of State, Turner J concluded (para 67):-

“There is no substance in the complaint that the defendant impermissibly distorted the outcome of its decision making process in a way calculated to preserve funding for itself as opposed to the nurseries. In any event the Guidance, thankfully, does not require a formulaic “pound for pound” approach. …”

As regards CA 2006, Turner J said:-

“70. Section 1 of the 2006 Act is described as a “general duty” and cannot be approached in the context of the position of an individual or individuals. It is necessary to look at the population of those affected as a whole. In this case, it was perfectly open to the defendant to conclude that the decision to prioritise intervention over subsidy would have the overall effect of improving the well-being of young children and to reduce inequalities in the well-being of young children in the Sheffield area. It is not for the court to substitute its own views for that of the democratically elected local authority.”

“71. Much the same can be said of section 3(2). I do not see how it can be contended that redistributing resources away from nursery subsidies and towards individual cases of need cannot, at least arguably, result in a better integrated provision of early childhood services and a maximisation of the benefit to be derived by young children and their parents. Whether it actually does or not is a matter upon which the defendant is in a far better position than this court to judge.

72.Within the factual parameters of this case it is difficult to see how section 3(3) could be any more than peripherally relevant if at all. This sub-section too applies to all those children and parents affected by the actions of the decision maker and cannot be applied to a limited class in isolation. The withdrawal of funding from twenty nurseries does not on the face of it constitute a general failure to identify parents or prospective parents who would otherwise be unlikely to take advantage of early childhood services. There is simply no evidence in support of this contention and it is misconceived as a matter of law.

73. The duty under section 6 is more obviously pertinent to the issues arising in this case but it is subject to the constraints of reasonable practicability. This issue was clearly and directly considered by the defendant. The requirements of section 6 are also set out in the overarching EIA. There is simply no legitimate basis in this case upon which this court can substitute its own view as to what is or is not reasonably practicable for that reached by the defendant.”

As regards irrationality, Turner J said:-

“77. I am in no doubt that the claimants genuinely believe that the defendant’s decision was irrational in the sense that they consider that the balance of argument was firmly weighted in favour of the retention of the grants, at least for some further period, and they cannot understand why this did not happen. It is not, however, for this court to attempt to re-balance the arguments and form its own conclusion on their respective merits.”

Turner J’s conclusion was as follows:-

78. The twenty nurseries affected by this decision which provide valuable facilities to the families which they serve are to be commended on the contribution they have made and continue to make to their local communities. I hope that, despite the termination of the subsidies, they are all able to survive and flourish but I must recognise that some may not. In an ideal world, it would not be necessary to make hard choices about the distribution of funds between competing but thoroughly meritorious causes but, particularly in the present economic climate, sacrifices even of highly socially desirable initiatives are sometimes unavoidable. Councils are democratically elected to make decisions and some of these are bound to be contentious and unpopular. Ultimately, however, the decision in this case, controversial as it undoubtedly was, complied with the standards imposed by public law and must remain undisturbed.”

R (Nash) v Barnet LBC [2013] EWCA Civ 1004 (“Nash”) concerned whether a decision and an impending decision by Barnet Council to outsource a high proportion of its functions and services to private-sector organisations was lawful.  The judicial review challenge was brought by a local resident.  There were three grounds of challenge: non-compliance with “best value” consultation obligations; breach of the PSED; and breach of fiduciary duty to council tax payers.  A procurement challenge was not pursued. 

The challenge failed at a rolled-up hearing: [2013] EWHC 1067 (Admin), (2013) LGR 515.  The Court of Appeal dismissed the Claimant’s appeal. 

The first question was whether the claim was in time.  The Claimant sought to rely on the House of Lords decision in R (Burkett) v Hammersmith & Fulham LBC [2002] 1 WLR 1593 (“Burkett”), where outline planning permission had been preceded by a resolution approving the award subject to certain conditions, and the resolution was subject to, amongst other things, completion of a Section 106 agreement; and where property rights were affected. 

The Court of Appeal said (para 45) that the Council “was entitled to emphasize the general importance of compliance with the time limits set for judicial review proceedings, given the various public interests generally involved in public law cases”. 

The essence of the argument on behalf of the Claimant was that even if she could have raised her challenge at an earlier stage, there was no obligation on her to do so, that Burkett permitted her to raise the legal challenge at the time of the final decision to do the act, that all the Council had decided to do in 2010/2011 was to initiate a procurement process, and thereafter move on from time to time to the next stage of the process, and that the Council had not committed to awarding any contract, let alone any particular contract, until its December 2012 decision. 

The Court of Appeal, however, ruled that Burkett, properly analysed, “simply will not bear so open-ended an application”.  They agreed with the first instance Judge as follows:- 

“I do not believe that Burkett is authority for the proposition that in every situation in which a public-law decision is made at the end of a process which involves one or more previous decisions – what I will refer to as “staged decision-making” – time will run from the date of the latest decision, notwithstanding that a challenge on identical grounds could have been made to an earlier decision in the series. In my judgment it is necessary in such a case to analyse carefully the nature of the latest decision and its relationship to the earlier decision(s). I believe the true position to be as follows. If the earlier decision is no more than a preliminary, or provisional, foreshadowing of the later decision, Burkett does indeed apply so that the later, “final”, decision falls to be treated as a new decision, the grounds for challenging which “first arise” only when it is made. But if the earlier and later decisions are distinct, each addressing what are substantially different stages in a process, then it is necessary to decide which decision is in truth being challenged; if it is the earlier, then the making of the second decision does not set time running afresh. I accept that the distinction may in particular cases be subtle, but it is in my view nonetheless real and important.” 

Burkett was concerned with a merely provisional decision.  In Nash the Council was not provisionally resolving to enter any outsourcing contract at all.  What the Council was doing was actually deciding to enter into a procurement process by way of competitive dialogue.  That process then, and in accordance with the Public Contracts Regulations (“the PCR”) 2006, proceeded in stages.  Thus, in contrast with the initial resolution in Burkett, work was lawfully and foreseeably done and money was expended precisely because of such decisions.  The decisions thus had and were intended to have legal effect: not, of course, in terms of sanctioning a binding contract in terms of authorising and causing the initiation of the procurement process, with attendant inevitable heavy expenditure and significant use of time and resources.  Without such decisions, those things could not and would not have been done.  Those decisions are thus properly to be regarded as substantive.  They are not to be regarded as contingent or provisional, even though there was no guarantee at all that any outsourcing contract or contracts might ultimately result.  A failure to comply with the procedure at any stage inevitably undermines the integrity of all that follows. Accordingly, the right of action is complete immediately and cannot be improved by allowing the procedure to continue to a conclusion. Where there has been a failure to comply with the proper procedure the later award of the contract does not constitute a separate breach of duty; it is merely the final step in what has already become a flawed process. The approach adopted in Burkett can simply be transposed to a procurement challenge whether under the PCR or by way of judicial review. 

The Court of Appeal further observed that there was “nothing in fairness or certainty” such as to justify the Claimant not issuing proceedings until after the final decision.  The prior decisions had been made at public meetings, had been published and were widely known.  On the contrary, considerations of fairness and certainty “all weigh strongly in favour of the Council”.  The Court of Appeal added:-

“It is inconceivable that the Council (or the potential tenderers) would have gone down the very costly and time-consuming process of procurement and competitive dialogue had it been envisaged that a challenge on the grounds of lack of consultation on the whole strategy of outsourcing might at the very end of the day be made. That is quite different from the inherent and understood risk that the procurement process might not ultimately result in any concluded procurement contract.”