England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
DIVISIONAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		06/11/2008

Lord Justice Dyson:

Introduction

1. In these judicial review proceedings, the claimants challenge the lawfulness of the increase in court fees for public law child care applications and placement order applications made by the Family Proceedings Fees Order 2008, SI 2008/1054 and the Magistrates' Courts Fees Order 2008, SI 2008/1052. Like the parties, I shall refer to these proceedings compendiously as "public law family proceedings".
2. The Fees Orders were made on 7 April 2008 and laid before Parliament (subject to the negative resolution procedure) on 9 April. They came into force on 1 May. They put into effect the Lord Chancellor's prior decision that the principle of "full cost recovery" in setting court fees should be applied to public law family proceedings.
3. The rationale for the Lord Chancellor's decision was his wish to fix the fees at a level which reflects the true cost to Her Majesty's Courts Services ("HMCS") in place of the previous level which was heavily subsidised. At first sight, the effect of the Fees Orders is truly striking. They raised the fees for public law child care applications from £150 to £4825 and the fees for placement order applications from £100 to £400. The fee of £4825 is payable in stages: £2,225 for issuing an application; £700 for an issues resolution hearing; and £1,900 for a final hearing.
4. The claimants say that the Fees Orders are unlawful on the grounds that they were (i) made without any consultation as to the principle of whether court fees paid in public law family proceedings should be increased to "full-cost" levels; (ii) were irrational; (iii) were made without regard to a relevant consideration and/or under a mistake of fact; (iv) defeated the claimants' substantive legitimate expectation that the increase in fees would be fully funded by Central Government; and (v) had a degree of retrospective effect.
5. The decision to raise the level of court fees has been heavily criticised in many quarters. It has been attacked by members of the judiciary, the Bar Council, the Law Society and the NSPCC. Both of the latter organisations were given permission to intervene in these proceedings. We are grateful to them for their assistance.
6. Applications for care and supervision orders are made under section 31 of the Children Act 1989 ("the 1989 Act"). A court may only make such an order:

"if it is satisfied (a) that the child concerned is suffering, or is likely to suffer, significant harm and (b) that the harm, or likelihood of harm, is attributable to (i) the care given to the child, or likely to be given to him if the order were not made, not being what it would be reasonable to expect a parent to give to him; or (ii) if the child is beyond parental control."

7. The Adoption and Children Act 2002 places various duties on local authorities in relation to adoption. A local authority applies and pays for a placement order in public law care proceedings. A placement order is an order made by the court authorising a local authority to place a child for adoption with any prospective adopters who may be chosen by the local authority.

The History of Court Fees

8. Fees have been charged by civil courts since the modern court system was established in the 19^th century. Shortly after the First World War, the policy became established that fees should cover the cost of the court system, but excluding judicial salaries and pensions and the cost of court buildings. From 1983/84, accommodation costs were included in the expenses to be met from fee income. In 1992, the policy was announced that all costs, including judicial salaries, should be borne by court fees. Since then, the policy of full cost recovery has generally been achieved in civil proceedings. This was not, however, the case with family proceedings (both public and private), where fees remained at levels which did not cover the full cost.
9. The policy of the Lord Chancellor in relation to court fees in public law family proceedings has evolved over time. In May 2004, a consultation paper on changes to civil court fees was published. At para 5.3, the paper stated:

"In contrast to non-family claims, the Lord Chancellor has concluded that for certain types of Family proceedings it would be wrong to set fees purely on the basis of the cost of the service provided by the courts. The Lord Chancellor considers that the issues at stake in Children Act applications, adoptions, and domestic violence applications, warrant an element of public subsidy. This is to ensure that would-be litigants are not deterred from seeking, for example, contact with their children or freedom from physical violence, because they cannot readily pay the full cost of the proceedings."

10. This was followed by a further civil court fees consultation paper published on 2 April 2007 which at para 13 identified as one of its medium-term objectives:

"13. To agree and deliver financial objectives for family business for the 2007 spending review period and beyond. The SR04 66% target was based on achieving 100% cost recovery (net of Remex) for most non-children private law family fees. Different policy considerations may apply to public law care cases, adoption, domestic violence and private law children cases. For example, it is arguable that domestic violence injunctions should not be a fee-charging service at all (because of their urgency and the vulnerability of the applicant)"

11. Para 14.2 of the paper stated that "it was recognised in 1999 that it would be wrong for certain family fees to be set purely on the basis of cost. The "family subsidy", which covers adoption, Children Act and domestic violence cases, enables fees to be set below cost. The subsidy is being reviewed."
12. The policy decision to introduce the principle of full cost recovery in the setting of court fees in public law family proceedings was reflected in the spending settlement for the Ministry of Justice ("MoJ") in the Comprehensive Spending Review 2007 (CSR07). This Review covered the 3 year period 2008-09 to 2010-11 and was published in October 2007. HMCS had calculated that the cost of public law family proceedings not covered by existing fees was £40 million per annum. This was the figure for additional income that was built into the MoJ CSR07 spending settlement. It was also the figure that was reflected in the local authority settlements for England and Wales by means of a block addition to the Formula Grant made to local authorities as a whole. I shall consider later the implications of including the sum of £40 million in the local authority settlements in this way.
13. On 19 December 2007, the MoJ issued a further consultation paper entitled "Public Law Family Fees Consultation Paper" which stated that court fees paid by public bodies in public law family proceedings would be increased to "full cost levels" with effect from April 2008. The paper stated that the proposal was to increase the court fees in child care proceedings from the existing figure of £150 to £4825 (£2,225 for issuing an application, £700 for an issues resolution hearing or pre-review hearing and £1900 for a final hearing). The paper did not seek responses as to the principle of increasing the fees to full cost levels. This was because, as was stated at p 7 of the MoJ Response to the December 2007 consultation paper, "it is not customary for Government to consult on overall financial plans and targets". Nevertheless, the consultation paper did explain the rationale for the decision to make the change. It stated:

"Against this, the general arguments of principle in favour of charging for inter-departmental services are that:

• it promotes the efficient allocation of resources, by providing paying authorities with a greater incentive to use services economically and efficiently; and

• it improves decision-making and accountability by providing greater visibility of the true costs and benefits of the services provided by both the charging and paying authority.

Specifically, HMCS is taking steps to minimise the administrative cost to local authorities of paying magistrates' court fees (not just fees for care proceedings). HMCS is developing a new payment system that should mean local authorities will be able to set up accounts with magistrates' courts allowing them to pay all court fees incurred by single monthly or quarterly payments. This will substantially reduce the administrative cost associated with drawing a cheque in every case.

Social services departments are subject to a clear statutory duty to protect the interests of the children. It would be unlawful for them to avoid taking court proceedings for financial reasons where they considered that to be the appropriate step. Nor, given that the local authority spending settlement reflects the additional pressure, is there any reason to think they would do so. Full-cost court fees will mean, however, that the cost to authorities of court proceedings and alternative social services interventions are set on a comparable basis. This will remove any perverse incentive there may currently be to pursue the former prematurely or unnecessarily when the latter would be more appropriate. This should underpin the revised statutory guidance aimed at encouraging more effective use of pre-application interventions by local authorities.

The move to full-cost fees in April 2008 is timed to coincide with the implementation of reforms designed to make the procedure for care cases speedier and more cost-effective. This provides an opportunity to ensure that the fee-charging structure is aligned with and supports the new procedure."

14. The consultation paper consulted as to the best way of structuring the new policy, for example whether there should be a single fee or a variable fee. Consultees were asked to comment on various options. The closing date for responses was 11 March 2008.
15. An Impact Assessment was issued by the responsible Minister at the MoJ (Bridget Prentice MP) at the same time as the consultation paper. The section headed "Local Authority Impact" included the following:

"The proposed changes will have an impact on local authorities, which pay the fees concerned. The latest local authority spending settlement takes account of this. If the total fees charged under the new structure equal current volumes and costs, the additional cost to local authorities would be about £40 million. This represents about 1% of the £4 billion total budget of social services departments (and a small fraction of one per cent of total local authority spending).

The consultation paper will seek views from local authorities upon whom the increases will fall whether our financial impact assumptions are accurate. If responses indicate legitimate concerns in relation to the timing or the cost we work with DCLG and DCSF to find an acceptable solution before deciding on when they will be implemented.

The new statutory guidance on pre-application interventions and case preparation, and the Public Law Outline, require better preparation of cases by authorities at the outset, but should deliver a speedier and more cost-effective court process.

In so far as the new fees encourage authorities to prepare cases properly and adhere to the Outline, it is likely that more cases will be assessed as suitable for a fast-track approach. This will tend to reduce the total fees paid by authorities relative to the £40 million figure above. However, the extent of this effect is unquantifiable, and likely to be marginal relative to the impact of the Outline generally. Therefore no assumption of such saving is made."

16. On 24 January 2008, the Local Government Finance Report (England) 2008/2009 was laid before Parliament in accordance with section 78A of the Local Government Finance Act 1988. In this report, the Government announced its final allocations for 2008-09 and its provisional allocations for 2009-10 and 2010-11 stating that it did not expect to make changes to the provisional allocations "except under entirely exceptional circumstances". Mr Gay, the Director of Resources and Chief Executive Officer at Leeds City Council, states that it was not until 24 January 2008 that local authorities were informed that the Formula Grant contained an element recorded in the final settlement as the Public Law Family Fees Adjustment. So far as the local authorities were concerned, there remained considerable uncertainty as to how the additional funding in respect of the additional court fees would be effected.
17. On 31 January, a letter from Bridget Prentice to the editor of the Law Society Gazette was published. It was in response to an article that had been published the previous week criticising the consultation exercise on the fees issue. Her letter included the following:

"Mr Cole suggested that finance managers have not been able to find any extra provision for increased court fees in their allocations. The government has added this funding into local authorities' general grant. But we do not want to dictate all their spending priorities, so the settlement now provides greater flexibility. We have been able to move £6.5 billion of resources into grants that are not ring-fenced over the CSR07 period. This means, of course, that we cannot hypothecate funding to services or particular pressures. And there will now be a greater responsibility on individual finance managers. But I am certain that most would welcome the opportunities afforded by increased flexibility.

My colleagues and I at the Ministry of Justice are working with local authorities to ensure it is understood clearly that the additional pressure has been reflected in spending settlements, and built into allocated public spending totals with effect from April 2008. The introduction of the proposals need not and should not have any impact on local authorities fulfilling their statutory duty to protect children at risk."

18. On 4 February, Parliament approved the Local Government Finance Report. Local authorities set their budgets (as usual) in February/ March 2008.
19. Although they were not asked to comment on the principle of full cost recovery of court fees by HMCS, many of those who responded to the consultation paper did in fact do so. As I have said, there was much opposition to the principle from many influential quarters. But the defendants were not deflected from their course of full cost recovery.
20. As I have already stated, the Fees Orders which are under challenge in these proceedings were laid before Parliament on 9 April. Para 7 of the accompanying explanatory memorandum prepared by the MoJ set out the policy background. It said at para 7.7 that the £40 million transferred to local authorities was "likely to exceed the total fees payable because it assumes that the maximum fee is paid in each case. In reality, the new "Public Law Outline" procedure…should mean that some cases will be resolved without going through all possible stages."
21. On 21 April, Bridget Prentice made a Ministerial Statement on the outcome of the consultation. She said:

"During the course of consultation, the Government introduced an adjustment into the local government finance settlement figures to make visible the sums attributable to these proposals. The purpose of this adjustment was to ensure that a valid comparison could be made between 2007-08 and 2008-09 for each authority's grant increase. The authorities generally now recognise that funding has been made available within the revenue support grant. Indeed, the total of £40 million is likely to exceed the total fees payable because it assumes that the maximum fee is paid in each case. In reality, some cases following the new 'Public Law Outline' procedure (implemented this month, introduces revised judicial case management procedures to be introduced in all family courts) will be resolved at earlier stages and pay a lower fee. I therefore believe that we have responded in full to those responses that objected to the proposals on the basis that it was not clear that authorities had been funded, or that they had been insufficiently funded, to pay these fees.

The second main theme of the responses was that authorities would be improperly influenced by financial considerations and would not always act in the best interest of children. Local authorities are under a statutory duty to protect children at risk of significant harm. Both the Local Government Association and the Association of Directors of Children's Services, in their responses to the consultation, confirmed that local authorities are not influenced by cost considerations in their approach to initiating proceedings or in their decisions about appropriate pre-proceedings work. The practical effect of the statutory duty in this instance is to require authorities to ensure that adequate budgetary provision is made to pay the necessary court fees, and to ensure that individual decisions are not affected by budgetary considerations. In practice, most local authorities pay court fees from a legal department or similar central budget, rather than from a children's services budget that is the responsibility of individual social workers making decisions on the ground, with the cost of court fees being a small proportion of the overall cost of child care proceedings. For these reasons, I am satisfied that the proposals do not in fact create a risk that local authorities will neglect their statutory duty causing children to be harmed."

The grounds of challenge

22. On behalf of the claimants, Mr Supperstone QC advances the following grounds of challenge. First, the decision to implement full cost recovery was unlawful because it was made without any prior consultation of anybody, still less of the parties most directly affected by the change, namely the local authorities. Consultation was required (a) by the common law duty to act fairly and in accordance with the rules of natural justice, and (b) because the local authorities had a legitimate expectation that they would be consulted.
23. Secondly, the decision was irrational. The reasons put forward by the defendants in justification of the decision are inconsistent and contradictory.
24. Thirdly, the decision was unlawful because (a) it was made without regard to a relevant consideration, namely that the effect of the decision would be that local authorities would suffer a significant shortfall in the additional funding needed to meet the increased court fees and/or (b) it was made in the mistaken belief that the fee increases would not have adverse budgetary consequences for local authorities.
25. Fourthly, the decision was made in breach of assurances given on behalf of Government that the additional funding that would be provided would be sufficient for all local authorities to meet the increased cost of court fees. The substantive legitimate expectation of local authorities that these assurances would be honoured was thereby frustrated.
26. Fifthly, the Fees Orders were unlawful to the extent that they applied to all court hearings held after 14 May 2008, including those of applications issued prior to 1 May.

Was there a shortfall in funding?

27. I start with this question because the claimants' contention that there was a shortfall in the funding provided to local authorities to meet the cost of the court fees is the foundation on which much of their case rests. It is not in issue that the annual value of the HMCS subsidy represented by the previous fees of £150 (care applications) and £100 (placement order applications) was £40 million for England and Wales. It is also agreed that, following the withdrawal of the subsidies, £40 million was added to the Formula Grant paid to local authorities for the year 2008-09 to fund the additional fees payable in public law family cases. That sum comprised £37,651,500 for local authorities in England and the balance for local authorities in Wales.
28. The principal sources of revenue for local authorities are (i) grants from central government and non-domestic rates redistributed as grant by central government, (ii) revenues generated by the authorities themselves (eg council tax), (iii) capital receipts and (iv) borrowings. Most of a local authority's revenue expenditure is financed by central government in the form of grants. General and specific grants and business rates make up what is known as "Aggregate External Finance". General grants are those which are not hypothecated by Central Government to any particular service and can be spent by the local authority on whatever service it chooses. The Formula Grant is a general grant. The annual Local Government Finance Settlement is the mechanism by which Central Government distributes the Formula Grant to local authorities. The Formula Grant is part of the Aggregate External Finance and is the main general grant given to local authorities.
29. The Formula Grant allocation is based on a formulaic system which takes into account the social, economic and other characteristics of each local authority area which affect the relative costs of providing services in that area and the relative ability of each authority to raise council tax. The Formula Grant distribution system apportions the total available grant (which is determined in Central Government Comprehensive Spending Reviews) between all the local authorities. By reference to certain mathematical formulae, the system considers local authorities' individual circumstances, their needs and their ability to raise resources locally.
30. The Formula Grant has 4 elements. The first is a Relative Needs Amount. Relative Needs Formulae have been developed for each of 7 major service blocks one of which is Children's Services. The formula is generally specified in terms of the sum of a series of "amounts" multiplied by "indicators" (such as the size of the "client" group, for example the number of the population under the age of 18 years for Children's Social Care, with account made for deprivation top ups, a foster care adjustment and an area cost adjustment). The second element is "Relative Resources" which is a deduction to reflect the extent to which the resources of the local authority exceed those of the authority with the least resources. The third element is a Central Allocation, which is an amount received per head of population calculated on the basis of the services that the authority provides. The fourth element is what is known as "floor damping". This is a mechanism for ensuring that every local authority receives at least a minimum percentage increase in grant as compared with the previous year.
31. It is agreed that of the total sum of £37,651,500 added to the Formula Grant paid to local authorities in England for the year 2008-09 for fees in public law family cases, the claimant authorities received the following additional sums: Leeds (£485,651), Liverpool (£516,296), Hillingdon (£232,142) and Norfolk (£434,679). There is disagreement as to the amount that these authorities are likely to spend on court fees in public law family cases in 2008-09. Ms Mitchell-Langford, who is the Head of Civil and Family Fees Policy in the Civil Law and Justice Division at the MoJ, says that the total figure of £40 million was calculated on the assumption that there would be the same number of new cases in the first year of the new regime as there had been in 2006-07. She says that the £40 million figure was an over-estimate of the additional fee income likely to be paid to HMCS by local authorities. This is because there has been a downward trend in the number of cases since 2006-07. She estimates that the total additional fees payable by local authorities in 2008-09 may amount to £28 million ie 70% of the estimated figure on which the addition to the Formula Grant was based.
32. The claimants do not accept that the additional grant of £40 million represents a 30% over-estimate of the number of cases (and therefore fee income). They say that, although the reason for the estimated fall in the number of applications has not yet been established, it is likely to be attributable to the Public Law Outline ("PLO"), which was published in January 2008 and given effect by a practice direction issued by the President of the Family Division which came into force on 1 April 2008. It introduced new practices in child care proceedings requiring increased case assessment and preparation before applications are issued. They also point out that in her second witness statement, Ms Mitchell-Langford recognises that, for the reasons that she gives, there is "a considerable margin of error surrounding the figures".
33. It is clear that it is not possible to calculate with precision the amount, if any, by which the additional sum received by the 4 claimant local authorities will fall short of the additional court fees that they will have to pay in 2008-09. On the basis of a 30% over-estimate of the total volume of cases and, therefore, a 30% over-estimate of the additional fees payable by all local authorities, the individual figures for the 4 claimant authorities are: Leeds (£66,877 shortfall), Liverpool (£117,974 shortfall), Hillingdon (£44,455 (gain)) and Norfolk (£60,518 shortfall). On the basis of a 20% over-estimate, the figures are: Leeds (£145,809 shortfall), Liverpool (£208,584 shortfall), Hillingdon (£17,642 (gain)) and Norfolk (£131,261 shortfall). On the basis of a 10% over-estimate, the figures are: Leeds (£224,741 shortfall), Liverpool (£299,194 shortfall), Hillingdon (£9170 shortfall) and Norfolk (£202,003 shortfall).
34. To put these figures in context, the Formula Grants paid for the year 2008-09 were as follows: Leeds (£292,154,000), Liverpool (£314,987,000), Hillingdon (£81,259,000) and Norfolk (£213,821,000).

The first ground of challenge: lack of consultation on the principle

35. Mr Supperstone submits that the failure to consult on the decision to extend full cost recovery to public law family cases renders the Orders unlawful. He accepts that the Lord Chancellor was not under a statutory obligation to consult the affected local authorities before taking the decision. Instead, he relies on the common law duty to act fairly and/or the doctrine of procedural legitimate expectation. Underpinning both arguments is the contention that the introduction of the principle of full cost recovery of court fees in public law family cases deprived the affected local authorities of a benefit that they had previously enjoyed. It is said that the removal of the benefit of the HMCS subsidy (enjoyed since the 1989 Act came into force) was so significant that fairness demanded that the Lord Chancellor consult the local authorities before making his decision.
36. Alternatively, Mr Supperstone submits that the local authorities had a legitimate expectation that they would be consulted before any decision was taken to move to full cost pricing of court fees in public law family proceedings. The claimants accept that there was no promise of consultation in this case. Nor do they rely on any established practice of consultation prior to the making of decisions of this kind. They rely solely on the fact that the local authorities had enjoyed the benefit of subsidised court fees since the 1989 Act came into force and say that this long-standing enjoyment itself gave rise to a legitimate expectation that they would be consulted before a decision was taken to remove it.
37. I cannot accept these submissions. The starting point is section 92 of the Courts Act 2003 which is the provision which empowers the Lord Chancellor to prescribe court fees by order. Subsection (5) provides that before making an order under the section, the Lord Chancellor "must consult" the Lord Chief Justice, the Master of the Rolls, the President of the Queen's Bench Division, the President of the Family Division, the Chancellor of the High Court, the Head of Civil Justice and the Deputy Head of Civil Justice (if there is one). Subsection (6) provides that before making an order in relation to civil proceedings, the Lord Chancellor must consult the Civil Justice Council. Subsection (7) provides that the Lord Chancellor must take such steps as are reasonably practicable to bring information about fees to the attention of persons likely to have to pay them.
38. In my judgment, the fact that, when conferring on the Lord Chancellor the power to prescribe court fees, Parliament decided whom he should consult before doing so militates strongly against the idea that there should co-exist a common law duty to consult more widely (in the absence of a clear promise by the Lord Chancellor that there would be wider consultation and in the absence of any clear established practice of wider consultation). Parliament is to be presumed to have considered that the degree of consultation specified in section 92 of the 2003 Act was sufficient. It is to be noted that one of the consultees is the President of the Family Division. If he thought it necessary to seek the views of local authorities (for example, through the medium of the Local Government Association ("LGA")) before responding to the Lord Chancellor's proposals, he could have done so. I am aware of no authority for the proposition that, where Parliament has prescribed the nature and extent of consultation, a wider duty of consultation may exist at common law (in the absence of a clear promise or an established practice of wider consultation by the decision-maker).
39. Mr Supperstone submits that the scope of the statutory duty of consultation is irrelevant where the decision-maker is proposing to remove an existing benefit from the putative consultee. I do not agree. The Lord Chancellor was given the power, inter alia, to raise fees to full cost recovery levels. Raising fees can be said to deprive repeat users of the courts of a benefit they previously enjoyed, namely the benefit of subsidised fees. Local authorities in public law family cases are not the only repeat users of the civil and family courts. Large public utilities and other large private entities are obvious examples of repeat users of the civil courts. They were not compensated from the public purse for the increased cost of court fees which resulted from the withdrawal of the HMCS subsidy. Parliament must be taken to have understood this when defining the scope of the obligation to consult. In my view, the fact that the proposal to raise the fees would remove the benefit of subsidised fees from repeat users of the courts is not a reason for imposing on the Lord Chancellor a duty to consult which Parliament did not see fit to impose. The courts should not add a burden of consultation which the democratically elected body, decided not to impose. Thus, even if it is right to regard the raising of the fees in public law family cases as depriving local authorities of a benefit, that is not a sufficient reason for requiring consultation which Parliament did not see fit to require.
40. But I do not accept that it is right to characterise the raising of the fees in public law family cases as depriving local authorities of a benefit that they previously enjoyed. An integral part of the proposal to raise the fees was the provision of additional funding (not ring-fenced) through the Formula Grant so that the authorities would not suffer any or any significant shortfall. What changed was the means by which a subsidy in favour of public law family cases is delivered. This was not analogous to a proposal to deprive a private individual or group of individuals of a personal benefit.
41. Mr Supperstone relies on the decision of this court in R v Secretary of State for the Environment, ex p Brent LBC [1982] 1 QB 593. In that case, the Secretary of State decided to reduce the applicants' rate support grants. It was held that the decision involved "taking away some existing right" (p 643C). On the date the Order came into operation, the applicants were entitled to receive the rate support grant. It was held that, having regard to the applicants' "accrued right" to support grant, the duty of fairness obliged the Secretary of State to afford any objector the right to make representations. In my judgment, that case is plainly distinguishable from the present in at least two respects. First, an accrued right was to be taken away without any compensation to make up the shortfall. Secondly, there was no statutory duty to consult. I do not, therefore, find it necessary to decide whether, in the light of more recent developments in this area, that decision is still good law. I have in mind decisions such as Nottinghamshire County Council v Secretary of State for the Environment [1986] 1 AC 240, In re Westminster City Council [1986] 1 AC 668, R (BAPIO Action Ltd) v Secretary of State for the Home Department [2007] EWCA Civ 1139 and R (Bhatt Murphy & Others) v Independent Assessor; R (Niazi) v Secretary of State for the Home Department [2008] EWCA Civ 755.
42. There is a further point. The proposed change in the level of fees was not merely a proposal potentially affecting the finances of the affected local authorities. In this respect, the position of local authorities is to be contrasted with that of the private litigant in civil proceedings who can truly be said to have lost the benefit of subsidised fees and is the only party adversely affected thereby. But the debate in the present proceedings shows that the real question is whether the interests of vulnerable children are potentially threatened by the increase in court fees. Once this point is appreciated, it becomes clear that the decision who should be consulted is one of some difficulty on which opinions may differ. Why should the consultation be limited to the local authorities? If in truth, the real significance of the proposal was its implication for vulnerable children, then it is at least arguable that the consultation should go wider than merely to local authorities and should at least include bodies concerned with child welfare. But how much wider? These are difficult questions. They raise matters of public interest. Where Parliament has decided, the courts should not enter the arena and impose a different duty of consultation.
43. This is the very point that was made by Sedley LJ in the BAPIO case which concerned the lawfulness of government measures introduced without consultation. One of these was the abolition of permit-free training for doctors who lack the right of abode in the UK. Sedley LJ said:

"43. The real obstacle which I think stands in the appellants' way is the difficulty of propounding a principle which reconciles fairness to an adversely affected class with the principles of public administration that are also part of the common law. These are not based on administrative convenience or potential embarrassment. They arise from the separation of powers and the entitlement of executive government to formulate and reformulate policy, albeit subject to such constraints as the law places upon the process and the product. One set of such constraints in modern public law are the doctrines of legitimate expectation, both procedural and substantive. Some have been touched on above – for example the requirements of candour and open-mindedness where either law or established practice calls for consultation. The duty to give reasons is another area in which there has been marked growth. It is not unthinkable that the common law could recognise a general duty of consultation in relation to proposed measures which are going to adversely affect an identifiable interest group or sector of society.

44. But what are its implications? The appellants have not been able to propose any limit to the generality of the duty. Their case must hold good for all such measures, of which the state at national and local level introduces certainly hundreds, possibly thousands, every year. If made good, such a duty would bring a host of litigable issues in its train: is the measure one which is actually going to injure particular interests sufficiently for fairness to require consultation? If so, who is entitled to be consulted? Are there interests which ought not to be consulted? How is the exercise to be publicised and conducted? Are the questions fairly framed? Have the responses been conscientiously taken into account? The consequent industry of legal challenges would generate in its turn defensive forms of public administration. All of this, I accept, will have to be lived with if the obligation exists; but it is at least a reason for being cautious.

45. The proposed duty is, as I have said, not unthinkable – indeed many people might consider it very desirable - but thinking about it makes it rapidly plain that if it is to be introduced it should be by Parliament and not by the courts. Parliament has the option, which the courts do not have, of extending and configuring an obligation to consult function by function. It can also abandon or modify obligations to consult which experience shows to be unnecessary or unworkable and extend those which seem to work well. The courts, which act on larger principles, can do none of these things."

44. In a very different context, Lord Bridge raised similar concerns in the Westminster case at p 692E-693B.
45. For all these reasons, I consider that the existence of the statutory duty to consult is fatal to the claimants' case on consultation.
46. Even if there were no provision for statutory consultation, I would still have rejected this ground of challenge. I propose to express my conclusions briefly. I have referred to what Sedley LJ said in the BAPIO case. In my judgment, those observations would be fatal to the argument that there was a legal duty to consult. Laws LJ expressed similar views in the Bhatt Murphy case at [41-42] and [49]. As he put it:

"…Thus a public authority will not often be held bound by the law to maintain in being a policy which on reasonable grounds it has chosen to alter or abandon. Nor will the law often require such a body to involve a section of the public in its decision-making process by notice or consultation if there has been no promise or practice to that effect. There is an underlying reason for this. Public authorities typically, and central government par excellence, enjoy wide discretions which it is their duty to exercise in the public interest. They have to decide the content and the pace of change. Often they must balance different, indeed opposing, interests across a wide spectrum. Generally they must be the masters of procedure as well as substance; and as such are generally entitled to keep their own counsel. All this is involved in what Sedley LJ described (BAPIO [2007] EWCA Civ 1139 paragraph 43) as the entitlement of central government to formulate and re-formulate policy. This entitlement – in truth, a duty – is ordinarily repugnant to any requirement to bow to another's will, albeit in the name of a substantive legitimate expectation. It is repugnant also to an enforced obligation, in the name of a procedural legitimate expectation, to take into account and respond to the views of particular persons whom the decision-maker has not chosen to consult."

47. Laws LJ continued at [42]:

"But the court will (subject to the overriding public interest) insist on such a requirement, and enforce such an obligation, where the decision-maker's proposed action would otherwise be so unfair as to amount to an abuse of power, by reason of the way in which it has earlier conducted itself. In the paradigm case of procedural expectations it will generally be unfair and abusive for the decision-maker to break its express promise or established practice of notice or consultation. In such a case the decision-maker's right and duty to formulate and re-formulate policy for itself and by its chosen procedures is not affronted, for it must itself have concluded that that interest is consistent with its proffered promise or practice. In other situations – the two kinds of legitimate expectation we are now considering – something no less concrete must be found. The cases demonstrate as much. What is fair or unfair is of course notoriously sensitive to factual nuance. In applying the discipline of authority, therefore, it is as well to bear in mind the observation of Sir Thomas Bingham MR as he then was in Ex p Unilever at 690f, that "[t]he categories of unfairness are not closed, and precedent should act as a guide not a cage."

48. The Lord Chancellor has decided to withdraw the subsidy in respect of court fees. For present purposes, I shall assume that the withdrawal of subsidy was a policy decision which he was entitled to make in the public interest. He did not promise that he would consult any particular person or group of persons before making the decision. Nor has he adopted an established practice of consulting on which the claimants can rely. In my view, therefore, the withdrawal of subsidy falls within the paradigm category of decisions on national policy issues in respect of which a public authority is entitled to decide whether and, if so, whom to consult. In support of their case, the claimants cannot point to any conduct on the part of Central Government apart from the failure to consult itself. But that is not enough. They need to make good a case of unfairness amounting to an abuse of power. In my judgment, they come nowhere near doing this. Their principal point is that the withdrawal of the subsidy deprived them of a benefit. Even if that were right, it would not be enough. Decisions made by public authorities in the exercise of their discretion will often yield benefit to some and loss to others. It is not the law that authorities must necessarily consult those who are liable to be disadvantaged by a proposed decision before they can make the decision. Government and administration would be impossible if that were the case. But in any event for the reasons that I have given at [40] above, I do not accept that in substance local authorities were deprived of a benefit by the withdrawal of the subsidy in respect of court fees in public law family cases.
49. I therefore reject the first ground of challenge.

The second ground of challenge: irrationality

50. The claimants (supported by the Law Society and the NSPCC) submit that the enhanced scrutiny described by Sir Thomas Bingham MR in R v Ministry of Defence, ex p Smith [1996] QB 517, 554 is applicable in the present case. The more substantial the interference with human rights, the more the court will require by way of justification before it is satisfied that the decision is one within the range of decisions which a reasonable decision-maker could reach. They say that at the heart of the case is the risk posed to vulnerable children as a result of the Lord Chancellor's decision to move to full cost recovery and the Government's failure to provide sufficient funding to meet the costs of the additional court fees. This is a decision which, putting the case at its lowest, could put children at risk and result in a violation of their human rights. The court should therefore apply anxious scrutiny to determine whether the defendants have demonstrated a "compelling justification" for the risk posed to such children. Mr Vinall submits that, even if the proposed change to the fees in public law family cases is fully funded, the fact that the additional funding is not ring-fenced means that there is a risk that, at any rate in borderline cases, local authorities will be tempted not to make applications which they should make, or to defer making them, especially towards the end of their financial year.
51. They rely on the statement by Lord Woolf MR in R v Lord Saville of Newdigate ex p A [2000] 1 WLR 1855 at [37]:

"Again we would respectfully agree with the second quotation from the judgment of Simon Brown L.J. What is important to note is that when a fundamental right such as the right to life is engaged, the options available to the reasonable decision-maker are curtailed. They are curtailed because it is unreasonable to reach a decision which contravenes or could contravene human rights unless there are sufficiently significant countervailing considerations. In other words it is not open to the decision-maker to risk interfering with fundamental rights in the absence of compelling justification. Even the broadest discretion is constrained by the need for there to be countervailing circumstances justifying interference with human rights. The courts will anxiously scrutinise the strength of the countervailing circumstances and the degree of the interference with the human right involved and then apply the test accepted by Sir Thomas Bingham M.R. in R v Ministry of Defence, ex parte Smith [1996] QB 517 which is not in issue."

52. The consultation paper of 19 December 2007 set out the reasons asserted in justification of the decision to move to full cost recovery. They were: (i) the promotion of the efficient allocation of resources, providing authorities with a greater incentive to use services economically and efficiently; (ii) improvement of decision-making and accountability by providing greater visibility of the true costs and benefits of the services provided by the charging and paying authority; and (iii) the removal of any perverse incentive to pursue care proceedings prematurely or unnecessarily when alternative social services interventions are more appropriate.
53. At para 17 of her first witness statement, Ms Mitchell-Langford, explains:

"I wish to make clear that it is not our policy intention, and it would be entirely inappropriate, to use fees as a means of discouraging meritorious applications to the court. We do consider that, in certain circumstances, court fees reflecting the cost of the court services provided can create healthy incentives affecting when cases are initiated and how they are pursued. In this context, they may provide an additional incentive for authorities to ensure that other avenues are explored and cases prepared properly, and to consider at each stage whether a case can be properly resolved without continuing to a final hearing. We consider that it would be possible for authorities to establish financial and management arrangements that allow this, without creating perverse financial incentives that would prevent appropriate cases from being brought."

54. It is submitted by Mr Supperstone (supported by the interveners) that there is a fundamental lack of logic in the reasons given in justification of the decision to introduce full cost recovery. The references to providing authorities with a greater incentive to use services economically and efficiently and improving decision-making by providing greater visibility of the true cost and benefits only make sense on the basis that a change in the level of fees will cause authorities to change their behaviour. If it did not, there would be no "incentive" and no effect on "decision-making" and the rationale for the increase would disappear. And yet, the December 2007 consultation paper insists that there is no reason to think that those making the decisions in individual cases would be improperly influenced by budgetary considerations. If that is right, what is the point of the fee increase? It would fail in its stated aims.
55. As regards the explanation given at para 17 of Ms Mitchell-Langford's statement, they say that it is implausible that the new fees could act as a disincentive only to badly prepared or unmeritorious cases, but have no impact on local authorities' readiness to bring meritorious cases. With the welfare of children at stake, the court should treat these assertions with scepticism. Further, there is independent research to suggest that there is no evidence that local authorities issue care proceedings prematurely or unnecessarily: see the research carried out for the MoJ in 2008 by Professor Judith Masson of Bristol University: there was "...no evidence that local authorities brought care proceedings without good reason."
56. The defendants say that the reasons given in justification of the decision to introduce full cost recovery for fees are consistent with the approach identified by the Department for Constitutional Affairs in its paper "Review of the Child Care Proceedings System in England and Wales" published in May 2006. The aims of this review included ensuring "that all resources were used in the most timely, effective way" (para1.1). The recommendations of the review included "encouraging, where safe or desirable, the exploration of alternatives to court proceedings" (para 1.5). It stated (para 1.9) that "in the longer term, more can be done to engage families in addressing local authority concerns earlier, with the aim of avoiding proceedings altogether where possible or desirable". At para 5.19, the review included the following:

"There are various means through which consistent application of the statutory guidance and Practice Direction could be promoted:

• the Review recommends further consideration of means to encourage or enforce preparation in accordance with the statutory guidance and Practice Direction. These could include encouragement of greater use of existing powers on cost orders, or through the fees structure so that it better reflects the true costs incurred by poorly prepared applications (the fee paid by local authorities to the court for s31 applications is currently £150; in 2003/04 each s31 application actually cost HMCS £1,200); or the exercise by the court of existing powers to require explanations from senior local authority staff where applications have been inadequately prepared..."

57. It is also consistent with the PLO (see [32] above) which came into force on 1 April 2008. The two main features of the PLO are (i) that local authorities are expected to have undertaken as much of the necessary assessment work as possible and explored alternative options to legal proceedings (eg placement with relatives or friends) prior to starting care proceedings; and (ii) that more robust case management should be undertaken by the judiciary once proceedings have been instituted.
58. In my judgment, the reasons given in justification of the Fees Orders are not illogical. The aim of achieving greater visibility of the true costs and benefits of the services provided by the charging and paying authority is a free-standing reason. It is not illogical or irrational. Nor is the aim of discouraging badly prepared and unmeritorious cases. It may be that there is a contradiction between the concession in the evidence that public law family proceedings are not currently initiated unnecessarily and the stated need to remove any perverse incentive to pursue such proceedings prematurely or unnecessarily. But the fact that proceedings are currently not initiated unnecessarily does not mean that it is illogical or perverse to include as one of the reasons in justification of the Fees Orders the removal of any incentive to initiate proceedings unnecessarily in the future.
59. I cannot, therefore, accept that the specific reasons given in justification of the Fees Orders are illogical. Quite apart from these reasons (specifically applied to public law family cases), it seems to me that the decision to make the Fees Orders was an application of the Government's general policy on fee-charging set out in HM Treasury's Fees and Charges Guide. As is explained at p 6 of the MoJ's summary of responses to the December 2007 consultation paper: "This makes clear that it is appropriate and desirable to charge for services provided by one department to another (and therefore even more so for services within the wider public sector)". The paper goes on to identify two general reasons for this policy, namely (i) it promotes the efficient allocation of resources, by providing paying authorities with a greater incentive to use services economically and efficiently; and (ii) it improves decision-making and accountability by providing greater visibility of the true cost and benefits of the services provided by charging and paying authority.
60. It seems to me that the real question raised by this ground of challenge is whether the application of this general policy to court fees in public law family cases is irrational. During the course of argument, it became clear that the essential issue raised by this question was whether charging the full cost involves a real (as opposed to a fanciful) risk that the interests of vulnerable children will be jeopardised by the policy. There was argument before us as to the correct approach to this question. Mr Grodzinski submits that the question is whether it follows from the Fees Orders that local authorities will (or there is a real risk that they will) be required to act inappropriately by not making applications which objectively should be made. Mr Supperstone and the interveners submit that the correct question is whether as a matter of fact the increase in fees will (or there is a real risk that they will) cause local authorities not to make applications which objectively should be made.
61. I doubt whether in practice there is much (if any) difference between the two formulations. But to the extent that there is any difference, I prefer the latter formulation. The Fees Orders may not oblige local authorities to act inappropriately. But their impact must be considered in the real world. In my view, the relevant question is whether there is a real risk that the increase in fees will cause local authorities not to make applications which objectively should be made. Understandably, the claimants do not assert that, as a result of the new fees, they will fail to perform their statutory duty. But Rosemary Archer, the Director of Children's Services at Leeds City Council, says at para 37 of her witness statement that "the increase in the fees payable for issuing proceedings may prove to be a significant disincentive to the commencement of care proceedings for the Council and other local authorities. There is a significant risk that children may remain in abusive situations longer than they should." The claimants accept that they are not consciously influenced by financial considerations in discharging their statutory duties. The concern expressed on behalf of the claimants is put in this way in para 27 of the second witness statement of Mr Gay:

"I am informed by my colleague Rosemary Archer that it is not correct to state that those making decisions about child care proceedings on the ground are not directly responsible for the budgets against which the associated court fee costs will be incurred. The decision to initiate care or supervision proceedings is so significant that it is not taken by the social worker "on the ground" without reference to senior managers who have responsibility for the children's services budget. Managers within Leeds City Council have both operational and financial responsibilities. That is not to say that senior managers within my local authority would be influenced by financial considerations in deciding whether to institute care proceedings: it is simply to say that once again, the Defendants have misunderstood how service responsibility, financial responsibility and risk are managed at a local and operational level. Managers within the Children's Services team are placed in an extremely difficult situation of knowing that they have to balance the budget. Every care application that is authorised will have a significant impact on the Children's Services budget and cuts will have to be made elsewhere (generally in preventative work) to balance the budget. The risk this poses for children is set out in Ms Archer's statement."

62. Mr Supperstone submits that the possibility that the Fees Orders will result in local authorities acting in breach of their statutory duties in relation to children cannot be ruled out. Accordingly, a compelling justification for the new policy is required. It does not exist. He relies on the fact that in their response to the December consultation paper, the Family Subcommittee of the Council of Circuit Judges said: "our experience is that budgetary considerations DO enter into decisions to take care proceedings. That can be the only reason that in many areas proceedings are not commenced promptly when money is tight at the end of a financial year."
63. On behalf of the Law Society, Mr Vinall puts it no higher than that in borderline cases, local authorities may be tempted (consciously or subconsciously) not to make section 31 applications which objectively should be made.
64. Ms Archer also criticises the defendants for deciding to distribute the additional £40 million of funding by means of the Formula Grant, a decision which she says (para 44) appears to be "arbitrary and inappropriate". This is because the Children's Social Care Relative Needs Formula is not calculated by reference to the number of child care applications or placement order applications issued by a local authority. She says that it would have been a simple matter to ascertain the number of care applications and placement order applications issued by each authority and to have distributed subsidies which "had some connection to the number of applications issued by each local authority".
65. The contention that the method chosen for calculating and distributing the subsidy was arbitrary and inappropriate for the reasons given by Ms Archer was not developed in oral argument on behalf of the claimants. The defendants have two answers to it. First, they say that it is Government policy to use the Formula Grant rather than specific grants. Para 65 of the 2007 Pre-Budget Report and Comprehensive Spending Review, published by HM Treasury on 8 October 2007 states that :

"Strong and Prosperous Communities [the October 2006 White Paper on Local Government] set out a clear framework for determining the allocation of funding to increase flexibility and allow local authorities to meet local priorities more efficiently. From 2008 onwards, the presumption for all revenue funding is that it will be delivered through Revenue Support Grant…."

66. Secondly, Robert Davies, Deputy Director in charge of the Formula Grant Distribution Division in the Department for Communities and Local Government has shown that there is a high degree of correlation between the number of children who are subject to Care Orders and the Children's Relative Needs Formula which is used in the Formula Grant: see paras 24-30 of his first witness statement. He amplified this in his second witness statement when he said:

"20. In their skeleton argument (see paragraph 66(1)) the claimants dispute the statement in the detailed grounds of defence (paragraph 36) that it is reasonable to conclude that the distribution of spending on family fees will follow a similar pattern to the distribution of overall spend on children's social care. The context for this statement is the explanation in my earlier witness statement (see paragraphs 28 to 30) of the way in which the Relative Needs Formula for Children's Social Care was derived by analysing information on the numbers and needs of almost every child seen by social services in the sample week of the Children in Need survey.

21. The claimants seek to argue that there are factors independent of the number and neediness of childcare cases seen, that may induce some authorities to take more legal proceedings than others. We have therefore examined other data available to Government on the numbers of children in care in each authority's area who have interim or full care orders, or who have been freed for adoption or had a placement order granted. All these will have been the subject of legal proceedings. The numbers of such children in each authority are highly correlated with the Children's Social Care formula. The correlation coefficient is 0.84, which is high (zero would mean no correlation, and 1.0 would mean 100% positive correlation)."

There has been no challenge to this important evidence.

67. I agree that, because the interests of vulnerable children are potentially at stake, the court should consider the issue of irrationality with anxious scrutiny. As I have said, I approach it on the basis that the Fees Orders are unlawful if there is a real (as opposed to fanciful) risk that the increase in fees will result in local authorities not performing their statutory obligations in relation to children who are at risk.
68. In approaching this question, it is necessary to have in mind the following 5 factors. First, the addition of £40 million to the Formula Grant made for the year 2008-09 is not criticised as a total sum. Indeed, it is likely to be more than is necessary to compensate local authorities as a whole for the extra cost of the increased fees. I have already referred to the £28 million figure at [31] above. Cafcass has provided evidence of the number of care cases received in England from April 2006. These show that significant reductions were occurring before the Fees Orders came into force. It is not certain why this should have occurred. It may be attributable to the Child Care Review (see [56] above). The decline in the number of applications continued after the Fees Orders came into force. An article in the Law Society Gazette (21 August 2008) stated that Anthony Douglas, the Chief Executive of Cafcass, had said that "there was no evidence that councils' decisions on care proceedings would be influenced by fee rates and pointed out that the introduction of enhanced case assessment and preparation requirements would delay applications". The same article also stated that a spokesperson for the Local Government Association ("LGA") which represents 466 councils in England and Wales "denied that the fall in applications was because of higher court fees. He claimed the decline-- which the LGA expects to be temporary-- was attributable to the introduction of new practices and increased cases assessment and preparation."
69. Secondly, it is true that, because the additional £40 million has been distributed to local authorities by means of the Formula Grant, there cannot be a precise match between additional funding and the additional fees payable by individual local authorities. Some local authorities will be over-compensated; others will suffer a shortfall. But as has been seen at [33] above, the scale of any shortfall is relatively small. To take the worst case postulated above, the 2008-09 figures for Liverpool would show a shortfall of £299,194, which is slightly less than 0.1% of its total Formula Grant of £314,987,000.
70. Thirdly, although the increased cost of court fees is significant, it should be borne in mind that the 2006 Review of Child Care Proceedings System in England and Wales found that the average cost to authorities of a care case in legal fees etc was £35,000. It is fair to point out, however, that the £35,000 figure does not appear to be supported by the 2006 Review, para. 3.2 of which states, "on average each s 31 application costs £25,000 including legal aid (approximately 60% of total), local authorities' costs (25%), HMCS costs (5%); and CAFCASS costs (10%)". It cost about £40,000 to keep a child in care for a year and the average duration of a care order is 6 years. As HMCS stated in its June 2008 response to the Public Law Family Fees Consultation: "If local authorities were influenced by financial considerations [in deciding whether or when to initiate proceedings], these existing costs would be far more significant than the new court fees". I would add that this is all the more so where the increased cost of court fees has been funded by the Government.
71. Fourthly, pace the observations of the circuit judges, the overwhelming weight of the evidence is that local authorities do not and would not refrain from taking proceedings for financial reasons. In its response to the December 2007 consultation paper, the LGA stated:

"34. Given the sensitive nature of public law care proceedings it is important to avoid creating unnecessary financial pressures that could impact negatively on a local authority's capacity to act properly because it is not financially able to do so.

35. We would not expect any local authority to fail to comply with a statutory duty to make an application where the situation meets the requirements on the basis of cost or budgetary constraint. Therefore applications will be made regardless of the pressures.

36. However if the costs of doing so are in excess of the budget available the local authority has to find the balance from other services. It is highly likely that the cost of care proceedings will be found from preventative and early intervention budgets, which could create a vicious circle, by increasing the number of applications made as a last resort because of a failure to intervene earlier. The greater the unfunded increase the greater the budgetary pressure. This is an unacceptable position creating a potential perverse consequence from the proposals as they are currently framed."

72. The response of the Association of Directors of Children's Services ("ADCS") included: "We do not accept that Local Authorities are influenced in their approach to initiating proceedings by cost considerations and costs are not likely to have a determining influence on the approach to pre-proceedings work outlines in the Public Law Outline". The ADCS is the national leadership organisation in England for directors of children's services appointed under the Children Act 2004.
73. In my judgment, the responses of the LGA and the ADCS are important. Both bodies were critical of a number of aspects of the consultation exercise. And yet neither of them would expect local authorities to be influenced in their approach to their statutory duties by financial considerations. The LGA went further and said in terms that they accepted the principle of full cost recovery of services and they "concurred with the central premise behind the proposals" made in relation to fees in public law family cases.
74. Fifthly, the relevant question is not whether there is a risk that an individual local authority will suffer a shortfall in 2008-09 or any future year. It is whether, as a result of the introduction of the new fees regime together with the additional funding that has been provided to finance it, there is a real risk that any local authority will fail to perform its statutory duty to initiate proceedings where it is necessary to do so. This is where the scale of any potential shortfall becomes significant. If the potential shortfall were relatively large, then it might be difficult not to conclude that there was a real risk that local authorities would not perform their statutory duties, at least in borderline cases. But if the shortfall is relatively small, it becomes far more difficult to reach such a conclusion.
75. On the claimants' case, the fact that additional funding has been provided to meet the extra cost of the increased fees is of little, if any, relevance. This is because the additional funding has not been ring-fenced by the Government: the extra money goes into the general pot of the Formula Grant. The claimants' complaint is that, since local authorities are subject to many competing demands on their limited resources, they will always be tempted to spend some of the additional funding on other objects.
76. In my view, there are two answers to this argument. First, it does not sufficiently recognise that those charged with the heavy responsibility of deciding whether or not to issue care proceedings are professional persons and there is no reason to suppose that they do not act conscientiously or they are unaware of the importance of the work they have to do. I refer to the responses of the LGA and the ADCS. Secondly, if there is a risk that those who are charged with the responsibility of making these decisions may be tempted not to perform their statutory duties because of the demands of competing needs, there is nothing to prevent a local authority itself from ring-fencing the additional sum it receives by way of Formula Grant and to stipulate that it may only be expended on fees in public law family proceedings.
77. Thus, examining the rationality of the Fees Orders through the lens of anxious scrutiny, I am satisfied that they are not irrational. It is striking that the LGA support the principle which underlies the decision to charge local authorities fees which reflect the true cost to HMCS. They object to the way in which the consultation exercise was carried out and the lack of transparency as to the basis on which the amount to be transferred to local authorities by way of the Formula Grant was calculated. There is force in these criticisms. Light has now been shed on the basis of the calculation of the amount to be transferred. But these criticisms do not impinge on the rationality of the decision itself.

The third ground of challenge: failure to have regard to a relevant consideration and/or decision made under a mistake of fact.

78. Mr Supperstone submits that the decision to increase the fees was made (i) without having regard to the fact that the increase would not be fully funded and/or (ii) in the mistaken belief that it would be fully funded.
79. I would reject this submission for the reasons given by Mr Grodzinski. The Minister responsible for the Fees Orders, Bridget Prentice MP was well aware that the £40 million was to be distributed by Formula Grant. It was inherent in distribution of additional funds by way of Formula Grant that they would not be ring-fenced. She was well aware of this. This is clear from her letter to the Law Society Gazette dated 31 January 2008 part of which I have quoted at [17] above. She must also have been aware that, although there was a high degree of correlation between the Children Services Needs Formula and the number of children subject to public law family court orders, the system of fund allocation that was adopted would not create a perfect match between revenue and expenditure.

The fourth ground of challenge: breach of substantive legitimate expectation.

80. Mr Supperstone submits that assurances were given by the responsible Ministers to the effect that (i) the total Formula Grant had been or would be increased by an amount equivalent to the estimated total increase in court fees for the year 2008-09 and (ii) each local authority would receive sufficient additional funding to pay the fee increases.
81. On 24 January 2008, the Minister for Local Government, John Healey MP issued a Written Ministerial Statement on the Local Government Finance Report (England) 2008-09 in which he confirmed that the figures published for the 2008-09 settlement included an "adjustment for Public Law Family Fees to reflect the policy change by her Majesty's Court Service to full cost recovery for proceedings under the Children Act".
82. In her letter to the Law Society Gazette dated 31 January 2008, Bridget Prentice said that the additional pressure on local authority budgets as a result of the increase in fees "….has been reflected in spending settlements and built into allocated public spending totals with effect from April 2008. The introduction of the proposals need not and should not have any impact on local authorities fulfilling their statutory duty to protect children at risk".
83. The third assurance on which Mr Supperstone relies is that given by Mr Healey on 4 February 2008, during the debate on the Local Government Finance Settlement. Concerns were raised about the distribution of funds for the family fees increase to a particular local authority. Mr Healey stated:

"I am aware of my hon Friend's point. It was put to me by a number of local authorities that I dealt with during the consultation and also by the Local Government Association. The money in the settlement is intended to cover the full cost of family law settlements as a result of a change in approach by the Ministry of Justice."

84. Mr Supperstone submits that the references to "full cost recovery" (24 January), "not have any impact on local authorities" (31 January) and "the full cost" (4 February) clearly connoted that the additional funding would be sufficient to meet the extra cost that would be incurred by every individual local authority. He argues that it would be "meaningless" if the assurances were merely as to the position of local authorities as a whole. An assurance that the sum by which the Formula Grant to local authorities as a whole had been or would be increased would have been of no comfort to individual local authorities or to others who were concerned about the fee increases. The only sensible interpretation of the assurances is that they meant that each local authority would receive the additional funding necessary to pay the fee increases.
85. Mr Supperstone accepts that the assurances or representations on which the claimants rely must be "clear, unambiguous and devoid of relevant qualification": R v Inland Revenue Commissioners, ex p MFK Underwriters [1990] 1 WLR 1545, 1569H per Bingham LJ, R (on the application of Bancoult) v Secretary of State for Foreign and Commonwealth Affairs [2008] UKHL 61 per Lord Hoffmann. In my judgment, the assurances do not satisfy this requirement. At the very least, they were ambiguous as to whether they were statements that local authorities as a whole would be fully funded or whether they were statements that each individual local authority would be fully funded. This ambiguity is fatal to this ground of challenge.
86. I would go further. Local authorities would have understood that the additional funding was to be provided by means of an addition to the Formula Grant. They would also have understood that additional funding by that means (being made in advance) could not have been guaranteed to cover the full cost of the additional court fees incurred by each individual local authority in 2008-09. It was impossible to know in advance precisely how many applications each local authority would make in the year. In these circumstances, it seems to me that the only realistic interpretation of the assurances is that they were statements that local authorities as a whole would be fully funded.

The fifth ground of challenge: the retrospectivity point

87. The Fees Orders contain transitional provisions which, mutatis mutandis, are in identical terms. It is sufficient to refer to article 6 of the Family Proceedings Fees Order:

"6. Fees 2.2(b) and (c) are not payable in respect of an issues resolution hearing, pre-hearing review or final hearing which has been listed on any day between 1^st May 2008 and 14^th May 2008 inclusive."

88. The new fees were payable only in respect of applications made after 1 May 2008 and, where an application had been made before 1 May, in respect of a hearing taking place after 14 May. Thus, the increased fees were payable in respect of hearings in proceedings which had been commenced before 1 May. Mr Supperstone submits that, even if his first ground of challenge fails (breach of duty to consult generally), there should have been consultation on the retrospective element of the Fees Orders.
89. Ms Archer says that prior to the publication of the Orders, local authorities did not know that the increased fees would be payable in respect of hearings in proceedings started before 1 May. Leeds City Council set their budget on 20 February 2008. At that time, they knew that "drastic" fee increases were proposed, but they did not know whether they would be implemented or precisely how large the increase would be. In particular, they did not know that they would be required to pay the increased fees in respect of hearings started before 1 May. Accordingly, no provision was made in the budget to reflect this particular possibility.
90. Ms Mitchell-Langford says that the transitional provisions of the Fees Orders reflect established policy in relation to the effect of fee changes in proceedings issued before the changes are made. She says that it was not felt necessary to consult specifically on this issue because (i) of the existence of this established policy and (ii) in any event, local authorities could not properly have decided whether to commence proceedings before 1 May 2008 on the basis of the court fees which then applied: their statutory duty obliged them to issue proceedings when it was appropriate to do so.
91. In my judgment, it would be very surprising if there was a duty to consult local authorities on this one narrow issue in circumstances where (as I have held) there was no duty to consult them on the fundamental question of whether the fees should be increased to "full cost" levels. I reject Mr Supperstone's submissions on this point, substantially for the same reasons as I have rejected his submission on the wider duty to consult.

Delay

92. Mr Grodzinski submits that the present challenge was made well out of time and that there is no good reason for the delay. There is force in this submission, but it is unnecessary for me to reach a concluded view on whether, if one or more of the substantive ground of challenge succeeded, the claim should nevertheless be dismissed on grounds of delay.

Overall conclusion

93. For the reasons that I have given, I would reject all the grounds of challenge and dismiss this application. I recognise the strength of the opposition to the Government's policy on court fees. There are many who consider that it is fundamentally misconceived and that the court service should not be regarded as a "business" which should pay its way. In a sense, the case against the implementation of the policy in relation to civil justice is greater than it is in relation to public law family proceedings. That is because litigants in civil proceedings are not compensated by the Government for the loss of the subsidy which they previously enjoyed. Local authorities have been and will continue to be so compensated in public law family proceedings. For the reasons that I have given, the compensation is sufficient to avoid any real risk that the new fee regime may lead to the interests of vulnerable children being harmed. Any measure that is said to have the potential to harm the interests of children must be carefully scrutinised to see whether it in fact carries with it the real risk of harm. I have given my reasons for concluding that there is no such risk here.
94. Many people may find unconvincing the reasons advanced by the Government in justification of the increased fees. But the policy is not irrational and is not unlawful. If it is not unlawful, the fact that the reasons put forward in justification of the policy may be unconvincing is of no relevance. That is a matter for political debate and ultimately for Parliament.

Mr Justice Bennett :

95. In my judgment, for the reasons advanced by my Lord, Dyson LJ, grounds 1, 3, 4 and 5 of the challenge of the Claimants fail. As to ground 2, irrationality, I have to confess that my mind has wavered. However, in the end, for the reasons expressed by Dyson LJ, particularly between paragraphs 67 and 77 of his judgment, I agree that this ground must fail too.
96. At the heart of the case of the four local authority Claimants, and the NSPCC and the Law Society as interveners, is the risk to vulnerable children by the making of the Family Proceedings Fees Orders 2008 S.I. 2008/1054 and the Magistrates Court Fees Order 2008 S.I. 2008/1052 of 7 April 2008, which came into force on 1 May 2008.
97. It is common ground that the local authorities, who together with the NSPCC are the only bodies authorised under S.31(9) of the Children Act 1989 ("the 1989 Act") to bring proceedings under Part IV for care or supervision orders, and are under numerous duties under Parts III and IV to protect children who cannot protect themselves. Such children range from those who have been physically (and/or sexually) assaulted, babies who have been shaken leading to brain damage or who have suffered fractures, through to those children who have suffered emotional harm and/or neglect.
98. The Adoption and Children Act 2002 ("the 2002 Act") places various duties on local authorities in relation to adoption. A local authority applies for and pays for a placement order application in public law care proceedings (i.e. under Part IV of the 1989 Act). A placement order is an order made by the court authorising a local authority to place a child for adoption with prospective adopters.
99. Children have human rights as well as adults. Articles 2, 3, 6 and 8 of the European Convention on Human Rights particularly impact on children. The impact of Articles 2, 3, and 8 on children are self-evident. So far as Article 6 is concerned Mr Vinall, counsel for the Law Society, cited a passage in Re S (Minors)(Care Order: Implementation of Care Plan); In Re W (Minors)(Care Order; Adequacy of Care Plan) [2002] UKHL 10, [2002] 2 AC 291, at paragraph 82, which highlights the limbo into which a vulnerable child may fall where his rights under Article 6(1) are not enforced:

"I must note also a difficulty of another type. This concerns the position of young children who have no parent or guardian able and willing to become involved in questioning a care decision made by a local authority. This is an instance of a perennial problem affecting children. A parent may abuse a child. The law may provide a panoply of remedies. But this avails nothing if the problem remains hidden. Depending on the facts, situations of this type may give rise to difficulties with convention rights. The convention is intended to guarantee rights which are practical and effective. This is particularly so with the right of access to the courts, in view of the prominent place held in a democratic society by the right to a fair trial: see Airey v Ireland (1979) 2 EHRR 305, 314, para 24. The guarantee provided by article 6(1) can hardly be said to be satisfied in the case of a young child who, in practice, has no way of initiating judicial review proceedings to challenge a local authority's decision affecting his civil rights. (In such a case, as already noted, the young child would also lack means of initiating section 7 proceedings to protect his article 8 rights.)"

100. The core of the submissions of Ms Theis Q.C. for the NSPCC, and Mr Vinall, for the Law Society is that the scale of increase in the court fees payable by the local authorities in public law and adoption cases, i.e. 2,500%, is likely to act as a disincentive to local authorities either to bring care proceedings under Part IV of the 1989 Act at all or to delay bringing them, when such proceedings either should be initiated or not delayed. The fees have been set at such a level under the Orders that there is a risk that it will tip the balance of the decision maker either not to bring Part IV proceedings at all or delay them, and/or persuade the decision maker within a local authority to seek other arrangements for a vulnerable child such as voluntary accommodation under Part III of the 1989 Act which may well not be in the child's best interests. Thus the best interests of the child may be damaged substantially. There will be no-one to protect the child's human rights which may be breached by the local authority not initiating, or delaying the initiation of, Part IV proceedings.
101. Neither Ms Theis nor Mr Vinall suggested that local authorities would not start, or delay starting, proceedings under Part IV where a child had suffered brain damage from being shaken or where it has suffered unexplained fractures. In such cases there was no 'alternative' to proceedings under Part IV. Rather it was the child suffering from emotional abuse and/or physical neglect upon whom the large increase in court fees would impact. Ms Theis drew our attention to a review carried out for the Department for Constitutional Affairs by Dr. Julia Brophy, a senior research fellow at the Oxford Centre for Family Law and Policy at the University of Oxford, which was published in May 2006. It is a research review in relation to child care proceedings under the 1989 Act. Dr. Brophy found that neglect coupled with emotional maltreatment is the commonest form of harm to children. Parents who are subject to proceedings based on allegations of child maltreatment are likely to be poor; many live deprived and troubled lives in complex and dislocated circumstances; and many will be well known to social services. Dr. Brophy said (at page 23 of the Review) that research evidence indicated that for highly vulnerable parents with multiple problems:-

"… the court provides:

Immediate and effective protection for maltreated children, placing their safety and welfare needs first, while bringing home to parents the serious nature of concerns in a forum that, nevertheless, is independent of the party making the allegations.

A protected space in which assessments can be undertaken and where serious and time limited considerations can be given to whether parents can change to meet the needs of their children. Courts also control and monitor that process safeguarding children against multiple assessments/examinations.

A forum in which local authority applicants are accountable for their actions and their plans for children."

102. Thus, it was submitted that in the majority of cases, i.e. these involving physical neglect and/or emotional maltreatment, the huge increase in the court fees are likely to act as a disincentive. Local authorities will be tempted to seek alternative ways of assisting such a child e.g. by voluntary accommodation, whereas either the local authority ought to be issuing Part IV proceedings or, if minded to take Part IV proceedings, not to delay starting such proceedings until, for example, a new financial year when funding would be more readily available.
103. The NSPCC's position may thus be seriously affected. Under S.31(9) of the 1989 Act it, and local authorities, are the only persons authorised to bring proceedings under Part IV. Hitherto the NSPCC has been successful in persuading authorities to take all necessary steps rather than bring proceedings itself. Under the new regime of court costs it is feared that the NSPCC's influence will be lessened; the NSPCC may have to become more interventionist by starting proceedings itself thereby placing extra burdens on its finite resources; and a perceived increased willingness on the part of the NSPCC to issue proceedings itself would act as a perverse incentive to local authorities to avoid issuing proceedings in cases where to issue was otherwise appropriate.
104. These submissions then lead directly to the argument that the making of the Orders was irrational. Ms Theis and Mr Vinall submitted that one of the motivations for the increase in fees was to deter local authorities from bringing proceedings that they would otherwise bring. Each founded that argument on the passage in the December 2007 Consultation Paper set out at internal page 6:-

"Response to the comments made on full cost recovery

Government's general policy on fee-charging is set out in HM Treasury's Fees and Charges Guide. This makes clear that it is appropriate and desirable to charge for services provided by one department to another (and therefore, even more so, for services within the wider public sector). There are two general reasons given for this:

it promotes the efficient allocation of resources, by providing paying authorities with a greater incentive to use services economically and efficiently; and

it improves decision-making and accountability by providing greater visibility of the true cost and benefits of the services provided by charging and paying authority.

In short, the principles of fee-charging policy apply equally to public sector bodies as to other users. Nor is it relevant whether the public body can be said to be acting pursuant of a specific statutory duty or its more general objectives. Indeed, it is axiomatic that court proceedings generally are, or should only be, brought in pursuit of some important objective, whether public policy or access to justice for an individual user. The significance of the issues at stake does not in itself provide a basis for differences in fee policy."

105. It is submitted that these reasons, i.e. the reasons expressed in the bullet points set out in paragraph 104 above, are mutually contradictory and irrational. The justifications of the Defendants are inconsistent with its assertions that local authorities are not influenced by cost considerations in their approach to initiating proceedings. If local authorities are not influenced by cost considerations, the rationale for the change falls away; if they are, the change will put children at risk and lead to a potential violation of the United Kingdom's positive obligations under the Convention.
106. It was further submitted that neither of the justifications at paragraph 104 above is a rational justification for imposing full cost pricing on public law family proceedings. Public law family proceedings are taken in order to protect a child. The local authority itself has no interest in the proceedings; it is acting purely to protect a child. Further, the references to "…..a greater incentive to use services economically and efficiently" and "…. Improv[ing] decision-making ….by providing greater visibility of the true cost and benefits" only makes sense on the basis that a change in the level of fees will cause public authorities to change their behaviour. It if did not, then there would be no "incentive" and no effect on "decision-making", and the rationale for the increase would disappear. If, as the Defendants state in the consultation paper, it would be unlawful for local authorities to avoid taking court proceedings for financial reasons and that there is no evidence that local authorities would act inappropriately in such a way, then it is submitted that they cannot be incentivised to use services "economically and efficiently" and there can be no "improve[d] decision making." If there is a duty upon local authorities to bring proceedings then they have no discretion to use financial resources differently.
107. Mr Supperstone, for his part, was careful to disavow any suggestion that local authorities would not start Part IV proceedings in respect of a child on the grounds of cost considerations and thus be in breach of their duties to protect vulnerable children. Ms Theis and Mr Vinall were not so constrained.
108. In my judgment there is some force in the submissions on the part of the NSPCC and the Law Society. Furthermore, the Public Law Outline ("PLO") which has been in force since 1 April 2008 is designed to control the initiation and progress of public law proceedings. Paragraph 2:1 sets out the "overriding objective", which by sub-para (4) includes "saving expense". The provisions of the PLO put the court itself in the driving seat so it can progress the case appropriately and prevent delay and reduce costs. The PLO deals with "good case preparation" before proceedings are issued. The pre-proceedings checklist is designed to ensure that before proceedings are started the case of the local authority is properly prepared. The Public Law Outline was brought into being after the Thematic Review published by the Judicial Review Team in December 2005, and after the Child Care Review of 2006, to which I have referred. These two documents identified areas where the Protocol for Judicial Case Management in Public Law Children Act Cases, brought into operation in November 2003, needed improvement.
109. In his foreword to the PLO Sir Mark Potter, President of the Family Division, made clear that the PLO was directed at "cases [that] have proved unwieldy through having been brought to court before local authority pre-proceedings work is complete" as well as those that were not being properly managed. Further, the PLO was piloted in various centres in England and Wales before its introduction, nationwide, on 1 April 2008.
110. The Ministry of Justice Care Profiling Study of March 2008 specifically found that "there is no evidence that the local authorities brought care proceedings without good reason". This finding finds a resonant echo in the response of the Family Sub-Committee of the Council of Her Majesty's Circuit Judges that Circuit Judges have no significant experience at all of care proceedings being brought for no good reason; whereas there is real cause for concern that cases are brought too late, and children have been accommodated by agreement so that there is delay in ascertaining their real needs leaving the child unprotected.
111. In my judgment the two bullet point "general reasons" set out in paragraph 104 above may be perceived as being the core reasons for the levying of court costs 2500% above the levels before 1 May 2008 and they could be read as the Defendant erecting a disincentive to local authorities either to initiate Part IV proceedings at all or to delay their commencement. I am also rather troubled that these two bullet points do not appear to acknowledge that from 1 April 2008 there was in place a mechanism, the PLO, which was specifically designed to ensure good preparation and the efficient use of scarce court resources.
112. However when these matters, which I have set out above, are put into wider context it is my view that irrationality as a ground must fail. The five factors enumerated by Dyson LJ in paragraphs 68 to 74 of his judgment are matters which plainly are highly relevant to the issue of irrationality, and are, with respect, compelling. Thus even though the bullet points to which I have referred may be said to be irrational when considered on their own they are only part of the reasoning of the Defendant. When set in the context of the matters to which Dyson LJ refers it seems to me that looking at all the factors that the Defendant took into account, the orders cannot be said to be irrational.
113. Accordingly I agree that the application must be dismissed.

Mr Justice Pitchford:

114. For the reasons given by Dyson LJ I agree that this application must fail. As to the challenge on the ground of irrationality I agree with Bennett J that the defendants have not always been consistent in their justification for a policy of full recovery for court fees in public law family cases. I recognise that there are strong and persuasive views in opposition to it. It is plain to me, however, that the justification of fiscal transparency underpinning government's drive towards full cost recovery is sufficient in itself to undermine the accusation of irrationality, provided that the parallel objective of access to justice for vulnerable children is not in the process put at risk. In my judgment, upon the evidence we have considered, there is no such risk.