Liverpool City Council, R (on the application of) v Secretary of State for Health

A statutory consultation must be genuine and undertaken while the proposed decision remains open to reconsideration. The statutory decision-maker has substantial discretion to identify appropriate consultees, and need not consult every affected authority where the legislation permits consultation with representative bodies. Consultation must address the substance of the proposed decision sufficiently to permit an intelligent response, and representations must be conscientiously considered. In allocating grants, rational estimates and approximations are lawful where precise calculation is impracticable and precision was not promised. A fixed grant, rather than reimbursement of actual expenditure, is not irrational merely because it may produce shortfalls, provided the decision is reasonably open to the authority and there are no cogent grounds for intervention.

Liverpool City Council sought judicial review of a determination by the Secretary of State for Health under section 93 of the Local Government Act 2000. The determination fixed Liverpool’s grant for expenditure arising from the transfer of responsibility for persons with preserved rights to local authorities.

The Council alleged inadequate consultation and irrationality in the calculation and structure of the grant, including the decision not to reimburse actual costs or provide a supplementary mechanism. A separate legitimate-expectation claim was abandoned. The central issues were whether the statutory consultation duty had been complied with and whether the grant determination was irrational.

1. Claim dismissed. Liverpool City Council established no ground for quashing the determination.
2. Section 93(11) of the Local Government Act 2000 required consultation before the determination. The Secretary of State had considerable scope to decide which local authorities or representative bodies were appropriate consultees. The provision did not require consultation with every authority affected by the grant.
3. The consultation nevertheless had to be genuine. The proposals had to remain at a formative stage, consultees had to receive sufficient information to respond intelligently, adequate time had to be allowed, and the representations had to be conscientiously taken into account. The consultation concerning the amount and distribution of the grant, including the relevant assumptions and numbers of preserved-rights residents, satisfied that standard.
4. The duty extended to the substance of the grant determination, although consultation about central-government spending limits was not generally required. Any possible deficiency concerning the calculation of the overall fund had no material consequence: there was no evidence of material miscalculation, and the Department would have considered an increase if consultation had demonstrated an exceptional and substantial error.
5. Rationality depended on the context and object of the decision. The Department was entitled to use estimates and approximations because the future costs, including mortality and shortfall costs, could not be calculated precisely. The objective was broadly cost-neutral transfer of responsibility, not exact reimbursement of every cost incurred.
6. The decision to pay a specified grant rather than reimburse actual expenditure was also rational. Reimbursement would have operated as an effective blank cheque, reduced incentives to move suitable residents into supported accommodation or control fees, and required a more elaborate monitoring system. The decision was plainly open to the Secretary of State and there were no exceptional or cogent grounds for intervention.

First-instance judicial review decision. No prior appellate decision is stated in the judgment.