England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL Judgement handed down at The Sessions House Lancaster Road Preston PR1 2PD
		10th October 2006

JUDGE GILBART QC:

NATURE OF DISPUTE

1. This matter arises out of two housing benefit redeterminations made by the Defendant Rent Service on 20^th December 2004 and 25^th May 2005. Those redeterminations concerned the Claimant's rented flat, 100 West One Peak, 15 Cavendish Street, Sheffield, S3 7SR. They were made under Regulation 12CA of the Housing Benefit (General Regulations) 1987. Permission to apply for judicial review was given by Collins J.
2. The Housing Benefit scheme is described succinctly by Pitchford J in R (Cumpsty) v The Rent Service [2002] EWHC 2526 Admin at paragraphs 3 to 18. I gratefully adopt his account. I only repeat matters relevant to the issues before me.
3. The central issue before me has related to the interpretation and application of the Rent Officers (Housing Benefit Functions) Order 1997 S.I. 1997/1984, as amended by the Rent Officers (Housing Benefit Functions) (Amendment) Order 2001 S.I. 2001/3561. I shall call it " the Order". It was amended to negate the interpretation placed upon the original Order by the Court of Appeal in R(Sadaat) v The Rent Service [2001] EWCA Civ 1559
4. The effect of Schedule 1 of the Order is to require the calculation of certain figures for the purposes of a determination, or redetermination:

(a) Whether the rent payable by the tenant for his/her dwelling is significantly higher than the rent which the landlord might reasonably have been expected to obtain, having regard to rents for similar dwellings in what is now defined since Saadat as the "vicinity," which is defined as the area " immediately surrounding the dwelling"

(b) Whether the dwelling exceeds certain size criteria related to the occupiers, based on levels in the " vicinity"

(c) Having applied the results of those two determinations, whether the rent payable is " exceptionally high," having regard to the levels of rent in assured tenancies of the same number of habitable rooms in what is now defined since Saadat as the same "neighbourhood" as the dwelling . If s/he then determines that the rent is exceptional, s/he then determines the rent which might reasonably be expected to be obtainable in the "neighbourhood." "Neighbourhood" is defined as " where the dwelling is in a town or city, the part of that town or city where the dwelling is located which is a distinct area of residential accommodation," or if not in a town or city, the area surrounding the dwelling which is a distinct area of residential accommodation ( and where there are similar dwellings).

5. The effect of the provisions was that under the relevant benefits legislation (which does not require being set out here) a claimant for benefit would receive assistance in paying his rent up to the determined rental level, having excised the effects of the premises being too large for his needs, and the rent being exceptionally high for the neighbourhood. However in 1996 a further cap was introduced, called the " Local Reference Rent " or " LRR.". Now, the determined level for the purpose of calculating benefit could not exceed the LRR. It is common ground between the parties (and rightly so) that the purpose of the LRR was to reduce the availability of housing benefit, and to deprive some claimants of the degree of benefit which they might previously have enjoyed. The LRR is calculated according to a formula, which I describe below. It takes a median figure between low and high rents within a "locality."
6. The effect of the LRR calculation is to keep the level of housing benefit paid to a level which reflects the median between the defined low and high figures. It is obvious that if the choice of "neighbourhoods" used to make up the "locality" includes areas of different rental levels, that will affect the calculation of the LRR. As a generality, areas of greater affluence produce higher rental levels, and areas of less affluence produce lower rental levels.
7. In this matter, the Claimant, who is disabled, lives in an apartment at West One Peak, Cavendish Street, Sheffield S3 7SR. The dispute relates to two redeterminations made by the Rent Service, dated 20^th December 2004 and 25^th May 2005 respectively.
8. On 20^th December 2004, the Rent Service, through an officer Mr Shaw, redetermined that

(a) The rent paid of £ 745 per month was not significantly higher than a reasonable rent for the vicinity. That reflected a change from the rent officer's previous determination, which had treated it as such;

(b) The claim related rent was assessed as £ 745. It follows that the rent paid was not exceptionally high for the dwelling (the neighbourhood test);

(c) The LRR for the locality was £ 433.34.

9. The redetermination stated that within the valuation the "meaning" of "locality" was

" A broad geographical area made up of a number of neighbourhoods with a mix of property types and tenure where a tenant could , as an alternative to the property in question, reasonably be expected to live and benefit from similar amenities"

The document also stated that

" the locality used for the Local Reference Rent was Sheffield"

10. On 20^th May 2005, the Rent Service made a further redetermination. By this time, the rent had reduced to £ 695 per month, because the landlord had agreed to remove the use of a garage from the tenancy. That redetermination was made by Mr Spedding.
11. The rent paid of £ 695 per month was not significantly higher than a reasonable rent for the vicinity That reflected a change from the rent officer's previous determination, which had treated it as such. The claim reference rent was assessed as £ 695. It follows that the rent paid was not exceptionally high for the dwelling (the neighbourhood test).
12. The LRR for the locality was £ 455 per month. The redetermination stated that within the valuation the "meaning" of "locality" was

" A broad geographical area made up of a number of neighbourhoods with a mix of property types and tenure where a tenant could , as an alternative to the property in question, reasonably be expected to live and benefit from similar amenities"

The document also stated that

" I have looked at a range of reasonable rents from £ 260 to £ 650 in a broad area covering your locality….."

13.  It will be noted that the 20^th May 2005 redetermination did not specify what the locality was. However an accompanying letter from Mr Spedding of 25^th May 2005 stated that

"the locality for local reference rent purposes is Sheffield, comprising postcodes S 1 to S14 inclusive, S1 (sic) S20, parts of S 35 and parts of S 36"

14. The effect of each of the two redeterminations was therefore to provide housing benefit at a level capped at the determined LRR.
15. It will be noted that the term " broad geographical area" appears in both redeterminations. It does not do so in the statutory definition. The relevance of that appears below, as does a consideration of the provenance of that phrase and its meaning.
16. The issues between the parties are

(a) Did the Rent Service base its redeterminations of the LRR on a properly determined " locality" ?

(b) In calculating the LRR, did the Rent Service wrongly exclude evidence

(i) non-transactional evidence of higher rents

(ii) of rents which it determined were " exceptionally high" for the purposes of the LRR calculation in paragraph 4(1)

THE HISTORY OF THE ORDER AND ITS MEANING IN LAW

17. As noted above, the provision in force at the date of these determinations was amended to its current form in 2001. Much of the argument before me has turned on the reasons for, and effect of the amendments, and on the way in which the Rent Service responded to them. The Rent Service exhibited in evidence the various internal circulars and guidance which are considered below.
18. As will become apparent, the amending order in question was put before Parliament to overcome the effects of the decision in the Court of Appeal in R (Saadat) v Rent Service [2001] EWCA 1559, which allowed an appeal against the decision of Maurice Kay J sub nom R(Dinsdale, Shaw and Saadat) v Rent Service [ 2001] EWHC Admin 65. It has become apparent during the hearing that the amendment was drafted before the decision of the Court of Appeal, which was given on 25^th October 2001. It was made on 4^th November, laid before Parliament on 5^th November, and made on 6^th November 2001.
19. Although at some points (but not all) in Mr Strachan's argument the Rent Service has argued that the effect of the (amended) Order was simply to restore previous internal practice within the Rent Service and as understood by Ministers, both parties agree, and rightly so, that I am required to interpret the Order as written. It provided a definition of locality which had not been set out before in the legislation. I may only refer to what occurred in Parliament when it was made , as an aid to interpretation, if there is ambiguity. As will become apparent, I consider that the Order is unambiguous in its meaning. It will become apparent that the Rent Service issued internal guidance on its meaning. I have had to consider

(a) whether the internal guidance reflected the amended Order

(b) whether the redeterminations followed the internal guidance.

20. Mr Strachan also argued that the effect of the amended Order was to sweep away the effects of the Court of Appeal judgement in R (Saadat) v Rent Service [2001] EWCA 1559. Indeed he described it as being of historic interest only. Mr Burton relied on it as being relevant to the policy of the legislation.
21. As at the date of the judgement of the Court of Appeal in Saadat the relevant parts of the Order read as follows:

"Significantly high rents

1. (1) The rent officer shall determine whether, in his opinion, the rent payable under the tenancy of the dwelling at the relevant time is significantly higher than the rent which the landlord might reasonably have been expected to obtain under the tenancy at that time.

(2) If the rent officer determines under sub-paragraph (1) that the rent is significantly higher, the rent officer shall also determine the rent which the landlord might reasonably have been expected to obtain under the tenancy at the relevant time.

(3) When making a determination under this paragraph, the rent officer shall have regard to the level of rent under similar tenancies of similar dwellings in the locality (or as similar as regards tenancy, dwelling and locality as is reasonably practicable) and shall assume that no one who would have been entitled to housing benefit had sought or is seeking the tenancy.

Size and rent

2. (1) The rent officer shall determine whether the dwelling, at the relevant time, exceeds the size criteria for the occupiers.

(2) If the rent officer determines that the dwelling exceeds the size criteria, the rent officer shall also determine the rent which a landlord might reasonably have been expected to obtain, at the relevant time, for a tenancy which is-

(a) similar to the tenancy of the dwelling;

(b) on the same terms other than the term relating to the amount of rent; and

(c) of a dwelling which is in the same locality as the dwelling, but which-

(i) accords with the size criteria for the occupiers;

(ii) is in a reasonable state of repair, and

(iii) corresponds in other respects, in the rent officer's opinion, as closely as is reasonably practicable to the dwelling.

(3) When making a determination under sub-paragraph (2), the rent officer shall have regard to the same matter and make the same assumption as specified in paragraph 1(3), except that in judging the similarity of other tenancies and dwellings the comparison shall be with the tenancy of the second dwelling referred to in sub-paragraph (2) and shall assume that no one who would have been entitled to housing benefit had sought or is seeking that tenancy.

Exceptionally high rents

3. (1) The rent officer shall determine whether, in his opinion, the rent payable for the tenancy of the dwelling at the relevant time is exceptionally high.

(2) In sub-paragraph (1) "rent payable for the tenancy" means-

(a) where a determination is made under sub-paragraph (2) of paragraph 2, the rent determined under that sub-paragraph;

(b) where no determination is so made and a determination is made under sub-paragraph (2) of paragraph 1, the rent determined under that sub-paragraph; and

(c) in any other case, the rent payable under the tenancy.

(3) If the rent officer determines under sub-paragraph (1) that the rent is exceptionally high, the rent officer shall also determine the highest rent, which is not an exceptionally high rent and which a landlord might reasonably have been expected to obtain at the relevant time (on the assumption that no one who would have been entitled to housing benefit had sought or is seeking the tenancy) for an assured tenancy of a dwelling which-

(a) is in the same locality as the dwelling;

(b) has the same number of bedrooms and rooms suitable for living in as the dwelling (or, where the dwelling exceeds the size criteria for the occupiers, accords with the size criteria): and

(c) is in a reasonable state of repair.

(4) For the purpose of determining whether a rent is an exceptionally high rent under this paragraph, the rent officer shall have regard to the levels of rent under assured tenancies of dwellings which-

(a) are in the same locality as the dwelling (or in as similar a locality as is reasonably practicable); and

(b) have the same number of bedrooms and rooms suitable for living in as the dwelling (or, in a case where the dwelling exceeds the size criteria for the occupiers, accord with the size criteria).

Local reference rents

4. (1) The rent officer shall make a determination of a local reference rent in accordance with the formula-

R=(H + L) /2

where-

R is the local reference rent;

H is the highest rent, in the rent officer's opinion,-

(a) which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and

(b) which is not an exceptionally high rent; and

L is the lowest rent, in the rent officer's opinion,-

(a) which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and

(b) which is not an exceptionally low rent.

(2) The criteria are-

(a) that the dwelling under the assured tenancy-

(i) is in the same locality as the dwelling;

(ii) is in a reasonable state of repair, and

(iii) has the same number of bedrooms and rooms suitable for living in as the dwelling (or, in a case where the dwelling exceeds the size criteria for the occupiers, accords with the size criteria); ……."

22. The effect of the 2001 amendments to the Order was

(a) in paragraphs 1 and 2 , to substitute " vicinity" for " locality" when determining whether the rent was significantly high, and to define " vicinity"

(b) in paragraph 3 to substitute "neighbourhood" for " locality" when considering whether the rent was exceptionally high, and to define "neighbourhood"

(c) in paragraph 4 (which deals with LRR), to include a definition of "locality."

23. A central issue in the proceedings before me relates to the definition of "locality" as it appears in then amended Order.
24. The relevant parts of the Order now read (amendments in square brackets):

" Significantly high rents

1 (1)     The rent officer shall determine whether, in his opinion, the rent payable under the tenancy of the dwelling at the relevant time is significantly higher than the rent which the landlord might reasonably have been expected to obtain under the tenancy at that time.

(2)     If the rent officer determines under sub-paragraph (1) that the rent is significantly higher, the rent officer shall also determine the rent which the landlord might reasonably have been expected to obtain under the tenancy at the relevant time.

(3)     When making a determination under this paragraph, the rent officer shall have regard to the level of rent under similar tenancies of similar dwellings in the [vicinity] (or as similar as regards tenancy, dwelling and [vicinity] as is reasonably practicable) and shall assume that no one who would have been entitled to housing benefit had sought or is seeking the tenancy.

[(4)     For the purposes of this paragraph and paragraph 2 "vicinity" means—

(a)     the area immediately surrounding the dwelling; or

(b)     where, for the purposes of sub-paragraph (2)(c) of paragraph 2, there is no dwelling in the area immediately surrounding the dwelling which satisfies the description in heads (i), (ii) and (iii) of that sub-paragraph, the area nearest to the dwelling where there is such a dwelling.]

Size and rent

2 (1)     The rent officer shall determine whether the dwelling, at the relevant time, exceeds the size criteria for the occupiers.

(2)     If the rent officer determines that the dwelling exceeds the size criteria, the rent officer shall also determine the rent which a landlord might reasonably have been expected to obtain, at the relevant time, for a tenancy which is—

(a)     similar to the tenancy of the dwelling;

(b)     on the same terms other than the term relating to the amount of rent; and

(c)     of a dwelling which is in the same [vicinity] as the dwelling, but which—

(i)     accords with the size criteria for the occupiers;

(ii)     is in a reasonable state of repair; and

(iii)     corresponds in other respects, in the rent officer's opinion, as closely as is reasonably practicable to the dwelling.

(3)     When making a determination under sub-paragraph (2), the rent officer shall have regard to the same matter and make the same assumption as specified in paragraph 1(3), except that in judging the similarity of other tenancies and dwellings the comparison shall be with the tenancy of the second dwelling referred to in sub-paragraph (2) and shall assume that no one who would have been entitled to housing benefit had sought or is seeking that tenancy.

Exceptionally high rents

3 (1)     The rent officer shall determine whether, in his opinion, the rent payable for the tenancy of the dwelling at the relevant time is exceptionally high.

(2)     In sub-paragraph (1) "rent payable for the tenancy" means—

(a)     where a determination is made under sub-paragraph (2) of paragraph 2, the rent determined under that sub-paragraph;

(b)     where no determination is so made and a determination is made under sub-paragraph (2) of paragraph 1, the rent determined under that sub-paragraph; and

(c)     in any other case, the rent payable under the tenancy [at the relevant time].

(3)     If the rent officer determines under sub-paragraph (1) that the rent is exceptionally high, the rent officer shall also determine the highest rent, which is not an exceptionally high rent and which a landlord might reasonably have been expected to obtain at the relevant time (on the assumption that no one who would have been entitled to housing benefit had sought or is seeking the tenancy) for an assured tenancy of a dwelling which—

(a)     is in the same [neighbourhood] as the dwelling;...

b)     has the same number of bedrooms and rooms suitable for living in as the dwelling (or, where the dwelling exceeds the size criteria for the occupiers, accords with the size criteria); and

(c)     is in a reasonable state of repair.

(4)     For the purpose of determining whether a rent is an exceptionally high rent under this paragraph, the rent officer shall have regard to the levels of rent under assured tenancies of dwellings which—

(a)     are in the same [neighbourhood] as the dwelling (or in as similar a locality as is reasonably practicable); and

(b)     have the same number of bedrooms and rooms suitable for living in as the dwelling (or, in a case where the dwelling exceeds the size criteria for the occupiers, accord with the size criteria).

[(5)     For the purposes of this paragraph and paragraph 4(6) "neighbourhood" means—

(a)     where the dwelling is in a town or city, the part of that town or city where the dwelling is located which is a distinct area of residential accommodation; or

(b)     where the dwelling is not in a town or city, the area surrounding the dwelling which is a distinct area of residential accommodation and where there are dwellings satisfying the description in sub-paragraph (4)(b).]

Local reference rents

4 (1)     The rent officer shall make a determination of a local reference rent in accordance with the formula—

R = (H + L) / 2

where—

R is the local reference rent;

H is the highest rent, in the rent officer's opinion,—

(a)     which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and

b)     which is not an exceptionally high rent; and

L is the lowest rent, in the rent officer's opinion,—

(a)     which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and

(b)     which is not an exceptionally low rent.

(2)     The criteria are—

(a)     that the dwelling under the assured tenancy—

(i)     is in the same locality as the dwelling;

(ii)     is in a reasonable state of repair; and...

iii)     has the same number of bedrooms and rooms suitable for living in as the dwelling (or, in a case where the dwelling exceeds the size criteria for the occupiers, accords with the size criteria); and

(b)     if the tenant does not have the use under the tenancy of the dwelling [at the relevant time] of more than one bedroom or room suitable for living in—

(i)     that under the assured tenancy the tenant does not have the use of more than one bedroom or room suitable for living in;...

ii)     if the rent under the tenancy [at the relevant time] includes payments for board and attendance and the rent officer considers the amount fairly attributable to board and attendance is a substantial part of the rent, that a substantial part of the rent under the assured tenancy is fairly attributable to board and attendance;

(iii)     if sub-paragraph (ii) does not apply and the tenant shares a [kitchen, toilet, bathroom and room suitable for living in] with a person other than a member of his household, a non-dependant or a person who pays rent to the tenant, that the assured tenancy provides for the tenant to share a [kitchen, toilet, bathroom and room suitable for living in]; and

(iv)     if sub-paragraphs (ii) and (iii) do not apply, that the circumstances described in sub-paragraphs (ii) and (iii) do not apply in relation to the assured tenancy.

(3)     Where ascertaining H and L under sub-paragraph (1), the rent officer:

(a)     shall assume that no one who would have been entitled to housing benefit had sought or is seeking the tenancy; and

(b)     shall exclude the amount of any rent which, in the rent officer's opinion, is fairly attributable to the provision of services which are ineligible to be met by housing benefit

[. . .(c)     . . .].

(4)     In sub-paragraph (2)(b)—

"bedroom or room suitable for living in" does not include a room which the tenant shares with any person other than—

(a)     a member of his household;

(b)     a non-dependant (as defined in this sub-paragraph); or

(c)     a person who pays rent to the tenant; and

["non-dependant" means a non-dependant of the tenant within the meaning of regulation 3 of the Housing Benefit Regulations or, as the case may be, regulation 3 of the Housing Benefit (State Pension Credit) Regulations;].

(5)     In sub-paragraph (3), "services" means services performed or facilities (including the use of furniture) provided for, or rights made available to, the tenant, but not[, in the case of a tenancy where a substantial part of the rent under the tenancy is fairly attributable to board and attendance, the provision of meals (including the preparation of meals or provision of unprepared food)].

[(6)     For the purposes of this paragraph and paragraph 5 "locality" means an area—

(a)     comprising two or more neighbourhoods, including the neighbourhood where the dwelling is situated, each neighbourhood adjoining at least one other in the area;

(b)     within which a tenant of the dwelling could reasonably be expected to live having regard to facilities and services for the purposes of health, education, recreation, personal banking and shopping which are in or accessible from the neighbourhood of the dwelling, taking account of the distance of travel, by public and private transport, to and from facilities and services of the same type and similar standard; and

(c)     containing residential premises of a variety of types, and including such premises held on a variety of tenancies.]

5………………………….

[Claim-related rent

6 (1)     In this paragraph, and in paragraph 9 below, "claim-related rent" means—

(a)     where the rent officer makes a determination under sub-paragraph (2) of paragraph 1, sub-paragraph (2) of paragraph 2 and sub-paragraph (3) of paragraph 3, the lowest of the three rents determined under those sub-paragraphs;

(b)     where the rent officer makes a determination under only two of the sub-paragraphs referred to in paragraph (a) above, the lower of the two rents determined under those sub-paragraphs;

(c)     where the rent officer makes a determination under only one of the sub-paragraphs referred to in paragraph (a) above, the rent determined under that sub-paragraph;

(d)     where the rent officer does not make a determination under any of the sub-paragraphs referred to in paragraph (a) above, the rent payable under the tenancy of the dwelling at the relevant time.

(2)     Where a rent officer makes any determinations under paragraphs 1, 2 or 3, he shall also determine which rent is the claim-related rent.

(3)     Where the dwelling is not in a hostel, the rent officer shall also determine the total amount of ineligible charges, as defined in paragraph 7, which he has not included in the claim-related rent because of the assumptions made in accordance with that paragraph.]

25. It is important to note how the Court of Appeal approached the Order as it was before them. In the leading judgement in Saadat, Sedley LJ said

9 "The concept of the local reference rent as an additional cap was an innovation, initially introduced into the Order by the Rent Officers (Additional Functions) Order 1995 which, together with an amending Order, came into force on 2 January 1996. These provisions are now consolidated in the 1997 Order. Their avowed purpose was to bring the global housing benefit bill down. The Social Security Advisory Committee had urged caution in the proposed use of local reference rents. The Government accepted that single rooms needed to be hived off so that multi-occupied properties did not drag down the mean level, but for the rest went ahead with its proposal.

10 It is evident that the local reference rent is a blunt instrument which can depress an individual's benefit below a level which is neither "significantly" nor "exceptionally" high, but cannot elevate it if for other reasons it falls below the local reference rent level. It is also evident, both from the text and from its history, that this effect is intentional. So an argument simply from hardship cannot succeed. Nor, however, should an argument simply from economic policy succeed – for example that it is consonant with the intent of the Order that as large an area as possible should be taken in order to depress the local reference rent level for better-off areas and so limit the housing benefit bill. Mr Fetherstonhaugh rightly disavows any such construction: he accepts that the comment of Lord Bingham MR in Ex parte Gibson (above) that the benefit assessment procedure is not designed to produce homelessness is as true of the amended Order as it was of the earlier version. Both counsel accordingly have concentrated their submissions on making sense of the words on the page.

11 Although both counsel start from the proposition that it is an ordinary English word, "locality" as used here, while certainly not a term of legal art, necessarily has a meaning, or a range of meanings, geared to its context and purpose. The context, Mr Luba submits, includes the use of the same word in the three preceding paragraphs to denote a plainly more restricted area than has been adopted for paragraph 4. While paragraphs 1 to 3 do not use the word "locality" to mean some defined geographical or administrative area, in all three places it clearly requires regard to be had to the near neighbourhood of the subject letting: why else would two of the three paragraphs need to contain fallback provisions introducing some elasticity into the concept of locality in the interests of practicability? But as Mr Fetherstonhaugh points out, wholly different meanings of this very word within a few lines are not unknown - for example as used subsections (1) and (2) respectively of s.70 of the Rent Act 1977 (see Metropolitan Property Holdings Ltd v Finegold [1975] 1 WLR 349, DC). It does not follow, therefore, that the meaning in paragraph 4 is necessarily the same as in the preceding three.

12 To decide whether it is the same or not, and at all events whether it is on any view large enough to encompass the whole of Stockport, it is necessary to consider the policy and objects of this Order in its amended form. We are not concerned here with policy in the sense of what ministers hoped or intended to achieve in financial terms, but with what the amended Order itself (which by s.122(6)(a) of the Housing Act 1996 was subject to negative resolution in Parliament) displays as its essential objective. This, in my judgment, is to limit the housing benefit which is otherwise payable on grounds of reasonable individual need to the median point between the upper and lower ends (excluding exceptional cases) of the local market in dwellings with similar living space (actual or assumed) and in a reasonable state of repair. To this extent, but no more, its purpose is to intervene in the market. It is not to drive people who have had to fall back on housing benefit out of more affluent areas where the benefit rules would otherwise have enabled them to remain and into poorer areas. If that were desired, it would require clear provision – for example by a recasting of paragraph 3, which is designed to avoid subsidising market-priced but excessively comfortable accommodation. It cannot fairly be deduced from the terms of paragraph 4.

13 It follows that it offends the purposes of the Order to take as the relevant locality an area so large that the poorer dwellings in it will inexorably bring the median, and with it the cap, down to a level which drives out or pauperises otherwise eligible housing benefit claimants. The fundamental purpose of the housing benefit scheme is the very opposite: it is to ensure that people who are not under-occupying property and not over-paying rent are not made homeless through genuine inability to pay. This is the context in which the purpose of the local reference rent has to be established. While, as a limiting procedure, it undoubtedly qualifies the basic purpose, it is not designed to negative it. Its objective, in its context, is that a rent should not be subsidised above the median or average level (the two are mathematically the same here) for the locality. That in turn implies a necessary geographical and demographic restraint on what can be legitimately regarded as the locality. Just as the court will intervene if too narrow an area is taken to accommodate the statutory purpose (Metropolitan Property Holdings Ltd v Finegold [1975] 1 WLR 349, DC), so it must intervene if too large an area is taken.

14 As the Secretary of State pointed out in the memorandum referring his proposals to the Social Security Advisory Committee (paragraph 20), "Localities are fluid representations of property markets and can be quite variable in size." In his witness statement Mr Cannon, the rent officer who made the redetermination in Ms Dinsdale's case, explains that

"If a general level for four-room accommodation were required, to restrict researches to just a few streets or a neighbourhood at the heart of the area would not provide the generalised view and would be based on limited evidence…. Hazel Grove…is a semi-suburban area … Residential property is principally semi-detached or terraced houses, mainly in owner-occupation. There is limited evidence of private rented accommodation…"

This one accepts; but it leaves open the question whether an area as large as the metropolitan borough of Stockport, containing as it does twelve discrete named areas, is the only alternative. Mr Luba points out that the Order, which could perfectly well have specified the rent registration area or the local authority area, does not do so; and Mr Fetherstonhaugh accepts that to take, say, Greater Manchester (of which Stockport forms part) as the material locality would be irrational, though he did not find it easy to say why.

15 In my judgment the reason is that it is contrary to the meaning and purposes of the Order and of the statutory scheme of which it forms part to treat an area as large and diverse as Stockport, and even more so Greater Manchester, as the relevant locality for the purposes of setting a local reference rent under paragraph 4 of the first schedule to the Order when an immediate locality capable of furnishing a local reference rent can readily be identified. If locality does not stop here, there is no answer to the question "Where does it stop?"

16 As a matter of construction, accordingly, I would hold that in none of the first four paragraphs of Schedule 1 to the Order as amended does "locality" necessarily refer to a particular geographical or administrative area, and that in all of them it signifies an area no greater than will enable the rent officer reliably to make the specified calculations and judgments. In each case this will depend on the character of the area in which the dwelling is located and on the data available there; but in none of the four paragraphs, for the reasons I have given, can it lawfully be an area as diffuse or as arbitrarily related to the subject dwelling as the administrative borough of Stockport.

17 For this reason the four material decisions must be quashed. Beyond this point, the court should heed what has been said more than once about the importance of letting expert decision-makers such as rent officers form their own view about the precise extent of a locality so long as they stay within the law: see Metropolitan Property Holdings v Finegold (above, 353-4). It will be for the rent officer service to redetermine the local reference rent in each of these four cases in accordance with the judgment of this court."

26. I accept Mr Strachan's submission that " locality" as defined by Sedley LJ cannot simply be read across into the new definition, because he was defining it in a different statutory context.
27. The central argument before me has related to the definition of the word "locality." Determination of what constitutes a "locality" requires consideration against three criteria (a), (b) and (c) in paragraph 4(6) of Schedule 1 of the Order. The first criterion, which defines the minimum number of neighbourhoods as two, sets no maximum or optimum size, but only that minimum size. It expresses no preference that the number of neighbourhoods should exceed that number either at all or by any particular degree, nor does it set out any considerations relating to the scale of the locality in geographic terms.
28. The second criterion requires an analysis of health, education, recreation, personal banking and shopping provision from the point of view of a tenant in the dwelling under consideration, albeit not the particular tenant. That analysis requires that attention is given to both type and standard. It is agreed before me, and I so hold, that " standard" requires consideration of the quality of the facility or service in question. If one considers education for example, " type" will refer to the type of school (e.g., primary, secondary, independent, sixth form college etc) and "standard" will relate to its quality. Mr Strachan, despite his acceptance that "standard" required a qualitative assessment, also submitted that (for example) in terms of education, "standard" meant no more than type, and that it would be a wholly subjective exercise for a rental officer to assess the quality of one school against another. I reject that argument as illogical and unrealistic. It is illogical because it would make the words "and standard" otiose. It is unrealistic because it overlooks what actually occurs. As set out by Ms Fletcher in her evidence for the claimant, Local Education Authorities and the Department of Education now publish data relating to school examination results and performance^[1]. In my judgement, the inclusion of the words " and standard" must have been designed to require a qualitative judgement. The degree of analysis may of course be less substantial, probably much less so, than a prospective parent would carry out.
29. In any event, a service or facility which has no spare capacity is not available in any real sense to a tenant. Even if available, access to services is also relevant under the definition. Ms Fletcher also gives evidence of published data relating to school admissions. As every parent of school age children knows, LEAs publish the selection criteria for admission of children to schools , and maintain information on which schools have places available and which do not, and also whether such places as are available would be available to children living outside the school's defined catchment ^[2]. The local education authority must keep a composite prospectus for all maintained schools in its area^[3].
30. I accept that for the purposes of a rent officer's determination, the degree to which s/he will be able to devote resources to assessing these matters relating to education will be limited, but I do not accept Mr Strachan's submission that s/he is entitled to leave aside any such exercise. For example, an hour or so spent considering the published material and in discussion with an LEA officer once a year would enable information to be provided which could be used to inform the choice of locality for determinations over the next 12 months.
31. Similar considerations apply to health and recreation facilities. All such information is readily available, whether in health authority or local planning authority material, in written form or often on the internet. The NHS, for example, keeps information on which GP practices have spare capacity for new patients. The local planning authority will have publicly accessible information on sports facilities and recreational provision, both in descriptive terms, and expressed in terms of areas per capita in the various wards in its area. Evidence on services and retail provision is also readily available from the local planning authority. All of these matters are straightforward topics where there is ample information readily available. I am more than a little surprised that Mr Strachan's instructions drove him to submit that such information is essentially subjective.
32. I reject the idea that such investigations are in any sense unusual or burdensome, if carried out at the degree required for the definition of "locality". These are matters often considered by valuers, or by housebuilders and other developers or their advisers, or by local authority planning officers. A broad brush approach may well suffice, provided that is that the criteria are addressed. But most importantly, the criterion in the Order is explicit that a judgement must be formed on such issues when considering how a locality is to be determined.
33. Another issue which arose on the second criterion relates to the relevance of facilities and services which are designed to serve a large area, including the areas falling within the potential "locality" of Sheffield. Particular reference was made to the Peak District National Park, the Meadowhall regional shopping centre, (which lies next to the M 1 at Tinsley to the ENE of the City Centre) the City Centre retail provision and to hospitals with a sub-regional function, and in one case a national role. I accept that they are to be considered when the criterion requires that regard is to be had to the existence of services and facilities, and to their accessibility. But in my judgement one must be careful not to do so in a way which distorts the meaning of the test. A regional shopping centre and a city centre (and especially so as such centres deal largely in comparison, as opposed to convenience, goods) have a catchment spreading throughout the region. They are visited less often than the stores selling convenience goods, which cater for daily or weekly needs. Thus Meadowhall and the City Centre shops have a catchment spreading into the N Midlands, into Humberside and across the whole of S Yorkshire. Neither is a substitute for local shopping in places such as convenience supermarkets/superstores or local shopping parades. The Peak District National Park covers parts of 6 counties (South Yorkshire, West Yorkshire, Greater Manchester, Cheshire, Staffordshire and Derbyshire) which include 5 metropolitan boroughs (Sheffield, Barnsley, Kirklees, Oldham and Tameside), and a number of district councils and is an amenity of national significance. Its existence is not a substitute for local or district recreational facilities. It is no comfort to the person who wants to take a stroll in a local park or go to a bowling green that he can travel further and enjoy the very different amenities of large tracts of wide open countryside. The same principle will apply to the large and/or important hospitals on the one hand and the local primary health facilities on the other.
34. The third criterion requires that the locality contain a range of types of property and tenancies. It is to be noted that it does not set any tests relating to the level of rents charged, nor of differences in value. Two 3 bedroom villas built in 1930 in different neighbourhoods may thus be of the same type, and the nature of the tenancy the same, but the criterion does not envisage any examination of the rent which is charged when considering how the locality is to be defined. Nor does the criterion set any tests for the number of rental transactions which are to be available for a locality to be identified. Indeed given the absence of any economic or valuation criterion, that omission is logical. Given certain submissions made by the Rent Service, that is an important omission.
35. While the definition sets a minimum size for a " locality" it sets no other tests which describe size as such. What happens if the Rent Service apply the tests properly and find that

(a) Case A: combining 8 neighbourhoods provides a locality which meets the definition

(b) Case B: combining 4 neighbourhoods provides a locality which meets the definition equally well

(c) Case C: combining 8 neighbourhoods meets the definition, but less well than combining 4 ?

36. The Order gives no assistance at all on that issue. It will be noted from Sadaat at paragraphs 14 and 15 of his judgement that it is a question which troubled Sedley LJ. I incline, without deciding the issue, to the view that in the comparison between A and B, it is a choice for the officer's reasoned and reasonable judgement, applying the criteria, but excluding any considerations of the effect of the choice upwards or downwards on the LRR. In the comparison between B and C, I find myself unable to go even that far.
37. But I do not have to go that far. The question for me is whether the choice of Sheffield as the locality under paragraph 4 was proper. In doing so, I remind myself that it is not for the court to substitute its own view for a properly made professional judgement by the Rent Officer. The Court's task is to check whether, in reaching that judgement he applied the proper criteria to the relevant information, but not to criticise his judgements if he did so.
38. I see nothing wrong with the Rent Service forming a judgement, provided that it is based on the statutory criteria, on what constitutes a "neighbourhood" and which such neighbourhoods go to make up a "locality," and that then being used by an officer dealing with determinations, provided always that s/he applies his/her mind to whether the choice holds good. In the real world, a proper decision based on the criteria that the "locality" consists of (say) "neighbourhoods" A B C D E and F would be taken in a way which is applied across the relevant neighbourhoods, so as to achieve consistency in decision making.
39. I come now to how the Rent Service have approached the issue. As noted above, it has elected to put various internal circulars before me, as well as the statements of the relevant Minister to the House.
40. The starting point is what happened in response to the Saadat case. At that time the regulations used " locality" where the Order now uses " vicinity" "neighbourhood" and " locality" . A challenge was brought before Maurice Kay J in relation to dwellings in different parts of Stockport, and the case was argued on the basis that the choice of the whole of Stockport as a "locality" for the purposes of assessing the LRR was to choose an area that was too diffuse. While awaiting the outcome of the appeal against the dismissal of that claim, an internal circular GA/18a/2001 was distributed on 25^th June 2001. It referred to an expected amendment to the Functions Order.

1 Rent Service DMC-14-2001 explained that the anticipated changes to the Functions Order had been deferred pending the requirement to consult on two of the changes and the appeal to the High Court ruling in the Dinsdale case. The proposed changes to the Functions Order were intended to clarify existing guidance on localities, to build upon current good practice and existing case law. The intention of the revised Order was to clarify rather than to change current valuation practice.

2 Area managers have continued to review localities and to prepare proposals , which confirm or amend localities in line with the current good practice. The reviews were based on accepted good practice

3 The Operations Support Committee has evaluated review work undertaken by Area managers and Valuation teams. We still need to implement any necessary changes to current localities following the recent review. Detailed guidance will be issued to individual managers by Regional Directors over the coming weeks. No changes to current localities should be made without the agreement of your Regional Director . (My italics)

4 The Dinsdale case" (i.e. the first instance decision of Maurice Kay J) "confirmed that it was possible to use more than one locality to make the full range of Housing Benefit Determinations. It also confirmed that it is possible for " locality" to have more than one meaning in the same Order, and that the task of giving a meaning to the term " locality" falls upon the Rent Service. In other words, the Rent Service has discretion- to be exercised reasonably and with the use of expertise.

GOOD PRACTICE

5 The purpose of this good practice note is to:

(a) Issue guidance on which description of locality should be used for individual Housing Benefit determinations

(b) Assist managers and valuation teams in ensuring that they adopt a consistent approach to identifying localities

(c) Ensure that we are following current recognised good practice

(d) Ensure that we implement DSS Housing Benefit policy and legislation consistently

LOCALITY

6 The following paragraphs contain good practice advice that will

Ensure consistency of valuation practice

Enable valuation teams to give clear explanations about Housing Benefit determinations

7 Rent Officers , working in valuation teams, use their expertise and discretion to make valuation determinations. Locality can and does have a number of meanings- the following explanations should assist them in that process

Vicinity………

Neighbourhood…….

Locality: meaning a broad geographical area comprising a number of neighbourhoods with a mix of property types and tenure, where a tenant could, as an alternative to the dwelling in question, reasonably be expected to live and benefit from similar amenities.(My italics)

8 These terms should be used when making the following valuations

1. …………………………

2. LRR locality

9 It has long been recognised that LRR valuations cannot be done on a case by case basis because of the volume of cases that need to be determined and that a number of dwellings will be in the same locality and therefore have the same LRR. For practical purposes, the geographical definition of a particular locality can best be identified using a series or group of postcodes. When Rent Officers are defining LRR….localities they need to ensure that they define locality in the broadest sense rather than looking at a vicinity or a neighbourhood.

10 ………………………………………………..

11 LRR values must reflect the market and they need to be reviewed on a regular basis (quarterly or monthly depending on the particular market for that type and size of accommodation)….

12 Localities will either be core or non-core areas, which need to be determined locally.

13 …………….."

(summary)The "Core Area" was to cover a significant proportion of the geographical area where there are dense areas of population. The LRR was to be calculated on evidence from that core area.

(summary)The " non-core area" could be addressed in the light of market evidence which would come from outside it. Non core areas would include areas on the border of an adjoining core area, areas where the rental market was significantly different from the core area, and areas with a limited supply of market evidence.

41. It must be noted that this internal circular gave a definition of locality to use for LRR purposes. The submissions of counsel for the Rent Service in the Dinsdale/Sadaat litigation do not appear to reflect that definition; for the terms of those submissions, see the judgement of Maurice Kay J at paragraph 17 and Sedley LJ at paragraph 11. Before me the Rent Service have argued that the internal circular of June 2001 represents practice at that time.
42. On 25^th October 2001, the Court of Appeal allowed the appeal of the claimants in that litigation. The Order was laid before Parliament. In doing so, the Minister described the Order as " restoring the status quo before the court case but with greater clarity" (Hansard Column 12). However it will be observed that, in truth, the approach before the Order was made had not applied the same criteria as now appeared in the Order. In particular the old approach contained two aspects absent from the new approach, namely

(a) the core/non core area distinctions. In my judgement the use of an LRR for the non core area which is defined by rents achieved outside it is impossible to reconcile with the statutory derivation of the formula.

(b) the concept of the " broad geographical area". Those words do not appear in the definition in the Order as made. As will appear in due course, the Rent Service has interpreted that term as implying that the number is likely to be significantly greater than two. There is no such test under the amended Order. If it means simply that there are to be a number of neighbourhoods greater than one, the words would add nothing to the Order definition. In my judgement they are in the internal circular for a purpose, namely the Rent Service's objective that the number of defined "localities" should be kept down.

43. The previous Rent Service approach did not include certain matters which are included in the new test

(a) the amenities in the later Order are to be both " of the same type" and of " similar standard" as opposed to merely being " similar" in the internal circular;

(b) the new provision contained a test relating to distance of travel by public or private transport, absent from the test in the internal circular.

44. In fact, each of the two redeterminations in this case cites the same now superseded definition of locality as that italicised above. Mr Strachan tried to dismiss the use of the word " meaning" in the redeterminations as describing the result of the application of the definition. I reject that submission, which was an attempt to avoid the plain meaning of the words used by Messrs Shaw and Spedding in the disputed redeterminations.
45. On 14^th December 2001, a further internal circular GA/24/2001 was distributed. It dealt with the effect of the CA decision. It contended that the new Order maintained the status quo (para 2) and

"returns the position on setting local reference rents to the original policy position prior to the Stockport decision. "

It then contended that

" the way we value and carry out determinations remains unchanged"

Paragraph 7 required implementation of localities that had already been agreed in a previous review.

" Where local management is no longer comfortable with the agreed localities, or the rental market has changed since the initial review , a further review should take place before the localities are changed."

46. It is obvious from the document that the determination of localities was a matter for management and not individual determinations on individual claims. Under paragraph 7, staff were instructed, inter alia, that

(a) "Current practice will remain unchanged……..

(b) Area managers should continue to implement the new localities following the recent review(my italics) if they have not already done so. Our legal advice is that we are able to use the core and non-core localities that were agreed prior to the amended Order, and those agreed localities should be in use. Circular GA 18a/2001 remains in place as standard guidance."

(c) (summary) Rent Officers should continue to use a " broad area" for LRR.

47. I observe also that the internal circular was seeking to adjust "localities" by reference to changes in the level of rent. That is in my judgement not a relevant consideration under any of the criteria.
48. At paragraph 30, it repeated the definition in GA18a/2001

"meaning a broad geographical area comprising a number of neighbourhoods with a mix of property types and tenure, where a tenant could, as an alternative to the dwelling in question, reasonably be expected to live and benefit from similar amenities."(My italics)

It then continued at paragraph 32

" Again while this definition works in practice, there are a number of issues when you try to convert the best practice statement in to the Order. For example we cannot use the phase (sic) a " broad geographical area" as a Judge will not be able to test this. Neither can we use the term "amenity" which has a very specific meaning under a separate piece of legislation relating specifically to hospitals " (my italics)

49. Having recited the terms of the new Order , it went on

"This again confirms existing practice and continues to mean that

A locality is made up of a number of rental markets

A locality has got to be at least as large as two adjoining neighbourhoods, and will usually be more

"Two or more" is not a limiting or arithmetic factor- it is purely a direction to use more than one neighbourhood. For example, a locality, which is made up of a city and its immediate area, could easily comprise 20 to 30 neighbourhoods"

At paragraph 35 , it referred to the concept of " a broad locality" for LRRs, and relied on 30 minutes as being a reasonable travelling time to shops, or an hour to a hospital. At paragraph 37 it cited "similar facilities and services" and referred to the " same type and similar standard" test (albeit that it used " similar type and standard" rather than " same type and similar standard" as the Order does)

50. The reference to " a number of rental markets" is worthy of note. No such criterion appears in the Order, and that could play no part in the process of determining which neighbourhoods made up the relevant "locality." A locality, if properly defined in accordance with the Order, may or may not have a number of rental markets. This internal circular is in error in informing rent officers that, in effect, a locality which does not contain a number of rental markets will have been wrongly defined.
51. Later Advice , distributed on the Rent Service intranet, and extant at the time of these determinations, again sought to define "locality." It defined it as "two or more neighbourhoods", and then sought to summarise criterion 4(6)(b). In doing so, it erroneously summarised the " same type and similar standard" test as "similar facilities".

It also advised Rent Officers to " look at a broad locality" to obtain the LRR evidence. It sought to justify that by reference to the criteria (which it now recited accurately) . However it now referred to a criterion entirely absent from the Order

" It is essential that the locality is large enough to provide a sufficient range of evidence to provide an effective LRR, without being so large as to be unrealistic"(my italics)

It then asked

" How many neighbourhoods make up a locality ?"

It stated that it could only be defined locally,

"but the criteria will be the guidance here, and (my italics) the need to have wide enough range of rents to make the LRR operate reasonably. Reasonable operation of the LRR process can be judged on whether the LRR is at or about the mid-point of a definable range of market evidence, within an area satisfying the LRR definition in the Order. If the effect of the LRR is that it could be too harsh on, or too generous to, a majority of tenants, it is probably based on the wrong number of neighbourhoods "

One there again sees the addition of a test which is entirely absent from the definition in the Order.

It also considered that all or part of a large town or city could make up a locality. In that context it is apt to revisit the passage noted earlier that

"Two or more" is not a limiting or arithmetic factor- it is purely a direction to use more than one neighbourhood. For example, a locality, which is made up of a city and its immediate area, could easily comprise 20 to 30 neighbourhoods"

In my judgement that passage shows that the Rent Service still saw the potential localities as large. An area consisting of a city and an additional area and totalling 20-30 neighbourhoods would cover a very substantial area indeed. By comparison, the " Sheffield" locality contains 13 neighbourhoods. I question in the strongest terms whether the author of that passage had ever actually considered how application of the criteria would produce a locality of that very substantial size.

52. I have noted the use by the Rent Service of the phrase "broad geographical area" in the statement "meaning a broad geographical area comprising a number of neighbourhoods with a mix of property types and tenure, where a tenant could, as an alternative to the dwelling in question, reasonably be expected to live and benefit from similar amenities."

As I have already found, that misinterprets the criteria. I also consider that the concept, as used by the Rent Service is confused and confusing. I reach those judgements because

a. The word "broad" must mean something. It defines the " area" in this statement by the Rent Service. It seems to me to have been added to imply that, when choosing the number of neighbourhoods of two or more, a larger number of neighbourhoods is preferred to a smaller one. If all that was intended was to set out the test from the Order without modification, the word would be otiose;

b. I have thought long and hard what is meant, if anything, by the word "geographical." As we are dealing here with areas on the ground, any area is " geographical" in that sense. It follows that if the word is being used properly, "geographical" adds nothing at all. However in the context in which the Rent Service has written this passage, I find that it was an attempt to introduce the concept of the " area" being broad in a physical sense, or in other words to strengthen the implication that a locality which was larger rather than smaller was preferred;

c. The point about the criteria in the Order is that they do not identify any preferred size in physical terms, but set tests for the definition of locality.

53. Those internal documents were put before me by the Rent Service to show

a. what their practice was, before Saadat, which practice the Rent Service contends was then embodied in the amended Order;

b. Their conduct of the redeterminations by Messrs Shaw and Spedding accorded with internal guidance and circulars.

54. I have cited the internal documents at length for five reasons:-

a. they demonstrate that the Rent Service perceived the Order as making no difference to its past approach, whereas the Order contained key differences both by way of addition and removal of criteria;

b. the Rent Service wrongly saw the test of locality as involving an assessment of the number of rental markets (as opposed to the variety of types of tenancy and property, which could of course occur within one market);

c. the Rent Service wrongly saw the existence of market evidence as relevant to the definition of a locality

d. the Rent Service wrongly saw the results of the LRR mathematical exercise as relevant to how one determined " locality"

e. Mr Strachan started his submissions by contending that the Rent Service accepted that the definition was new, and that it was incumbent on the Rent Service to review its hitherto defined localities in light of the criteria. When pressed he stated, on instructions, that the definition of the locality in the Sheffield Area had been assessed in the light of the new Order. It had, he said, been a framework assessment. In my judgement that reflects the clear intention of the internal guidance that Area Managers keep the matter under review. However when pressed to identify the evidence which showed how that was approached, Mr Strachan then relied on the evidence of Mr Spedding as to how he made the redetermination in May 2005. In my judgement it is quite clear, and I so find, that a definition of the locality used in the LRR determinations existed before either of the two redeterminations.

55. Unhappily, the evidence for the Rent Service gives no information about what had happened on those reviews, and simply relied on Mr Spedding's evidence of what he did on the second redetermination. Mr Strachan sought to give the impression that it had been considered afresh by him. In my judgement it was incumbent on the Rent Service to have disclosed the material relating to the process by which the " locality" in this case was defined in the way it was. However, while the witness evidence was lacking in that regard. There was some documentary evidence of how the Rent Service had approached the "locality" issue, which I address below.

THE EFFECT OF THE LRR DETERMINATIONS IN THE SHEFFIELD CONTEXT

56. It is a common feature of many industrial cities in this country that they were developed in such a way that the areas of greater affluence and larger dwellings were concentrated in the south and west so that the manufacturing areas were usually downwind. In Sheffield's case the combination of the rugged, beautiful but inhospitable millstone edges and moors to the west and the existence of the broad Don valley to the east pushed manufacturing to the eastern sides in any event. The attractive ridges and river valleys of western Sheffield became the residential areas more favoured by the affluent. Those matters are also evident from a cursory examination of the OS map.
57. The evidence before me (including some very informative coloured maps produced by the Rent Service to me which show income per household by postal sector) shows with clarity that rental values in the east tend to be much lower than in more favoured locations to the west and south. In the Central part of Sheffield, where the Claimant lives, the move towards City Centre living by some has led to higher rents as well.
58. The effect of the choice of Sheffield as the " locality" has led to the inclusion of lower rental values from the east, which potentially affect the " L" part of the formula. Ms Fletcher's evidence shows that the very same areas which produce the lower rental levels contain the schools which are of a lower standard in terms of performance, have health facilities of a lower standard and so on. Indeed Mr Strachan argued vigorously that if those areas were not treated as part of the same locality as the more affluent areas, then the LRR as defined for those areas would fall, and cause tenants within them hardship. I add for completeness that that submission was not based on any actual rents that were identified to me. However I accept the mathematical principle that a lower H figure must depress the LRR if the L figure remains unchanged.
59. The definition of the locality as Sheffield has led to some obvious anomalies. To a judge living in the Greater Manchester conurbation a few miles west of the National Park and familiar with the routes over the Pennines, the notion in the Rent Service evidence that one could get from areas west of Stocksbridge to the centre of Sheffield in about half an hour was more than a touch optimistic, and one noted that areas of Bleaklow, the Derwent Valley moors and the Snake Pass lying in Derbyshire had been included in " Sheffield" in error. That was remedied by a subsequent plan produced to me, as were the mistakes made by Mr Spedding in the identification of roads over the Pennines. The A 57 (Snake Pass) had been called the A 67, and the main trunk route over the Pennines which passes Stocksbridge (A 628/A 616) en route between Greater Manchester and Sheffield was never referred to at all. However I am satisfied that those matters had no practical effect on the LRRs in question.

THE REDETERMINATIONS, AND THE LOCALITY USED FOR LRR PURPOSES

60. The first redetermination challenged before me was made by Mr Shaw. I received no evidence from Mr Shaw about how he made his redetermination, which is unfortunate. One must do one's best from such material as exists.
61. In his redetermination Mr Shaw, as noted above, stated that within the valuation the "meaning" of "locality" was

" A broad geographical area made up of a number of neighbourhoods with a mix of property types and tenure where a tenant could , as an alternative to the property in question, reasonably be expected to live and benefit from similar amenities"

The document also stated that

" the locality used for the Local Reference Rent was Sheffield"

It will be noted that Mr Shaw used the definition which had been used internally before the Order was amended, and which differs in the respects already identified from the actual definition.

62. The Rent Service was asked to produce the basis for the judgement that the locality was Sheffield. On the 17^th March 2005, Ms Ann Oldroyd, the "Head of Policy and Legal" at the Rent Service headquarters in London, wrote to Ms Fletcher of the claimant's solicitors on 17^th March 2005. She included this paragraph

" I attach a brief description of the Sheffield locality which deals with the " heads" in the definition in the Order…….the Rent Service takes the view that this locality complies with the statutory definition of locality."

Mr Strachan insisted in argument that that description amounted to the assessment required under the Order. I reject his submission made after my draft judgement was circulated to the parties' counsel that he did not do so. It is quite plain from the terms of her letter that Ms Oldroyd was holding out that document as the place in which the Rent Service had addressed the statutory criteria.

63. That document (Annex B to that letter) is certainly a description of some aspects of the Sheffield area, including , for example, passages extolling its virtues. Thus one finds :

" For 700 years Sheffield has been at the forefront of world progress in metals technology. " Made in Sheffield" became a brand recognised worldwide for innovation and quality in cutlery and toolmaking."

It refers to a hospital as one with

" a growing international reputation"

and refers to a women's hospital as

" state of the art".

It tells the reader that the University was

"Sunday Times University of the Year 2001/2 and will be celebrating its 100^th year in May…" .

However while it is an interesting descriptive piece which would fit happily as a piece of public relations on a civic website, what it emphatically is not is an assessment under the criteria, or even an attempt at one.

64. That can be seen with clarity from the way in which the document deals with education. Having noted the existence of the two Universities in Sheffield, and observed that

"Sheffield College is the largest further education college in Europe"

It then deals with schools as follows:

"Primary and Secondary schools both private and local authority run are spread throughout the Locality (sic). There are approx 13 Nursery Schools, 140 Primary Schools, and 27 Secondary Schools within the City with a sixth form college, 15 special schools, 5 outdoor centres and numerous other educational establishments(Source: the Sheffield Education Directory).The catchment area for the best performing schools acts as a key factor when people are selecting where to live – typically popular secondary schools such as High Storrs and Silverdale are in the Ecclesall ward and Hallam Constituency (www.sheffield.gov.uk)"

65. That passage (which I have cited in full) demonstrates neatly why this is not an assessment of the kind demanded by the Order. While it deals with the type of schools within the area under consideration, there is no consideration at all of the standards of the schools in question, save for identifying that the best schools affect choices by people on where to live. The two examples chosen both lie within favoured western areas of Sheffield. There is no consideration whatever given to the accessibility of schools of different standards. Such discussion of availability as is provided relates to two schools in western Sheffield, and implies that those living outside their catchments would not have access to them.
66. The passage on Recreation continues the theme of civic pride, but when dealing with local recreational facilities (woodlands, parks and a city farm) gives no assessment of their distribution or assessment of their accessibility from different areas, even in the most rudimentary form.
67. The presence of the M 1 to the east of the city is noted, as is the mainline railway station. Neither is much relevant to accessibility within Sheffield, but rather only to accessibility to and from Sheffield. The Supertram system is described as " serving the city" and off peak journey times by car are given for three journeys. There is no assessment at all of the existence or availability of public transport provision within areas within the " locality" under consideration.
68. Healthcare provision is dealt with in terms of the distribution of facilities. While material is given about the standards of hospitals, none at all is given about the standards of primary care facilities, and there is no assessment of the accessibility of the hospitals from the neighbourhoods within the locality.
69. Shopping is dealt with shortly but adequately. The availability of banks throughout the locality is assessed, albeit briefly.
70. There is another oddity about the document. It stated that Sheffield as a "locality" covered postcode areas S1- s14 inclusive, S 17, S20, S35 and S 36. It then identified something over 60 neighbourhoods. It is now the Rent Service case that that was erroneous, and there are just 13.
71. That document, which was held out by the Rent Service as being an assessment of "locality" under the Order, fails to address the criteria as required by the Order. It was produced by the Rent Service in answer to a specific query from the Claimant's solicitors Irwin Mitchell, who had raised the question of the choice of locality by their letter of 14^th March 2005. It shows that the Rent Service, even at the highest levels, had no proper appreciation of the meaning of the word " locality" in the Order.
72. The Rent Service was asked to reconsider the determination by letter of 21^st March 2005. By this stage the application had been made to the Administrative Court for judicial review of the first redetermination. The Treasury Solicitor now replied on 13^th April 2005, and purported to produce what he called " a further note and relevant maps" . The note was dated 13^th April 2005, and was thus written almost 4 months after the redetermination of 20^th December 2004. That note stated in the first paragraph

" A description of the locality was enclosed as Annex B to the Rent Service's letter of 17^th March to Mr Heffernan's solicitors. This descriptor document address (sic) the various "heads" in the definition".

As I have already found, it failed to do that adequately.

73. Further notes and maps then followed, which were said to "supplement the descriptor document." As conceded by the Rent Service during the hearing before me, the maps were wrongly drawn, and included areas of the national park in Derbyshire. The document dealt with travel times (including the claimed driving time of less than half an hour to Glossop from central Sheffield). It dealt also with types of properties and tenancy types, and material on levels of rent. It gave no further information on health facilities, recreation, education, shopping or transport links.
74. There now followed, on 5^th May 2005, a series of answers by the Rent Service to a series of questions posed by Irwin Mitchell in a letter of 27th April 2005. That response now stated that the locality contained 13 neighbourhoods, and that the list given previously had included smaller areas. It stated that

"Sheffield is classed (my italics) as having 13 'neighbourhoods' as defined in (the Order)".

The locality was delineated on a map and by postcode number. No attempt was made to provide any further assessment pursuant to the Order criteria. Other material was provided about the location of the boundaries, and about the identification of neighbourhoods and rent levels.

75. In my judgement, when the first redetermination was made, the Rent Service officer Mr Shaw did not apply the correct test of locality, because

a. he used a " meaning" of locality in his determination which was inconsistent with that in the Order

b. I must assume that the material made available by the Rent Service in explanation of his decision reflects what he took into account. That material shows that neither Mr Shaw nor the Rent Service applied the correct criteria, and also failed to address important considerations under the criteria.

76. I turn now to the second redetermination in dispute, of 25^th May 2005. In it, Mr Spedding described the locality as Sheffield using the same postcodes as employed by Mr Shaw. As noted above, he gave a meaning for " locality" which is precisely the same as Mr Shaw, and like Mr Shaw's, one which does not follow the definition in the Order and is inconsistent with it. His redetermination contained no assessment at all of any of the issues raised by the criteria.
77. Mr Spedding's evidence contends that he addressed the criteria. He says that he "had the benefit of the previous determinations and redetermination…………….and other socio-economic information about the area". Having recited the criteria (paragraph 38) he addresses the issue. In my judgement, he does so in a way which does not reveal any proper assessment. He says at paragraph 39

" Access to services of the same type and similar standard throughout Sheffield is broadly the same, and travel times by both private and public transport allow cross-city travel for access to these services and facilities"

That is the entirety of his assessment and analysis of the criteria in sub paragraph (b) in the Order . I cannot accept that that shows that any real analysis has taken place. Rather it is simply a form of words inserted to recognize the relevance of the criterion. Ms Fletcher's evidence, which draws on published objective information, shows that such a bald statement, absent any analysis and justification, is simply inadequate. When developing his evidence in response to the challenge in these proceedings, he simply deals (paragraphs 51- 53) with

a. Travel times (this is the passage where he makes mistakes about the road network)

b. Whether the area has the attributes of good access to

" similar facilities and services over a broad area" ,

while expressly eschewing any assessment on his part of what he calls

" the potential for subjective choice to influence the final decision where to live."

78. In my judgement the starting point for Mr Spedding was the incorrect meaning of locality which he inserted in his redetermination. There is nothing in his evidence which shows the carrying out of the assessment as the Order requires. I am confirmed in that view by the stout resistance put up by Mr Strachan to the idea that the Rent Service officer was required to consider "standard" as a qualitative question in any realistic sense.

It is also quite clear from the evidence, and I so find, that the "locality" had been defined before Mr Spedding made his redetermination. That that is the practice is confirmed by Mr Evelegh's evidence for the Rent Service at paragraph 51. It also coincides with the advice given in internal circulars that localities are defined at Area or Regional level within the Service, and not by individual officers when making a determination.

79. In the absence of any evidence from him that he declined to follow it, I must assume that Mr Spedding also took on board the erroneous and misleading advice in the internal circulars on the meaning of " locality.."
80. I therefore conclude that Mr Spedding

a. used a meaning of "locality" in his determination which was inconsistent with that in the Order

b. relied on the inadequate work done before he made his redetermination

c. when making his redetermination, failed to make any assessment of the matters required under subparagraph 4(b) of the Order.

81. I express no view at all on whether a Rent Officer might properly conclude that Sheffield is a " locality" for the purposes of the Order. All that I do say is that such a conclusion must be reached properly, and not in the very unsatisfactory way in which this one was.
82. It is also necessary for the Rent Service, and in particular their legal advisers , to realise that the Order was not merely a form of words which can be assumed to have restored earlier practice. Whether it does so or not is a matter of interpretation and not mere assumption. Its advice to its officers on the meaning of the new Order contained serious errors of interpretation.
83. Mr Strachan has urged on me that the effect of the identification of a smaller locality may disadvantage poorer tenants, and that that is relevant to the choice of " locality.". That is because, he says, a lower H figure may drive the LRR figure down. If areas with lower H figures are excluded, then the LRR may fall. Suppose that in the currently defined "Sheffield" locality one had 7 neighbourhoods A-G, and that rental levels rise from the lowest in A to the highest in G. If one excised E-G from the "locality", those affected in A by the change in the LRR would not be those who were in the cheapest accommodation. Those affected are those currently in premises with rents at or below the median point between the L (lowest) ( which will lie in A) and the H (highest) (which will lie in G but will in future lie in D ). In my judgement his argument is irrelevant for two reasons:-

a. the matters he points to are consequences of the way in which the Order is written. The criteria do not allow for any such considerations to be taken in to account.

b. the concept that inclusion of different L or H figures will affect the outcome of the statutory formula is implicit in the formula. It follows that the Order anticipates that judgements about what is or is not included in a "locality" must affect the level of LRR applicable to those living within it, or living in areas considered for inclusion but then rejected. It follows that an erroneous application of the criteria will affect the LRR. I cannot regard this fact (that LRRs may alter) to be an argument of any weight when considering the interpretation and application of the definition of " locality."

EFFECT OF USE OF INCORRECT DEFINITION OF LOCALITY

84. The evidence of Ms Fletcher shows that, had the correct definition been applied, there are real questions about whether all of the chosen locality would have been included within that in which Mr Heffernan's flat lies. The Rent Service also produced evidence to show that different combinations of "neighbourhoods" altered the LRR, in some cases downwards.
85. It is quite impossible for me to determine whether the locality, properly defined, would have the same boundaries, and if not where they would fall. I say only that Ms Fletcher's evidence raises much more than a possibility that the " locality" is too widely drawn, and could exclude some areas which include those where the rental levels are lower.
86. In answer to the Claimant's evidence, the Rent Service produced some exercises to show what the LRR would be if the locality were drawn by reference to radii centred on the premises in question. I place no weight on that, as they in no sense reflect " localities" drawn by reference to the statutory definitions.
87. I also reject the submission of the Rent Service that , because Mr Heffernan's rent was at the high end of the scale, therefore he had suffered no prejudice, and I should exercise my discretion not to grant relief. If the effect of a proper definition of "locality" raises the level of L by the exclusion of a neighbourhood or neighbourhoods, then the relevant LRR would rise. It follows that he has potentially suffered very real prejudice from the Rent Service's failures to apply the criteria properly. I have considered whether there is a real possibility on reconsideration that the Rent Service might reach a different conclusion (see Bolton MBC v SSE (1990) 61 P&CR 343 per Glidewell LJ).In my judgement such a possibility exists.

EXCLUSION OF NON-TRANSACTIONAL EVIDENCE

88. Mr Burton's second ground was to complain that, in identifying levels of rent to be used for the purposes of the LRR calculation, the Rent Service had excluded from consideration levels of rent at the top end of the spectrum on the basis that they were not based on actual transactions. Mr Burton submitted that it was wrong in principle to exclude relevant evidence.
89. The Rent Service evidence gave reasons for doing so at paragraph 41 of Mr Spedding's evidence. He regarded some rents at the top end as " exceptionally high" for the purposes of the LRR calculation (where H excludes " an exceptionally high rent.") At first I had thought that Mr Spedding was regarding the level of a rent , as opposed to the frequency of that level within the range of rental levels , to be the test of whether it was exceptional for the purposes of the definition. Had he done so, I would have held the approach to be misconceived. However when one reads paragraph 41 more carefully, what Mr Spedding was actually doing was setting out reasons based on circumstances why the particular rentals involved are exceptional.
90. In my judgement Mr Spedding has shown that the exclusion of certain higher rents was a matter for the proper exercise of his judgement.

IRRELEVANT MATTERS

91. Mr Heffernan is disabled. While that is a matter for sympathy, the existence or otherwise of disability or other personal circumstances is a matter outwith the statutory criteria.
92. Some discussion took place before me on the choice of " neighbourhoods" in Sheffield. No aspect of that debate affects the process of the setting of the LRR in this case.

POST HEARING SUBMISSIONS

93. I circulated this judgement in draft to Counsel for corrections of typing errors and grammatical infelicities. Mr Strachan has sought to persuade me that my understanding and interpretation of his submissions at paragraphs 28, 30, 31, 54(e) and 78 of this judgement, are incorrect. I do not accept that I have misunderstood his submissions, or misinterpreted them.

CONCLUSIONS

94. I therefore conclude that

a. The LRR was fixed unlawfully, as the Rent Service

i. Failed to determine the extent of the locality in the manner required by paragraph 4 of the First Schedule of Rent Officers (Housing Benefits Functions) Order 1997 S.I. 1997/1984, as amended by the Rent Officers (Housing Benefits Functions) (Amendment) Order 2001 S.I. 2001/3561;

ii. Took into account immaterial considerations;

iii. The LRR could be differently calculated if the determination of what is the relevant "locality" were properly carried out as required by paragraph 4;

b. The decision to treat certain rental levels as " exceptionally high" is not capable of challenge.

95. I therefore quash the two housing benefit redeterminations made by the Defendant Rent Service on 20^th December 2004 and 25^th May 2005.
96. I make the Order in the terms in the accompanying Order. I have also considered applications relating to costs and permission to appeal, which appear in a separate judgement, appended hereto.
JUDGEMENT (approved by the Court) (ON ISSUES OF COSTS AND PERMISSION TO APPEAL

JUDGE GILBART QC:

1. At the conclusion of the hearing I reserved judgement, and indicated that I would provide my draft judgement to Counsel before handing it down. I invited written submissions on issues of costs and on any applications for permission to appeal. Both Mr Strachan and Mr Burton have been good enough to do so, for which I am grateful.

Costs

2. Mr Burton seeks all the claimant's costs. Mr Strachan contends that as Mr Burton failed on Ground 2, and did not win on all of his points on Ground 1, that therefore the claimant's costs should be restricted to 50%.

3. It is correct to say that a significant part of the evidence gathered before me has been directed to Ground 2. However at the hearing it was very plain that the fundamental dispute related to the definition of " locality" in Ground 1.

4. In the exercise of my discretion under Part 44.3 of the CPR, it is my judgement that the Claimant should receive most but not all of his costs. Bearing in mind the matters noted at paragraphs 2 and 3, the proper order is that the Defendant should be ordered to pay 80% of the Claimant's costs. As the claim is publicly funded, I have also ordered detailed assessment in default of agreement.

Permission to appeal

5. Mr Strachan has rightly reminded me that pursuant to CPR 52.3 (6), permission may be given where either:

a. The Court considers that the appeal would have a real prospect of success; or

b. There is some other compelling reason why the appeal should be heard.

6. In a very lengthy submission, Mr Strachan puts his case thus:

a. The interpretation of the Order is a matter of public importance

b. I am wrong in my interpretation of the criteria relating to " type" and "standard"

c. The Rent Service was correct to look at levels of rent as being relevant to the determination of " locality";

d. I am wrong to consider the effect of the internal circulars and guidance out before me by the Rent Service;

e. The Rent Service accepts that the Order did change the practice as it applied before Sadaat;

f. The " descriptor " document was not a " final determination of a locality in each case" and that the rent officers made subsequent case by case judgements;

g. The Rent Service did not use the LRR results as a cross check of the choice of " locality;"

h. The Rent Service is not to be expected to make assessments in writing under the criteria;

i. In determining what amounts to " locality," the Rent Service is entitled to consider what effect the choice would have on the LRR;

j. The Rent Service rejects adverse inferences being drawn against it;

k. Alternatively, there is a real prospect of persuading the Court of Appeal that the Rent Service was not in error.

7. I reject Mr Strachan's submission for these reasons:-

a. The reasons for the judgement against the Rent Service turn on the proper interpretation of the Order. Its interpretation is very straightforward indeed. What has caused the confusion has been the Rent Service's misinterpretation of the Order in successive internal circulars within that Service. Those circulars were adduced in evidence by the Rent Service to show that Messrs Shaw and Spedding had approached the redeterminations properly and in accordance with internal advice. What that evidence actually demonstrated, when properly read and considered, was that the Rent Service had not interpreted the Order properly.

b. I consider that there is no real prospect of the Rent Service persuading the Court of Appeal that it is permissible to import additional non-statutory criteria in accretion to, and most importantly in modification of, clear and unambiguous statutory criteria.

c. I have made findings about the "descriptor document" and about the degree of Mr Spedding's subsequent assessment. There was no evidence from Mr Shaw as to his assessment. So far as the question of Mr Spedding's assessment is concerned, I accept Mr Burton's submission that

"However the Defendant was and is unable to identify any evidence of any actual consideration of standards in the Sheffield locality beyond the single sentence of Mr Spedding [pg 39]. The Judgement merely finds that level of assessment insufficient and does not dictate beyond that finding what intensity of assessment is required. To submit, as the Defendant must do, that the Order only requires an assessment as limited as in this case is simply untenable. This is illustrated by the Defendant's submission that anything further would essentially be an exercise in subjective assessment and therefore beyond the scope of the Order. This is illogical. Mr Spedding's comment that the facilities are "broadly" the same is no less subjective in that it is the expression of an opinion. The problem is the cursory manner in which he reached that opinion"

d. For completeness, I would add that the claim by the Rent Service in those submission by Mr Strachan that it accepts that the Order altered previous practice is very hard indeed to reconcile with its internal guidance, as noted in my judgement. I also accept Mr Burton's submission that

"the Defendant in its circulars recognised that the Court of Appeal had approved the use of the use of different sized areas for the locality when making the different determinations under the order [p461 pg 11]. The reference therefore to "returns the position on setting local reference rents" [p460 pg3] refers to the manner in which the locality is determined for the LRR and not the practice of distinguishing between "vicinity", "neighbourhood" and a wider "locality." "

e. If the interpretation of the Order was anything other than straightforward, I might have accepted the argument about there being a public interest reason for granting permission. It is in fact very straightforward. However in truth the real reason for the position in which the Rent Service finds itself is that it wrongly set out to treat the Order as effecting no change from its previous approach, whereas it had patently made real changes. The Rent Service has also elected to use a number of non-statutory criteria which have the effect of cutting down or modifying those approved by Parliament.

8. Permission to appeal is therefore refused. I do not consider that either test for the granting of permission is met.

Note 1   The statutory provenance for its publication is the Education (School Performance Information) (England) Regulations 2001 (as amended)    [Back]

Note 2   The statutory provenance for its publication the Education (School Information) (England) Regulations 2002, SI 2002/2897 Schedule 2    [Back]

Note 3    ibidem Regulation 8    [Back]