Shropshire And Wrekin Fire Authority & Ors, R (On the Application Of) v The Secretary of State for the Home Department

Section 4A(5)(a) of the Fire and Rescue Services Act 2004 requires separate consideration of economy, efficiency and effectiveness. The expression is not a composite test, although the three matters must be considered together in the overall statutory context.

Economy does not require proof of an absolute reduction in total expenditure. It means careful management of resources and keeping expenditure as low as is consistent with achieving the relevant objective. A decision taken under the wrong statutory test may nevertheless attract no relief where it is highly likely that the outcome would have been substantially the same under the correct test.

The Secretary of State approved proposals under section 4A of the Fire and Rescue Services Act 2004 to transfer governance of three fire and rescue services to two police and crime commissioners.

The fire authorities sought judicial review on two grounds. They argued that the Secretary of State had misinterpreted the statutory requirement that an order be in the interests of economy, efficiency and effectiveness, and had irrationally relied on CIPFA as the independent assessor of public-safety issues. Farbey J granted permission to proceed on both grounds. The central issues were the proper construction of section 4A(5)(a), the meaning of economy, the consequence of applying the wrong test, and the legality of the independent assessment process.

1. Construction of section 4A(5)(a). The statutory phrase “in the interests of economy, efficiency and effectiveness” requires the Secretary of State to consider each of the three matters. The words are not a compendious term of art or a synonym for best value. The use of “and”, and Parliament’s use of different formulations elsewhere, supported that construction.
2. Meaning of economy. Economy does not require an overall reduction in public expenditure. It requires careful management of available resources and keeping expenditure as low as is consistent with achieving the objective in view. A proposal may therefore be in the interests of economy even if it increases expenditure, provided the increased expenditure is justified by the gains achieved.
3. Effect of the error. The Secretary of State had in fact applied a composite 3Es test. However, the evidence showed that CIPFA, officials and the Secretary of State had considered the three matters separately and had assessed the proposals as involving careful management of resources. It was highly likely that the outcome would have been substantially the same had the correct test been applied. Relief was therefore refused under section 31(2A) of the Senior Courts Act 1981. There was no exceptional public interest justifying disregard of that requirement under section 31(2B).
4. Independent assessment and public safety. Schedule A1 required an independent assessment of the proposal but prescribed neither the assessor’s precise expertise nor the assessment’s form. The Secretary of State had a broad discretion, reviewable on rationality grounds, in selecting the assessor and setting its remit. In the circumstances, selecting CIPFA, whose assessment addressed the contested business cases and identified potential operational safety concerns, was not irrational.
5. The judicial review was dismissed.

First-instance judicial review. The judgment states that Farbey J granted permission to proceed on both grounds, but no separate lower-court judgment citation is provided.