Audit Commission for England & Wales v Ealing London Borough Council

A statutory body entrusted with a discretionary decision must exercise its own judgment and cannot allow another body to determine the outcome in an individual case. That principle does not prevent it from adopting specialist findings or transparent, objective rules as part of its own decision-making methodology. The critical distinction is between adopting principles in advance and allowing another body’s case-specific decision to dictate the result. Where a specialist body’s underlying assessments are accepted and an established matrix mechanically produces a rating, applying that matrix is not an unlawful delegation. An inflexible rule is not unlawful merely because it leaves no room for exceptions; the question is whether its content improperly transfers the statutory decision to another authority.

The Audit Commission classified Ealing’s performance under section 99 of the Local Government Act 2003. Ealing’s core service performance and council ability each scored 3, which would ordinarily have produced an overall category of “good” under the published Comprehensive Performance Assessment Framework 2004.

Ealing had also received a zero-star social services rating from the Commission for Social Care Inspection. Rule 2 of the Framework prevented a council with less than one social services star from being categorised as “fair” or above, so Ealing was classified as “weak”. Ealing did not challenge the underlying CSCI scores or rating, but challenged the Audit Commission’s automatic use of the rating as an unlawful fetter and delegation of its statutory function. Walker J allowed the judicial review claim: [2005] EWHC 195 (Admin). The central issue was whether the rule unlawfully allowed CSCI to dictate the Audit Commission’s categorisation.

Appeal allowed; cross-appeal dismissed. Lord Justice Keene gave the judgment of the court.

1. The court accepted the established principle, illustrated by Lavender v Minister of Housing and Local Government [1970] 1 WLR 1231, that a body exercising a statutory discretion must exercise its own judgment. It cannot adopt a policy under which another authority’s objection or decision is decisive in an individual case, thereby transferring the effective decision to that authority.
2. That principle did not invalidate Rule 2. The Audit Commission was entitled to adopt the specialist CSCI assessments represented by the two underlying scores. It was also entitled to adopt, as part of its own methodology, the publicly available weightings and trade-offs embodied in the CSCI matrix. Those weightings were not case-specific discretionary decisions by CSCI. Once the scores had been reached, the star rating followed mechanically from transparent rules.
3. The case was materially different from Lavender. Rule 2 reflected principles which the Audit Commission itself had adopted for categorising authorities. It did not delegate the Audit Commission’s section 99 decision under the Local Government Act 2003 in an individual case to CSCI.
4. The absence of flexibility did not itself make the rule unlawful. Once the content of the rule was not an improper delegation, the Audit Commission was not required to invite or consider representations seeking departure from an accepted specialist rating, particularly where it lacked the specialist position needed to re-investigate the underlying assessments.
5. The policy embodied in Rule 2 therefore did not constitute unlawful delegation. The respondent was ordered to pay the appellant’s costs of the appeal and below, subject to detailed assessment if not agreed.

• Court of Appeal (Civil Division): allowed the Audit Commission’s appeal and dismissed Ealing’s cross-appeal.
• Queen’s Bench Division: Walker J allowed Ealing’s judicial review claim, holding that Rule 2 unlawfully prevented the Audit Commission from applying its own mind to the reasons for CSCI’s zero-star rating: [2005] EWHC 195 (Admin).