R v Secretary of State for the Environment, Ex parte Hammersmith and Fulham London Borough Council (Hammersmith and Fulham London Borough Council, Ex parte)

Where legislation entrusts a minister with setting limits on local government expenditure by principles of general application, the minister may determine the political norm by which expenditure is judged excessive. The minister need not assess each authority against an objective standard of reasonableness.

Once the statutory requirements have been satisfied, a decision involving national economic policy and requiring approval by the House of Commons is reviewable for irrationality only in extreme circumstances, such as bad faith, improper motive or manifest absurdity. The courts remain entitled to determine whether the minister misconstrued the legislation or disregarded legally mandatory considerations.

Detailed statutory procedures should not be supplemented by implied duties to consult, give reasons or disclose information where those additions would conflict with the legislative scheme.

The Local Government Finance Act 1988, as amended by the Local Government and Housing Act 1989, introduced a system under which the Secretary of State could limit a local authority's annual budgeted expenditure. After authorities set their budgets for 1990–91, the Secretary of State designated 21 authorities for charge-capping. Nineteen sought judicial review.

The Divisional Court dismissed the applications on 15 June 1990. The Court of Appeal dismissed the authorities' appeals on 27 June 1990 and gave reasons on 3 July. Sixteen authorities appealed to the House of Lords.

The central questions were whether the Secretary of State had misconstrued the designation power, acted irrationally, or failed to observe procedural requirements arising from statute or procedural fairness.

1. The appeals were dismissed unanimously. Lord Bridge of Harwich delivered the leading speech. Lord Brandon of Oakbrook, Lord Oliver of Aylmerton, Lord Goff of Chieveley and Lord Jauncey of Tullichettle agreed with his reasons.

2. Per Lord Bridge, section 100 of the Local Government Finance Act 1988 required a single designation decision made according to the principles determined under section 100(4). Those principles supplied the norm by which the Secretary of State decided whether expenditure was excessive. The section did not require a preliminary, authority-specific assessment independent of those principles.

3. The level of appropriate public expenditure and taxation was inherently a matter of political opinion. The Secretary of State was therefore entitled to determine the expenditure norm. The reasoning in Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014, concerning materially different statutory language, did not restrict that power. Ministerial statements did not create a legitimate expectation imposing the proposed limitation.

4. Section 100(4) required the same principles for authorities in the same class. It did not require every principle to be capable of affecting every authority. The use of thresholds based upon standard spending assessments therefore complied with the statutory requirement.

5. Per Lord Bridge, applying Reg v Secretary of State for the Environment, Ex parte Nottinghamshire County Council [1986] AC 240, a power concerned with national economic policy and requiring approval by the House of Commons could not, once exercised within the statute, be challenged for irrationality short of bad faith, improper motive or consequences so absurd as to demonstrate manifest irrationality. Questions whether the minister misconstrued the statute, frustrated its policy, considered legally irrelevant matters or ignored legally mandatory matters remained questions of illegality for the courts.

6. The statutory procedure gave a designated authority an opportunity to propose and justify an alternative maximum. No further duty arose to consult authorities before determining the designation principles, announce those principles before budgets were set, or provide reasons for the proposed maximum on request.

7. Contrary to both courts below, section 110 did not impose a legal duty to disclose information obtained from other sources before an order was submitted to the House of Commons. Such a duty would introduce delay into an expedited, non-adversarial procedure. Accuracy was appropriately secured through sound administrative practice.

1. House of Lords: Dismissed the 16 conjoined appeals unanimously and affirmed the orders of the Court of Appeal.
2. Court of Appeal: Dismissed the authorities' appeals on 27 June 1990, delivered reserved reasons on 3 July 1990, and granted leave to appeal.
3. High Court, Divisional Court: Dismissed the applications for judicial review on 15 June 1990.