Challenges to Budget Setting (plus surprise bonus topic) Peter - PowerPoint PPT Presentation

Challenges to Budget Setting (plus surprise bonus topic) Peter Oldham QC 4 th October 2017 Peter Oldham QC

Challenges to budgets: The typical Claim Full Council sets CT early in the calendar year for the new financial year in April. This is after a long iterative process culminating in the executive proposing a budget to Full Council to consider for the purpose of setting CT. One of the budget lines involves (say) proposed cuts to libraries. There is a JR challenge to (1) Full Council’s decision to set CT on the basis of an approved budget involving those cuts or to (2) A subsequent executive decision to cut libraries in the light of the budget envelope by Full Council in setting CT. The grounds are e.g. failure to consult, to comply with the PSED or to consider a needs assessment in relation to the libraries budget head.

The claims in more detail – (1) Full Council budget decision Claim against Full Council setting the budget which includes a budget line cutting amount for libraries. Claimant says Full Council should have considered consultation responses/PSED/needs assessment in doing so, but it did not.

The claims in more detail – (2) Subsequent executive decision in light of budget envelope Claim against Cabinet closing libraries in light of budget envelope set by Full Council. Claimant says either Full Council or Cabinet (or both) had to consider consultation/PSED/NA in relation to libraries before a decision to close libraries was made, and it or they did not. Furthermore, if the defence relies on Cabinet rather than Full Council having done so, Claimant says this can be done lawfully only if Cabinet is aware of the possibility of departing from the budget envelope – otherwise there is no open mind.

The main cases R (Domb) v Hammersmith and Fulham LBC [2009] EWCA Civ 941 R (Hunt) v North Somerset CC [2013] EWCA Civ 1320 (and in Supreme Court on issue of costs and form of relief) R (Harjula) v London Councils [2011] EWHC 448 R (Fawcett Society) v Chancellor of the Exchequer and others [2010] EWHC 3522 R (JG and another) v Lancashire CC [2011] EWHC 2295 R (A and C) v Oxfordshire CC [2016] EWHC 2419 and CA Dec 2016

The Council’s response: Claim against full Council Decision The Council’s arguments in response: - 1. Full Council may have considered consultation/PSED/NA specifically in relation to a proposal for cuts to libraries. But this may be unlikely given the number of budget lines. The iterative process leading to Full Council’s approval of the libraries 2. budget line may previously have taken into account consultation/PSED/NA. Likely in the case of a NA. Full Council’s approval of the budget line does not amount to a 3. decision about the precise form of delivery: indeed this is an executive function which it can’t undertake: LA (Functions and Responsibilities) (E) Regs 2000: Oxfordshire. 4. The various other non-merits arguments (see below).

The Council’s response: Claim against Cabinet decision The Council’s arguments: - 1. If Full Council considered consultation/PSED/NA in relation to libraries, and Cabinet’s decision simply put it into effect, no need for it to repeat the process. 2. If Full Council didn’t, then (again) the iterative process leading to Full Council’s approval might have done so. 3. If neither 1 nor 2 apply, Cabinet itself considered consultation/PSED/NA. BUT in this case …

The Council’s response: Claim against Cabinet decision cont’d … if the Council’s case relies on Cabinet considering consultation/PSED/NA, it will have to show Cabinet members were aware of the possibility of (1) departing from the budget envelope and/or (2) flexibility in the way services are reconfigured. See Lancs at 51 :- “…the decision -maker has taken a preliminary decision in relation to its budget, fully aware that the implementation of proposed policies would be likely to have an impact on the affected users, in particular, disabled persons, but not committing itself to the implementation of specific policies within the budget framework until it had carried out a full and detailed assessment of the likely impact. … there is nothing wrong in principle with such an approach … The economic reality was that it would be extraordinarily difficult to avoid an adverse effect on adult social care. But there remained flexibility as to how any such effect on disabled persons could be minimised and mitigated, and I am satisfied that the Council kept an open mind as to the precise policies that would be implemented. ”

The Council’s response: Claim against Cabinet decision cont’d The paperwork may demonstrate Cabinet members’ awareness of flexibility in the budget envelope or in the way services are to be reconfigured. But it may not. So consider putting in a statement/s/ If flexibility of budget is relied on, how might this flexibility arise? Possibly:- - Budget heads at a generic level - Virements between budget heads - Procedures in constitution for departure from budget - Use of earmarked or other reserves

Non-Merits arguments Delay – by the time claim is heard, it may be well into the new financial year. 1. Relevant that CT must be set by 11 th March: LGFA 1992, s 30, 31. Excessive relief sought, attacking entire budget – but even quashing one 2. budget line may result in need for new budget. Declaratory relief only? S 66(3) curiously provides: If on an application for judicial review the court decides to grant relief in respect of any of the matters mentioned in subsection (2)(b) or (c) to (e) above, it shall quash the determination, calculation, setting or precept (as the case may be). Prematurity e.g. if Full Council decision on budget head doesn’t amount to 3. decision to reduce services. Prime territory for operation of SCA 1981, s 31(2A) and (3C) – no 4. permission/relief if it is “highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred” - remember to plead this in the AOS, then the Court has to consider it on the permission decision.

Bonus – Raising money: Powers of investment and borrowing (1)? LGA 2003 1 Power to borrow A local authority may borrow money — (a) for any purpose relevant to its functions under any enactment, or (b) for the purposes of the prudent management of its financial affairs. 12 Power to invest A local authority may invest — (a) for any purpose relevant to its functions under any enactment, or (b) for the purposes of the prudent management of its financial affairs. Wide powers but …

Bonus – Raising money: Powers of investment and borrowing (2)? … - S 3 borrowing limit - Have regard duties in respect of 1. CIPFA Prudential Code for Capital Finance CIPFA publication “Treasury Management in the Public Services: 2. Code of Practice and Cross- Sectoral Guidance Notes” 3. DCLG Guidance on Local Government Investments - Hansard: USS at ODPM in Standing Committee on s 12 says “invest” means bank deposits and “safekeeping”. Really? Plus Roberts v Hopwood quasi fiduciary duty and Wednesbury .

Bonus – Raising money: Powers of investment and borrowing (3)? Also Localism Act 2011, s 1. Wise to assume that limitations in LGA 2003 apply so GPOC does not free authorities from have regard duties. Further, if aim is for profit, it has to be done through a company: s 4 (commercial purpose). It may also be sensible to do it through a company under 2003 Act. Plus, once again, Roberts v Hopwood quasi fiduciary duty and Wednesbury .