R (on the application of Moseley) v London Borough of Haringey [2014] UKSC 56

Haringey Council consulted residents on its Council Tax Reduction Scheme but presented reducing council tax support as inevitable, without mentioning alternative ways of absorbing the government funding shortfall. The Supreme Court held the consultation was unlawful, endorsing the Sedley/Gunning criteria for fair consultation.

Facts

Following the abolition of Council Tax Benefit (CTB) by section 33(1)(e) of the Welfare Reform Act 2012, local authorities were required by section 13A of the Local Government Finance Act 1992 (as substituted) to devise their own Council Tax Reduction Schemes (CTRS) with effect from 1 April 2013. Central government reduced its funding by approximately 10%, though for Haringey the effective shortfall was around 17-18% given the growth in claimants and the statutory obligation to protect pensioners.

Paragraph 3(1)(c) of Schedule 1A to the 1992 Act required local authorities to consult ‘such other persons as it considers are likely to have an interest in the operation of the scheme’ before making a scheme. Haringey chose to pass the entire shortfall onto working-age claimants by reducing their support by around 19.8%, rather than absorbing it through raising council tax, cutting services, or drawing on reserves (£76.8m in March 2012). Approximately 25% of English local authorities adopted the default scheme (absorbing the shortfall), 33% adopted a scheme complying with the Transitional Grant Scheme, and 42% (including Haringey) passed the shortfall onto claimants.

Haringey’s consultation document and covering letter, distributed to 36,000 households, presented the reduction in council tax support as the inevitable consequence of the funding cut, without reference to alternative means of absorbing the shortfall. Ms Stirling (later substituted by Ms Moseley) applied for judicial review. Underhill J dismissed the application, and the Court of Appeal (Sullivan LJ and Sir Terence Etherton; Pitchford LJ dissenting in reasoning) dismissed the appeal.

Issues

The central issue was whether Haringey’s consultation exercise complied with the statutory duty of consultation in paragraph 3(1)(c) of Schedule 1A to the 1992 Act. Specifically, whether fairness (or the statutory purpose of consultation) required Haringey to inform consultees of realistic alternative options for meeting the shortfall which it had considered and rejected, and its reasons for doing so.

A subsidiary issue concerned whether Haringey acted unlawfully in failing to enlarge its consultation to refer to the Transitional Grant Scheme announced on 16 October 2012.

Arguments

The appellant contended that the consultation was unlawful because it misleadingly presented the reduction of council tax support as inevitable and failed to inform consultees of alternative options and reasons for their rejection. It was further argued that Haringey should have re-consulted on the Transitional Grant Scheme.

Haringey contended that, in the statutory context, fairness did not require it to consult on options it had already rejected, and that the alternatives would in any event have been reasonably obvious to consultees.

Judgment

Lord Wilson (with whom Lord Kerr agreed)

Lord Wilson endorsed the Sedley criteria as set out in R v Brent London Borough Council, ex p Gunning (1985) 84 LGR 168, that consultation must be at a formative stage, that sufficient reasons must be given to permit intelligent consideration and response, that adequate time be given, and that the product be conscientiously taken into account. He described these as ‘a prescription for fairness’.

He identified three purposes of fair consultation: producing better decisions through relevant information properly tested; avoiding the sense of injustice felt by those subject to the decision; and, reflecting the democratic principle, ensuring meaningful public participation in decisions affecting all inhabitants of an area.

Lord Wilson held that fairness demanded brief reference in the consultation document to other means of absorbing the shortfall and the reasons for their rejection. This was particularly so given that those consulted were the most economically disadvantaged residents, and the scheme would reduce their income below an already basic level while sparing more prosperous residents. The covering letter from Mr Ellicott and the consultation document represented, as an accomplished fact, that the shortfall had to be met by reducing council tax support, thereby limiting the terms in which consultees could respond. The assumed knowledge of alternatives could not save the exercise where the presentation itself indicated that other options were irrelevant.

On the Transitional Grant Scheme, Lord Wilson held that the failure to enlarge the consultation was not unlawful given its late announcement and that it did not add a substantially different dimension.

Lord Reed

Lord Reed reached the same conclusion but preferred to emphasise the statutory context rather than the common law duty of fairness. There is no general common law duty to consult. Where a statutory duty to consult exists, its content depends on the particular statutory context and purpose. In this context, the purpose was to ensure public participation in the local authority’s decision-making. To achieve that purpose, consultees needed information about the draft scheme, an outline of realistic alternatives, and an indication of the main reasons for the authority’s choice, drawing on the principle in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213.

He held that Haringey’s document presented the reduction as the inevitable consequence of government funding cuts, disguised the choice made by Haringey itself, and misleadingly implied there were no possible alternatives. There was, in reality, no consultation on the fundamental basis of the scheme.

Lady Hale and Lord Clarke

Lady Hale and Lord Clarke agreed with both Lord Wilson and Lord Reed, noting there was very little between them, and endorsed Lord Reed’s paragraph 39 setting out the requirements of public participation.

Relief

The court granted a declaration but declined to order a fresh consultation, on the ground that it would not be proportionate to order re-consultation on a scheme which had operated for two years and which Haringey was not minded to revise.

Implications

The Supreme Court definitively endorsed the Sedley/Gunning criteria as the touchstone of fair consultation. Where a public authority consults on a preferred option in circumstances affecting the general public, and particularly where the consultees include the economically disadvantaged, the authority must give consultees enough information to make an intelligent response. This may include brief reference to realistic alternative options considered and rejected, and the reasons for their rejection.

The judgments demonstrate two doctrinal routes to the same result. Lord Wilson grounded the requirement in the common law duty of fairness applied to statutory consultation. Lord Reed grounded it in the statutory purpose of public participation in decision-making. Both approaches converge in requiring that consultation documents must not misrepresent a policy choice as an inevitable consequence of external constraints where that is not the case.

The decision matters especially to local authorities and other public bodies undertaking statutory consultations affecting residents or the wider public, particularly where finance-related decisions require balancing burdens between groups. It emphasises that consultation is not a formality: presentation that forecloses genuine debate about the underlying policy choice will render the exercise unlawful. However, the court was clear that a duty to consult does not invariably require detailed discussion of rejected alternatives; the requirement depends on statutory context and what is necessary for consultees to give an intelligent response. Documents should be clear and not unduly complex or lengthy.

The refusal to order re-consultation also illustrates the discretionary nature of remedies in public law: even where illegality is established, practical and proportionality considerations may limit relief.

Verdict: Appeal allowed in part. The Supreme Court held that Haringey’s consultation exercise was unlawful because the consultation document misleadingly presented reduction of council tax support as inevitable and failed to refer to realistic alternative options for absorbing the shortfall or the reasons for their rejection. A declaration to that effect was granted, but the court declined to order a fresh consultation exercise on grounds of proportionality.

Source: R (on the application of Moseley) v London Borough of Haringey [2014] UKSC 56