Capenhurst & Ors, R (on the application of) v Leicester City Council

Where a public authority chooses to consult before making a decision, the consultation must be fair. Consultees must be told the substance of the proposal, the criteria to be applied and the factors regarded as decisive or substantially important, so that they can make an intelligent response. The information required depends on the circumstances. A radical change of policy, particularly one threatening the existence of funded organisations, must be explained clearly and comprehensively. A later opportunity to negotiate or make representations does not cure an earlier defective consultation. A decision will ordinarily be quashed where the failure created a real, rather than merely minimal, possibility that the outcome would have been different.

Leicester City Council decided to end or reduce funding for six voluntary organisations represented by service-users. The decisions followed a change in political policy, under which funding was to concentrate on services regarded as statutory or otherwise core. The organisations sought judicial review, alleging that the consultation had not disclosed the criteria applied by the council, including the distinction between statutory and strategic services, provider requirements, viability considerations and, in relation to Voluntary Action Leicester, the Fair Access to Care Services threshold. They also challenged the council’s appraisal and reasons. The central issue was whether the consultation process was sufficiently fair and informative.

1. Outcome. The six decisions contained in the letters dated 25 and 26 February 2004 were quashed.
2. The council had chosen to consult and was therefore required to consult fairly. Applying R v North and East Devon Health Authority, ex parte Coughlan [2001] QB 213 and R v Secretary of State for the Home Department, ex parte Doody [1994] 1 AC 531, the organisations had to be given sufficient reasons and the gist of the case they had to answer. The extent and method of consultation depended on the circumstances, with fairness as the underlying principle.
3. The ELL organisations were not told that the previous “Category A” and “Category B” approach had been abandoned, that strategic services would no longer suffice, or that statutory targets, provider arrangements and the proportion and viability of residual core services would be decisive. They neither knew nor ought reasonably to have known of those changes. The consultation therefore did not enable intelligent and effective responses.
4. The council could not rely on subsequent discussions or offers of partial funding. Those occurred after the decisions, when the organisations were in a weaker position and still lacked the full criteria and reasoning. They were not an adequate substitute for consultation before the decisions.
5. In relation to VAL, the council had materially relied on the FACS threshold without explaining its significance. VAL could have made relevant representations, creating a real possibility of a different outcome.
6. Following R v Chief Constable of Thames Valley, ex parte Cotton [1990] IRLR 344 and R v Secretary of State for the Environment, ex parte Brent London Borough Council [1982] 1 QB 593, the court did not assess the substantive merits of the funding policy. It was sufficient that the procedural failure created a real, not merely minimal, possibility that the decisions would have been different. The appraisal and reasons points were consequently unnecessary to determine.
7. If the council wished to withdraw funding, it had to consult afresh and explain clearly and comprehensively the criteria it proposed to apply.

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