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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Capenhurst & Ors, R (on the application of) v Leicester City Council  EWHC 2124 (Admin) (15 September 2004)
Cite as:  EWHC 2124 (Admin)
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QUEENS BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE QUEEN ON THE APPLICATION OF
JENNIFER CAPENHURST, TERENCE KIRBY, IAN KING, TEJAL MISTRY AND LOUISE JOACHIM
|- and -
LEICESTER CITY COUNCIL
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Tim Straker QC and Charles Bourne (instructed by Anthony Cross, Assistant Head of Legal Services of Leicester City Council) for the Defendant
Crown Copyright ©
II The Parties
(i) The Turning Point Women's Centre ("Turning Point"), which provides services for women on a large council estate. The council has provided substantial funds for Turning Point but by the decision under challenge, the council terminated the funding for Turning Point with effect from 31 March 2004. Turning Point contends that without any of this core funding from the council, it "will have to close completely";
(ii) Shree Sanatan Community Project ("Shree") is involved with providing education and development opportunities to its members, many of whom have South East Asian origins. Shree has also been receiving substantial financial assistance from the council. By a letter dated 26 February 2004, the council notified Shree that its funding of Shree would terminate on 31 March 2004 and that no funding would be payable thereafter. If all this funding is withdrawn, it is contended by Shree that it "would almost certainly close";
(iii) Ajani Women and Girls Centre ("Ajani") was established to meet the needs of African Caribbean women to realise their social, economic and personal potential. Ajani also received financial assistance from the council. By a letter of 26 February 2004, the council notified Ajani that the funding arrangements would expire automatically on 31 March 2004 and no funding would be payable thereafter. If no funding is payable by the council, it is averred by Ajani that it "will have to be terminated";
(iv) St. Gabriel's Community Centre ("St. Gabriel's") is involved with providing facilities for local groups to meet, as well as running various clubs and communities for the local community. St. Gabriel's also received substantial funding from the council and funding by its other provider of funding is only provided on the basis and condition that the council provides core funding for St. Gabriel's. By a letter dated 26 February 2004, the council notified St. Gabriel's that their funding agreement would expire automatically on 31 March 2004 and that no funding would be payable thereafter. It is said in the evidence on behalf of St. Gabriel's that the consequence of the withdrawal of all funding from the council "will mean [that St. Gabriel's] having to close";
(v) The Chinese Community Centre ("CCC") is a project which provides services to the local Chinese community in Leicester and throughout Leicestershire. It also received substantial funding from the council, but by a letter dated 26 February 2004, the council notified the CCC that their funding agreement would expire automatically on 31 March 2004 and that no funding would be payable thereafter. If all funding from the council ceases, it is averred by CCC that it "is facing closure as a result";
(vi) Voluntary Action Leicester's Voluntary Bureau ("VAL") is involved with the recruitment of volunteers for work with the elderly, with young offenders and those with mental illnesses. It had also been receiving funding from the council. By a letter dated 27 February 2004, the council gave formal notice in accordance with the terms of its grant aid contract with VAL that all funding from the council would be terminated with effect from 25 June 2004. The consequence of that, according to VAL's evidence, is that it would then face immediate closure.
III The Chronology
"only provide financial support to voluntary sector bodies where they are delivering core services which the council would otherwise wish to provide by direct provision, save for exceptional reasons" (A.79).
"I have to inform you that my proposal was accepted and therefore, this letter is a formal notice that your agreement will expire automatically on [the dates when they would terminate] and no funding will be payable after then in any event".
IV The Claimants' Contention
(a) when it sought the views of the ELL organisations on the January 2004 letter, the council failed to inform them that its criteria for determining whether the ELL organisations should continue to receive funding was whether they provided "statutory" services, notwithstanding that they had hitherto regarded as the appropriate criteria for funding those projects was whether the ELL project provided "statutory or strategic services" ("the Strategic Point");
(b) when it sought the views of the ELL applicants on the January 2004 letter, the council failed to inform the ELL applicants that it attached crucial or great importance to the number of adults enrolled on courses supplied or commissioned by the local education authority, notwithstanding that this criterion had not been explained to the ELL applicants ("the Provider Point");
(c) when seeking views on the January 2004 letter, the council failed to inform the ELL applicants, that it attached crucial or great importance to the issue of the proportion of the "core" services to the project's overall activities and also to the council's judgment as to that applicant's financial viability; this point is not pursued by CCC ("the Viability Point");
(d) in the case of VAL, the SCH on behalf of the council adopted a test for determining whether to continue its funding based on the Fair Access to Care Services ("FACS") threshold, notwithstanding that VAL had not been informed of this by the council when VAL's views were sought on the January 2004 letter ("the Health Point");
(e) the council failed to conduct a proper and transparent appraisal of the projects ("the Appraisal Point") and
(f) the council failed to give reasons for its decision ("the Reasons Point").
V The Strategic Point
(ii) The Information communicated to the ELL Organisations by the Council during and before the consultation process
Mainstream – Priority statutory and strategic services. These include; Statutory Services reflecting the council's primary legal responsibilities reflected in core functions of the council's work delivered through voluntary sector service arrangements. Strategic Services that specifically contribute to corporate and departmental service priorities and community engagement. These serve and meet social and/or economic needs contributing to prevention strategies and complementing the core functions of the council.
Historically funded services. Other historical, mainly grant aided activity, which no longer conforms to departmental service or corporate priorities".
"[he] can understand that this categorisation may have fuelled their hopes of their services being designated as "core" but it is not inconsistent with a designation as "non-core"".
"activities are low priority because they are not core to the priorities of the social care and health department because they are not deemed essential in order for the department to meet its statutory obligations".
"The new administration's priorities are strongly focussed on delivering core services well, with a proper level of underlying resource. In order to do this, we will review services which are "non-core", and services will not continue to be funded simply because they have been historically…. The council will, however, only provide financial support to voluntary sector bodies where they are delivering core services, which the council would otherwise wish to provide by direct provision (unless there are exceptional reasons to do otherwise).
Inevitably this strategy if eventually approved by the council, would affect a number of voluntary organisations. Formal proposals will be released after Christmas. Under these circumstances we consider only fair to forewarn all voluntary organisations that there is likely to be an impact on the overall level of support to the voluntary sector .."
"As you are aware the council is planning the overall use of its revenue resources so that it can determine its budget within the resources available to it and that this will affect the amount of financial support available to the voluntary sector. The purpose of this letter is to inform you that I am proposing to the council that upon review of the amount and purpose of your grant aid funding and the council's draft revenue and budget policies, that the council does not renew your grant aid when the current Agreement expires on 31 March 2004 at all.
This letter is not formal notice to terminate that Agreement before it expires, nor, even if I am proposing continuation of funding in part, a representation or commitment that this will be so, a formal decision has not yet been made by the council one way or the other. You will of course be aware that unless the council decides otherwise, your Agreement will expire automatically on 31 March 2004 and no funding will be payable after then in any event. You are invited, and the council will consider, any representations you may wish to make about future funding by the council and this letter gives you information about the making of such representations, the background to my proposal, how a decision will be made and who by. It also sets out the process the council is adopting to ensure that all affected organisations are treated fairly and transparently and in accordance with the conditions of the Agreement.
The council has published, on 24 November, a draft Corporate Revenue Strategy that states that:-
The council will, however, only provide financial support to voluntary sector bodies where they are delivering core services that the council would otherwise wish to provide by direct provision, unless there are exceptional reasons to do otherwise.
I have looked at the totality of grant funding for which my department is responsible having regard to the draft Corporate Revenue Strategy and have come forward with proposals including the proposal relating to your grant aid funding. The reasons for my proposal to the council about your grant aid funding is that the council is unable to provide funding in the light of its draft corporate revenue strategy and the corporate budget strategy (which sets out resources available to the council for the next three years). In particular the activities are low priority because they are not core to the priorities of the Education & Lifelong Learning Department because they do not directly contribute to the Adult, Early Years, or Youth targets of the department, and there are no other material considerations that outweigh the above.
Any comments you wish to make regarding this proposal should be sent to Steven Andrews, Director of Education, to the above address, by 3 February".
(iii) What was required of the Council to ensure that there was adequate consultation with the ELL organisations?
"To be proper, consultation must be undertaken at a time when proposals are still at a formative stage. It must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken" (italicisation added).
"(5) Since the person affected cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer".
".. the precise demands of consultation .. there according to the circumstances .. The extent and method of consultation must depend on the circumstances. Underlying what is required must be the concept of fairness" (per Keene J (as he then was) in R v. London Borough of Islington ex parte East  ELR 74 at page 88 relying on a passage in the judgment of Simon Brown LJ in R v. Devon County Council ex parte Baker  1 All ER 73, 92).
"were invited to make representations and this letter gives you information about the making of such representations, the background to my proposal, how a decision will be made and by whom. It also set out the process the council is adopting to ensure that all affected organisations are treated fairly and transparently".
(iv) Four Preliminary Matters
(v) When will a decision be quashed?
"to make good a natural justice challenge an applicant must establish where there is a real, as opposed to purely minimal possibility that the outcome would have been different" (page 348).
In the same case, Bingham LJ (as he then was) explained at page 352 that:-
"While cases may no doubt arise in which it can properly be held that denying the subject of a decision an adequate opportunity to put his case is not in all the circumstances unfair, I would expect these cases to be of great rarity. There are a number of reasons for this:-
1. Unless the subject of the decision has had the opportunity to put his case it may not be easy to knew what case he could or would have put if he had the chance.
2. As memorably pointed out by Megarry J in John v. Rees  Ch 345 at page 402, experience shows that what is confidently expected is by no means always that which happens.
3. It is generally desirable that decision-makers should be reasonably receptive to argument, and it would therefore be unfortunate if a complainant's position became weaker as the decision-maker's mind became more closed.
4. In considering whether the complainant's representations would have made any difference to the outcome the court may unconsciously stray from its proper province of reviewing the propriety of the decision-making process into the forbidden territory of evaluating the substantial merits of a decision.
5. This is a field in which appearances are generally thought to matter.
6. Where the decision-maker is under a duty to act fairly the subject of the decision may properly be said to have a right to be heard, and rights are not to be lightly denied".
"it would of course have been unrealistic not to accept that it is certainly probably that, if the representations had been listened to by the Secretary of State, he would have nevertheless have adhered to his policy. However, we are not satisfied that such a result must inevitably have followed …. It would in our view be wrong for this court to speculate as to how the Secretary of State would have exercised his discretion if he had heard the representations … we are not prepared to hold that it would have been a useless formality for the Secretary of State to have listened to the representations …".
(vii) Turning Point
"Turning Point's early years work is core to the council's business and is negotiating with them about continued funding".
(ix) St. Gabriel's
VI The Provider Point
"outlines the key targets agreed with the Leicestershire Learning and Skills Council as part of our contract to draw down funding for Adult Learning. The Division aims to achieve a total of 22,000 adult learners. We are further required to set targets for particular learner categories as specified by the LSC".
(ii) What did the ELL know or what ought they to have known about the use by the Council of the provider point as a criterion for continuing funding?
"activities are low priority because they are not core to the priorities of the Education and Lifelong Learning Department because they do not directly contribute to the Adult, Early Years, or Youth targets of the department and there are no other material considerations which outweigh the above".
(v) Turning Point
(vi) St. Gabriel's
VII The Viability Point
"been subject to fair assessment, in my view [Ajani] would have been able to secure funding for other services and would have continued to exist even with reduced staff".
(iv) Turning Point
(v) St. Gabriel's
VIII The Health Point
(i) VAL's complaint
"… the council is unable to provide funding in the light of its draft corporate revenue strategy and the corporate budget strategy (which sets out the resources available to the Council for the next three years). In particular, the activities are low priority because they are not core to the priorities of the Social Care and Health Department because they are not deemed essential in order for the department to meet its statutory obligations".
(ii)The council's response
"For this department, core services for adults are services (care packages) provided following the community care assessment process which includes Fair Access to Care Services (FACS) threshold eligibility criteria of substantial or critical. Legislation requires the Department to provide these. A service is "non-core" if it is either insufficiently specific to the Department's core statutory responsibilities or if it is not a direct service, meeting assessed needs, within the context of the FACS threshold eligibility criteria of substantial or critical. The FACS threshold of substantial or critical refers to the criteria set by the Council to determine the eligibility for services in reference to the Department of Health Guidance issued by the Secretary of State under section 7(1) of the Local Authority Social Services Act 1970".
" ( Why you think the service affected provides core services.
( How the service does this.
- How this can be evidenced e.g. how many service users are receiving your service as a result of an assessment by the department for community care/children in need services, how many service users, in your view, would be eligible for community care/children in need services following an assessment by the department, how many service users are already receiving community care services in addition to your service. You may also want to add a service user profile stating the gender, age, disability, frailty e.g. housebound and isolated, or your service users.
- What impact the loss of the service would have on this department".
(iii) Discussion of the health point
"provided following the community assessment process which includes ...FACS threshold eligibility criteria of substantial or critical".
"the [January 2004 letter] stated the department's wish to concentrate its statutory obligations and FACS merely provides a framework within which this is done".
"make worthwhile representations without knowing what factors may weigh against [its] interests, fairness will very often require that [it] is informed of the gist of the case which [it] has to answer".
"unconsciously not stray from its proper province of reviewing the propriety of the decision-making process into the forbidden territory of evaluating the substantial merits of a decision".
(iv) The Effect of the Appeal and the Views of the Panel
"The council may terminate this agreement by giving three months notice in writing if:-
a) the council decides there is no longer a continuing need for the service or that the need of the service has been significantly reduced or
b) the council is unable to provide funding or
c) the Organisation fails to remedy any default as detailed in clause 19".
"At the outset of the process, it might have helped to share the criteria that were to be used and the assessment process that was to be followed. Once the assessment had been completed, it would have been more transparent to have shared this with the organisation concerned and to give them the chance to respond".
IX The Reasons and Appraisal Points