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Supreme Court endorses basic requirements of a “fair” consultation exercise for the first time

The UK’s highest court has endorsed the basic requirements of a “fair” consultation exercise for the first time, while overturning a consultation conducted by a London local authority.

The Court of Appeal confirmed the so-called ‘Gunning principles’, named after the 1985 High Court case in which they were established, in 2001. However, neither the Supreme Court nor its predecessor, the House of Lords, had previously endorsed them.

“Consultation is a concept which comes into play in a wide range of legal disciplines, from employment through planning to local government, but what does it mean?” said litigation expert Craig Connal QC of Pinsent Masons, the law firm behind Out-Law.com. “The cynical definition used to be ‘listen carefully, then ignore completely’; but now, helpfully, the Supreme Court has endorsed a definition which it describes as a ‘prescription for fairness’.”

“One can now expect that quote to appear, on either side of the argument, in every case where adequacy of consultation is argued over. Nevertheless, the stamp of approval is welcomed, if only to avoid others having to re-invent the wheel,” he said.

A public authority’s duty to consult those potentially affected before taking a decision may be a statutory requirement, or may be required by its general duty to act fairly. The Gunning case set out four principles that must apply in order for a consultation to be considered fair: that it take place when the proposal is still at a formative stage; that sufficient reasons for the proposal be put forward to allow for intelligent consideration and response; that adequate time be given for that consideration and response; and that responses be conscientiously taken into account.

Last week’s case concerned council tax benefit; specifically the new council tax reduction schemes (CTRS) that local authorities in England were expected to operate from April 2013. The CTRS replaced the previous benefit scheme that was implemented by central government and operated by local authorities, and operated on about 10% less funding. In 2012, Haringey Council consulted on its draft CTRS and then established the scheme substantially in line with the draft.

Two Haringey single mothers who had received full relief from council tax under the previous scheme, but whose benefits were reduced by 19.7% under the new CTRS, applied for judicial review of the authority’s decision. They claimed that its consultation exercise was misleading as it implied that Haringey had no alternative means of absorbing the central government cuts.

In his leading judgment, Lord Wilson relied on a letter sent by Haringey to local residents, along with the contents of the consultation paper. He said that the council was “stating that the shortfall in government funding meant that Haringey’s CTRS would provide less relief against council tax than recipients of the letter, other than pensioners, were receiving” under the previous scheme. However, he said that there were “other options, albeit not favoured by Haringey, for meeting the shortfall”. These included raising council tax overall, reducing the funding for local services or using the authority’s capital reserves; options which other local authorities in England had considered.

“Even when the subject of the requisite consultation is limited to the preferred option, fairness may nevertheless require passing reference to be made to arguable yet discarded options,” he said.

“Those whom Haringey were primarily consulting were the most economically disadvantaged of its residents. Their income was already at a basic level and the effect of Haringey’s proposed scheme would be to reduce it even below that level and thus in all likelihood to cause real hardship, while sparing its more prosperous residents from making any contribution to the shortfall in government funding. Fairness demanded that in the consultation document brief reference should be made to other ways of absorbing the shortfall and to the reasons why (unlike 58% of local authorities in England) Haringey had concluded that they were unacceptable,” he said.

“The court makes some other interesting points here, such as working out how informed or advised your audience is before deciding how much detail is needed,” said litigation expert Craig Connal. “This will be interesting to see worked out in practice, particularly where the target audience is a mixed one.”

In addition to making a declaration that the consultation exercise had been unlawful, the Supreme Court was also asked to decide whether Haringey should undertake a fresh consultation exercise for the 2015/16 financial year. However, the court said that this would not be “proportionate” in the case of a scheme which “will have been in operation for two years and which [Haringey] is not minded to revise”.

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