Neutral Citation Number: [2010] EWHC 1456 (Admin)
Case No: CO/2486/2010
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 21st June 2010

Before :

MR JUSTICE OUSELEY
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Between :

	(1)DEVON COUNTY COUNCIL
(2)NORFOLK COUNTY COUNCIL	Claimants	
	- and -		
	SECRETARY OF STATE FOR COMMUNITIES AND LOCAL GOVERNMENT	Defendant	
	and-		
	(1) EXETER CITY COUNCIL       
(2) NORWICH CITY COUNCIL	Interested Parties	

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Mr T Straker QC, & Mr J Moffett
(instructed by Knights Solicitors)  (1) Devon County Council
Mr Straker QC and Mr A Sharland
(instructed by Knights Solicitors) for (2) Norfolk                            County Council

Mr R Drabble, QC,
Mr S Grodzinski and Mr T Buley (instructed by Treasury Solicitors) for the Secretary of State

Mr J Goudie, QC and Mr P Oldham, QC (instructed by solicitors for Exeter City Council and Norwich City Council) for the Interested Parties

Hearing dates: 28th and 29th April 2010
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Judgment

Mr Justice Ouseley : 
Introduction

1.	On 10 February 2010, the Secretary of State for Communities and Local Government decided, pursuant to the Local Government and Public Involvement in Health Act 2007, that the City Councils of Exeter and Norwich should become unitary authorities on their existing boundaries, instead of being District Councils within the two tier system of local government which applies in most of Devon and throughout Norfolk. He decided therefore to lay before both Houses of Parliament the draft Orders by which those changes would be effected.  An announcement was made on the same day by the Minister for Local Government in the House of Commons. The draft Orders required approval by affirmative resolution of both Houses, and the necessary resolutions were passed  by the House of Lords on 22 March 2010, and on the next day by the House of Commons. On 24 March 2010, the final Orders were made by the Minister and they came into force on 25 March 2010, beginning the transitional arrangements for the new authorities to be fully operational in 2011. 

2.	Devon and Norfolk County Councils challenge the Ministerial decisions taken on 10 February 2010. They each contend that the basis on which the decisions were taken was radically different from that upon which the statutory consultation had been carried out and from that which Ministers had always said would underlie their decisions. Hence the consultation was unfair and did not comply with the requirements of the 2007 Act.  Their legitimate expectations as to the basis upon which the decisions would be taken were breached. The decisions were irrational in the sense that they were made without any evidence to support the critical points upon which the decisions turned. The decisions were pre-determined and should have been accompanied by reasons. 

3.	It was not in issue but that if the legal errors were as asserted by the County Councils, the decisions fell to be quashed as did the Orders themselves. The Secretary of State, and the City Councils who appeared as Interested Parties in support of his decisions, accepted that although the nature of the decisions and the statutory decision-making process might create a very high hurdle for the County Councils, the sort of errors they asserted could in principle lead to the quashing of both the decisions and the consequent Orders.

4.	Issues were raised in correspondence on behalf of the House Authorities about what use might be made of Committee Reports, debates and the Resolutions of either  House but these were helpfully resolved  immediately before the hearing.   

5.	The hearing was to be a permission and substantive hearing rolled up together. I decided to grant permission. 

The Local Government and Public Involvement in Health Act 2007

6.	This Act permits the Secretary of State to invite or direct District or County Councils to propose changes to local government structures so that a two tier authority becomes a single tier either on the same or different boundaries; section 2. The proposals by Exeter and Norfolk City Councils responded to an invitation. 

7.	Section 3 (5) provides:

“(5)	In responding to an invitation under section 2, or complying with a direction under that section, an authority must have regard to any guidance from the Secretary of State as to-
what a proposal should seek to achieve;
matters that should be taken into account in formulating a proposal.”
8.	The guidance is at the heart of this case. 

9.	Sections 4 and following deal with the role of the Boundary Committee of the Electoral Commission, from the start of April 2010 itself a Commission, the Local Government Boundary Commission. The Secretary of State can ask for its advice on any matter that relates to a proposal for change, section 4 (2); and he did so in relation to both of these changes. Where he has asked for advice, the Committee, if it thinks it appropriate  in addition to providing the advice, can also recommend whether he should or should not implement the proposal, or make an alternative proposal to that originally  proposed, including that a whole County Council area should be a single tier authority; section 5. 

10.	But, by section 6 (2), in making a recommendation on an original proposal or for an alternative proposal, the Committee must have regard to any guidance from the Secretary of State about its functions under section 5. This was very largely the same as the guidance given under section 3.  Section 6 also imposes a duty on the Committee to take account of representations made to it about draft alternative proposals, which it has to publish before recommending them to the Secretary of State. Here the Committee recommended to the Secretary of State that these two proposals upon which its advice was sought should not be implemented. It recommended that alternative proposals for   unitary Councils for the whole of two tier Devon and the whole of Norfolk should be implemented instead. 

11.	The Secretary of State’s powers, as set out in section 7, are to decide whether or not to implement original or alternative proposals by order, with or without modification. A timetable is set out. But he cannot make an Order to implement an original proposal, that is one which he has invited or directed, “unless he has consulted the following about the proposal- (a) every authority affected by the proposal(except the authority …which made it); and (b) such other persons as he considers appropriate.”; section 7 (3).

12.	Two additional provisions deserve mention: section 240 deals with the laying of Orders. Section 21 applies the Act retrospectively to invitations and guidance issued before the commencement of the Act in November 2007. The invitation process actually commenced in October 2006. 

The decision-making process

13.	A White Paper of October 2006 “Strong and Prosperous Communities” was accompanied by “Invitations to Councils in England”, whereby the Secretary of State invited proposals for unitary Councils in England.  The White Paper, para 3.58, said that the Government would assess the proposals it expected to receive against the criteria which were set out in the Invitation; a small number only were expected to meet them. 

14.	The Invitation contained the guidance which was later to become the statutory guidance under s3 of the Act. The Invitation required councils submitting proposals to have regard to the guidance, including the criteria, adding at para 2.6,”Any proposal should conform to the criteria set out in section 3 of the guidance.”  Paras 5.4 and 5.8 said that, at the first stage in the process, proposals would be assessed against the criteria in section 3 and “Only proposals which in the Government’s opinion meet the criteria set out in section 3 will proceed to stage 2 of the process”.  The Secretary of State in the House of Commons on 22 January 2007 said that proposals were to be judged against the criteria, only a few were expected to meet the strict criteria drawn up by the government for unitary status, and people could opt into the process on the basis of strict criteria, all of which was contrasted with previous efforts to achieve more single tier authorities.   

15.	Section 3 of the Invitation set out the headline criteria as follows:

“3.1 The criteria with which any proposal must conform are:
the change to the future unitary local government structures must be: 
affordable, i.e. that the change itself both represents value for money and can be met from councils’ existing resource envelope; and
supported by a broad cross section of partners and stakeholders; and
those future unitary local government structures must:
provide strong, effective and accountable strategic leadership;
deliver genuine opportunities for neighbourhood flexibility and empowerment; and
deliver value for money and equity on public services.”
16.	The five criteria fall readily into two parts: the first two deal with the cost of and support for the change; the other three deal with the objectives   the new body must meet. 

17.	Each of these criteria was the subject of considerable elaboration. Under “Affordability”, restructuring had to be self-financing so the overall transitional costs “must” be more than offset over the payback period by savings, and that payback period “must” be no more than 5 years. There were separate provisions limiting resources which could be used to meet capital and revenue transitional costs; no costs, foreseen or not, could come from council tax increases. 

18.	There was a modest change to the way in which two headline criteria were described and elaborated in the later guidance given to the Boundary Committee when the Secretary of State requested its advice in February 2008.  I highlight the changes because of their relevance to an aspect of the Secretary of State’s submissions about what the criteria addressed. The “Strategic leadership” criterion was enlarged so that the required leadership now expressly included “that strong economic leadership recognised in the Government’s Review of sub-national economic development and regeneration”, a Command Paper of 2007. In  elaboration:  “This leadership should work with [others] to create a vision for the future of the place (in particular for the place’s success, economically, socially, and environmentally)…A central role for the local authority is promoting the prosperity of its area and it should provide the strategic leadership necessary for this in the context of this developing agenda as envisaged in the Government’s Review of sub-national economic development and regeneration published on 17 July 2007.  Accordingly, a new unitary structure should provide strategic leadership that is characterised by strong, stable mandates, consistent with enabling local authorities to take a long-term, strategic view of the needs of their area and how best to promote that area’s prosperity, achieve economic development and allow the taking of tough decisions where necessary.” There was an addition to the neighbourhood flexibility and empowerment criterion to refer to another Government paper of 2007. 

19.	The Invitation stated that stage 2, for those proposals that met the criteria, would involve wide consultation with “partners/stakeholders” in the areas affected by the proposals. Local authorities and the wider public sector were enveloped by that phrase. Stage 3 would be the re-assessment of the proposals after consultation and any development of the business case. 

20.	In January 2007, Exeter and Norwich City Councils put forward their proposals for unitary status on their existing boundaries. On 27 March 2007, the Minister for Local Government announced that there was “at least a reasonable likelihood” of their meeting the criteria if implemented. The Department wrote to the two Councils: the basis of each decision was the Secretary of State’s assessment of the proposals against the five criteria, each of which the process of change and the new authority “must” meet or deliver.  The letter continued:

“The Secretary of State is currently prepared to implement the proposals that she is putting forward for stakeholder consultation if, but only if, when she comes to take final decisions she remains satisfied having regard to all the further information received during the consultation that the proposals meet the criteria, and that the overall use of reserves as then estimated is affordable.”

21.	The letter contemplated that “the prevailing fiscal position” might mean that some proposals which met the criteria might not proceed, but did not suggest that those which did not meet them might nonetheless still proceed. 

22.	An announcement was made by the Minister in the same day in the House of Commons, using the same language: “if and only if” a proposal met the five criteria would it proceed, and if “the limited envelope” of reserves of planned public expenditure permitted it to proceed.  And on that basis sixteen proposals passed to Stage 2: public consultation. 

23.	The Government published “Proposals for Future Unitary Structures: Stakeholder Consultation” in March 2007 to guide the consultation process. It was intended for “partners” as well.   It said that the Government would reassess the proposals, having considered the results of consultation, any further development of the proponents’ business cases, and all other relevant information. It explained that these proposals were proceeding on the basis of the five criteria, adding: 

“Each of those criteria specify an outcome that either the change to unitary structures must achieve, or that the new unitary structures once established must deliver.  Any assessment of the proposals against the criteria is, therefore, necessarily a process of judgement, reaching a view as to the likelihood of a proposal if implemented achieving the outcomes specified by each of the criteria.”

24.	Comments were then invited in these terms:

“We are seeking your views on the extent to which the proposals, if implemented, will achieve the outcomes specified by the criteria in our Invitation (see paragraph 22 above).  In particular we would welcome partners’ and stakeholders’ views as to the extent a proposal would, in their opinion, if implemented, deliver strong effective and accountable leadership, deliver genuine opportunities for neighbourhood flexibility and empowerment; and value for money and equity on public services.”  
25.	The next step, after consideration of the responses, was to be this:

“After the stakeholder consultation, we will consider very carefully all the representations that we have received.  Proposals will proceed to implementation if, and only if, when we take our final decisions, we remain satisfied that they meet the criteria, and that the overall use of reserves remains affordable, having regard to the prevailing fiscal position and the risks around the estimated costs of implementation.”

26.	It thus repeated what it had said before: the limited resources available meant that if there were more proposals that met the criteria than the Government could afford to implement, only those which had priority would be implemented. 

27.	The Government thus, in my judgment, explained how the decisions would be made on the proposals so that the consultation responses would be directed to the issues which would determine the decisions. And to put that beyond doubt, it asked and answered this question as follows in the “Frequently Asked Questions” paper: 

“What exactly do you want consultees to comment on?  The extent to which the proposals, if implemented, will achieve the outcomes specified by the criteria in the invitation to Councils (published alongside the Local Government White Paper).”
28.	This was emphasised by a repetition of the request that consultees deal in particular with the extent to which a proposal met the three criteria which related to how the proposed new authority would perform.

29.	Subsequent correspondence between Devon County Council and the Secretary of State about the open mindedness of the Government led to the Parliamentary Under Secretary writing on 26 June 2007 to affirm that, contrary to the suggestion that a local MP who was a Minister in another department was unduly influencing the process: “Only those proposals that meet the criteria will proceed to implementation.”

30.	As this consultation process was ending in June 2007, the Government initiated a further round of consultation, this time on how to rank in priority those proposals which it concluded met the criteria. The importance of this lies in its repeated assertion of the decisive negative role of the criteria:

“After this consultation, we will consider very carefully all the representations that have been received.  Proposals will proceed to implementation if, and only if, when we decide which proposals should proceed to implementation, we remain satisfied that they meet the criteria, and that the overall use of reserves remains affordable, having regard to the prevailing fiscal position and the risks around the estimated costs of implementation.”

31.	The commentary again made it clear that prioritising was only for those proposals which met the criteria. There was no suggestion that those which did not meet them would join the pool of proposals eligible for implementation. Paragraphs 16-18 were resolute that if there was not at least a reasonable prospect that a proposal, if implemented, would achieve the outcomes specified by the five criteria, it would not be implemented; if there was such a reasonable prospect for any proposals, the better alternative would be implemented where an alternative existed; the limited resources would be used to implement those that then had priority. This consultation about priority required consultees to address the three criteria relating to the performance of the new authorities. 

32.	After the consultation process, Mr Rowsell, Deputy Director Local Democracy at   the Department, wrote to the City Councils on 25 July 2007. He invited Exeter to undertake further work on the affordability criterion, because the Secretary of State saw risks   that   the affordability criterion would not be met, although he was presently of the view that it was reasonably likely to be met.  It was thought reasonably likely that the other criteria would be met. Norwich was different: it was not thought reasonably likely that it would meet the affordability or value for money criteria, and so the Minster was not minded to allow the proposal to proceed. However, she intended to refer the proposal to the Boundary Committee, upon enactment of the 2007 Act, asking it to look at the structure of local government in Norfolk with a view to it making an alternative proposal, if it saw fit, which was not based on Norwich’s current boundaries.  A report was published by the Government on the consultation processes. 

33.	Although the 2007 Act did not come into force until 1 November 2007, after these two   consultations had finished, they were treated by s21 as forming part of the statutory process. On 5 December 2007, Mr Rowsell again wrote to the two City Councils. Exeter’s further work had been considered but the Secretary of State had concluded that the pay back period for the transitional costs might be longer than the 5 years specified by the affordability criterion, and so there was no reasonable likelihood that the proposal would achieve the outcomes required by that criterion. As, in consequence, she was not minded to implement the proposal at present, she was to ask the Boundary Committee for advice on it, and was also going to request its advice on whether there were alternative unitary solutions, involving boundary changes, which would meet the five criteria for all or part of the county’s area, whether currently two tier or single tier. To Norwich, Mr Rowsell confirmed that the request to the Boundary Committee would involve looking at alternative solutions, involving boundary changes, but which also met the five criteria. These changes could involve alterations to the Norfolk/Suffolk boundary. In announcing these decisions to Parliament, the Minister referred to five proposals which were being implemented without modification and which had shown a reasonable likelihood that they would achieve the outcomes specified by the five criteria. 

34.	The Secretary of State made the formal request for advice to the Boundary Committee in February 2008. The request set out the background and asked for advice by mid December 2008 about proposals for alternative unitary authorities in Devon and Norfolk, as in the letters of 5 December 2007, which if implemented, would be able “to deliver the outcomes specified by the five criteria…”  I have already set out the criteria as varied by this document. The statutory guidance from the Secretary of State, in another annex to the request for advice, highlighted the decisive role of the criteria in the Committee’s   own consultation process, and in its formulation of and justification for any proposals it made:

“To provide the advice requested, and assess and make an alternative proposal sought by the Secretary of State, will involve the Committee having to reach a judgement about the capacity of particular unitary arrangements, if they were to be implemented, to deliver specific outcomes on the five criteria.” 

35.	In July 2008, the Committee produced   reports for public consultation on draft proposals for unitary government in the two counties. In Devon, it proposed a single tier County Council for those parts of Devon which were not single tier authorities already. In Norfolk, it proposed a single tier County Council for the whole area with the addition of parts of Suffolk. The two reports clearly place the Committee’s assessment of the proposals on which its advice was sought, as well as those it came to propose in the draft report, firmly within the framework of the five criteria. In relation to affordability each report said:

“2.53	The Secretary of State’s guidance to us makes clear that, whatever pattern of unitary local government we advise should be established in any area, it must be affordable.  In particular, the transitional costs of any change must be capable of being paid back within five years and, of particular concern to residents, all costs associated with structural change must be met locally without increasing council tax for the specific purposes of meeting transition costs.

2.54	The criteria set out in the guidance, including that of affordability, are the same as those used to judge the viability of the bids for unitary status submitted to the Secretary of State following publication of the 2006 Local Government White Paper.  The Secretary of State’s requirement at that time was that any proposals for unitary status should be made on the basis of existing local authority administrative boundaries, or amalgams of them.  Accordingly, ‘bidding’ authorities would have found the issue of ensuring the costs of change were met without any increase in council tax relatively straightforward to address.”

36.	The greater complexity of its proposals meant that the views of consultees on affordability would be particularly welcome. 

37.	Litigation involving other authorities delayed the Committee’s work and in December 2008, further guidance was issued. This guidance dealt with how the criteria were to be applied “in aggregate” in relation to new local government areas. It is of no great moment in itself, save that the elaborated guidance at this time, which did not add to the criteria in any other respect, is noteworthy in view of the basis on which the Secretary of State submits that the decisions in issue came to be taken: the guidance re-affirmed the need for proposals to deliver the outcomes specified by the five criteria, or as it was also put, the proposals had to have the capacity to meet the five criteria.  This opportunity for varying the criteria or for altering their role was not taken.
 
38.	One consequence of the other litigation was that the Boundary Committee could not complete its work within the timescale required by the Secretary of State, and sought and was granted an extension of time. But in seeking the extension of time in January 2009, the Committee made clear its interpretation of the High Court’s decision in that other litigation as being that it had to consider all proposals drawn to its attention that “are likely to meet the five criteria.” Its advice also had to be based on   evidence. Mr Straker pointed to the continuing emphasis on the need for proposals to meet the criteria. The Court emphasised in R (Breckland District Council) v Boundary Committee 2009 EWCA Civ 239 para 44 that the Committee had to tell consultees what proposal it was consulting on, why it was proposed and why it met the Secretary of State’s criteria.  Time was extended to July 2009, but there was no suggestion in the Ministerial reply that the approach of the Committee was wrong or that guidance had changed.
 
39.	Further draft consultation proposals for Devon and Norfolk emerged from the Committee in March 2009.  Both reports referred to the requirement that the proposals have the capacity to meet the five criteria. The proposals for Devon were a unitary council for the currently two tier parts of the County, or a unitary council for Exeter and Exmouth plus a unitary council for the rest of the two tier County. The proposals for Norfolk were not dissimilar: a county wide single tier council or a Greater Norwich unitary council and a unitary council for the rest of the County. So neither report included as meeting the criteria   unitary authorities for Exeter or Norwich on their existing boundaries. 

40.	On 29 June 2009, Mr Rowsell wrote an important letter to all the authorities in Devon and Norfolk to inform them of the approach which the Secretary of State intended to adopt in reaching his statutory decisions on any proposals received by him for unitary authorities in those Counties. This was to assist them in making representations to him about those matters.  The decisions open to him in relation to any proposal, whether the original proposals or proposals from the Committee, were to implement the unitary proposal with or without modification or to take no action. He said: 

“Where the Boundary Committee makes one or more alternative unitary proposals for an area, the Secretary of State will reach a view as to whether or not he shares the Boundary Committee’s judgement about each alternative unitary proposal’s capacity in aggregate, if it were to be implemented, to deliver the outcomes specified.”

41.	If so, he would also consider whether a modified proposal might meet the three long term criteria to a greater extent. If a proposal did not meet the criteria, he would consider whether a modification would enable it to do so. He would also consider whether the view reached in December 2007 that the original unitary proposals were not reasonably likely to achieve the outcomes “specified by all the five criteria” should be changed, and if not, whether an original proposal  would “deliver the outcomes specified by the criteria”,  if modified. 

42.	He continued, in paragraph 11:  

“Having identified those unitary proposals – either the original unitary proposal or any alternative unitary proposals made by the Boundary Committee and modified as the case may be – that in his judgement would have the capacity to deliver the outcomes specified by the criteria, the Secretary of State will then reach a judgement on whether to implement any of them.  In deciding which, if any, of these unitary proposals should be implemented he will consider the merits of each proposal, as a whole, having regard to the extent to which each has the capacity to deliver the long-term outcomes.
The importance of a unitary proposal delivering the long-term outcomes was recognised by the Secretary of State in the approach adopted when previously taking statutory decisions about unitary proposals in December 2007 and early 2008.”

43.	Where there were alternatives which met the criteria he would favour the one that met them best.  There was no suggestion that those which did not meet all the criteria might still proceed.

44.	He then set out the timetable for representations to him, adding that although further representations could be made to him about any of the original unitary proposals, previous representations  did not need to be and should not be repeated. Mr Straker submitted that this showed that consultees could rest assured that there had been no change in approach to the decisive negative role of the criteria or to the Secretary of State’s approach.  

45.	On 7 December 2009, the Boundary Committee presented its advice to the Secretary of State. It recommended that the original proposals for   unitary authorities for Exeter and Norwich on their existing boundaries should not be implemented, because the Secretary of State’s previous concerns about whether they would meet the affordability criterion and whether Norwich could also meet the value for money criterion had not been displaced by the evidence it had received during its review. Instead, it recommended that there be   unitary   councils for all of existing two tier Devon and Norfolk. Each proposal was considered and adjudged against the five criteria. 

46.	On the same day, Mr Rowsell again wrote to all the local authorities affected. He repeated that the approach which the Secretary of State was to adopt for taking his statutory decision on any proposals he had received for unitary local government was the same as he had set out in his letter of 29 June 2009. For good measure he attached the relevant extracts to this new letter. I have set out the relevant parts already. Again he repeated that, although further representations about the original unitary proposals could still be made, earlier representations should not be repeated.  He then referred to arrangements for receiving delegations. 

47.	Mr Straker is again entirely right to point out that there is no suggestion that proposals which the Secretary of State concluded failed any of the five criteria might be implemented, nor that there were any other factors which might justify a departure, nor that the current economic circumstances or any new Government policy might be relied upon to approve a proposal which had failed the criteria.   Mr Rowsell was not quite right in his first witness statement to suggest that the stated approach involved considering the criteria and then making a decision about which to implement, and that the criteria were not the “sole determinant”.  The stated approach was that the only decision to be made after considering the criteria was whether to implement any of those which met them. The criteria would not be the “sole determinant” only to the extent that those which passed them might not go ahead. It was never suggested that those which did not meet them might go ahead. 

48.	Representations were made and delegations heard. The notes of these meetings prepared by the Department have been produced. In January, various individual Ministers met with delegations from Exeter District Councils, from Devon County Council, and from Exeter City Council, and with delegations from Norwich City Council, Norfolk District Councils, and Norfolk County Council.  No delegation was told, either before, at or after the meetings that they should recognise that a decision might be made to go ahead with a proposal which failed to meet the criteria, nor what the basis for such a decision might be so that it could be addressed. 

49.	After the representations were completed, Mr Rowsell sent to the Secretary of State on 26 January 2010 a comprehensive submission inviting him to take his preliminary decisions. Although the flowcharts for decision-making did not show a route for a decision to implement a proposal which failed the criteria, the commentary included reference to a presumption against doing so unless there were “compelling reasons” to the contrary. On 27 January 2010 Ministers told civil servants that that was the conclusion they had reached. On 28 January 2010, Mr Rowsell expressed to them for their approval the reasoning which they had sketched out to him on 27 January. The reasoning as it later emerged reflected two strands: the significance of the current economic crisis compared to the position in 2006 when the criteria were developed together with recent representations about how the cities could promote economic growth; and the advent of the “Total Place approach to service delivery”.   

50.	The decisions were announced on 10 February 2010 in the House of Commons and by letter to the affected authorities. The Minister for Local Government rejected the Boundary Committee’s views that unitary county councils in Devon and Norfolk met the five criteria. The original proposal for Exeter City to be a unitary council on its existing boundaries was still not reasonably likely to satisfy the affordability criterion. The original Norwich proposal was still not reasonably likely to satisfy the affordability and value for money criteria. These are important points.  The letter then continued, using the same language for both proposals:

“However, she considers in this case that there are compelling reasons to depart from the presumption that where a unitary proposal does not meet all five criteria it should not be implemented.  Her reasons are two fold.
First, she considers that the Government’s priorities today are above all for jobs and economic growth.  Local government has an essential role to play in delivering these economic priorities, and this role is of a significance that could not be contemplated in 2006 when the criteria were developed.  The Minister for Local Government believes, as has been made clear to her by the representations received, that a unitary Exeter would be a far more potent force for delivering positive economic outcomes both for the city and more widely than the status quo two-tier local government.
Secondly, with today’s approach to developing public service delivery, as envisaged by the Command Paper – “Putting the Frontline First” – announced by the Chief Secretary to the Treasury on 7 December 2009, including the Total Place approach, the Minister for Local Government considers a unitary Exeter could open the way for improvements to the quality of public services.  She considers that through innovative shared services and partnership arrangements the public service for the city will be able to be tailored to the needs of the urban area whilst still being able to achieve the economies of scale that are possible under the countrywide delivery of such services as adult social care and children’s services.
We are clear that the decisions that we have taken are in the best interests of the people for the areas concerned.  They recognise the genuine local appetite for unitary government in the cities of Exeter and Norwich.  They provide a robust framework for the future prosperity of those cities and surrounding county areas.  They open the way to better and more efficient public services.  The potential will be delivered through the commitment and collaboration of all councils involved – this is what local people will rightly expect.”

51.	The Minister’s statement in the House of Commons also added by way of description of the approach adopted: “In the case of each proposal we have reached a judgement on it by reference to the five criteria…. Where we judged that a proposal does not meet all the five criteria, our presumption has been not to implement it unless there are compelling reasons to the contrary.”  This latter point had never been made in a public statement on this subject before.  (There had been advice to Ministers on 28 November 2007 about the preliminary statutory decisions in which they were advised that it was in principle open to the Minister to decide to implement a proposal which did not meet the criteria if there was nonetheless a good reason to do so but that would attract a very high risk of successful legal challenge. But that was said in only the one letter to Ministers, otherwise so far as I can tell the approach even in private until January 2010 was always that a proposal had first to meet the criteria.)

52.	The draft Orders were then laid before both Houses of Parliament. They were considered by the House of Lords Merits of Statutory Instruments Committee. In its Report to the House of 4 March 2010, drawing its special attention to the two Orders on the grounds that the issues of public policy to which the Committee thought the Orders gave rise were likely to be of interest to the House and that the Orders might imperfectly achieve their policy objective, the Committee attached the Government’s response to questions it had raised about the Orders.  I refer to the answers as evidencing the elaborated reasoning of the Government, to which Mr Straker drew attention. 

53.	There had not been an alteration in the Government’s views about the degree to which the unitary proposals failed the criteria. In relation to Exeter, the Minister concluded “…the affordability criterion should not be an impediment to implementing the proposal.  This was not least because the benefits for the local economy were judged to outweigh the risks on affordability.” 

54.	In relation to Norwich, the Secretary of State had concluded “that his assessment in relation to the affordability and value for money services criteria should not be an impediment to implementing the proposal.  This was not least because when the Total Place approach is factored into consideration of service delivery, the outcomes for services both in Norwich and Norfolk generally could be as good, if not better, than the outcomes envisaged by the value for money services criterion, and because the benefits for the local economy were judged to outweigh the risks on affordability”

55.	The response then set out a number of factors which were said to show how unitary status was anticipated to stimulate the local economy to the degree that it offset the financial considerations. Broadly, the cities were the driving force for growth in their areas, and region in the case of Norwich, and their potential had been hindered by the more rural concerns of the County Councils. 

56.	The Government was asked about the Total Place initiative, which was the second compelling reason behind the decisions and especially so for Norwich. This initiative was launched in April 2009; there had now been 13 pilots. It described the initiative. I am unwilling to summarise this description lest I miss its meaning, even with the assistance of “Putting the Frontline First: smarter government” Cmnd 7753 of December 2009, which introduces the results of 13 pilots under the heading “Action 2: Recast the Relationship between the Centre and the Frontline”, and suggests how it might work. 

“Total Place takes a ‘whole area’ approach to delivering public services in a geographical location, looking at how to deliver better services at less cost, through effective collaboration between local organisations and leadership.  The Total Place approach, therefore, is one which recognises that two or more service providers should be able to collaborate through partnership arrangements enabling them together to provide a service that can realise benefits such as economies of scale that would be available if there was a single service provider, whilst at the same time reflecting the particular priorities of the individual service providers.”

57.	Ministers expected that with “Total Place”, the two City unitary authorities:

“could open the way for improvements to the quality of public services. The Total Place approach is transforming the possibilities for local public service delivery.  Total Place takes a “whole area” approach to delivering public services in a geographical location, looking at how to deliver better services at less cost, through effective collaboration between local organisations, led by local authorities.  In the case of Exeter and Devon, and Norwich and Norfolk, it means that there can be the best of both worlds.  There will be one local government leader able to provide strong strategic leadership for the city; and the more rural remaining two-tier area stands to have a stronger voice through a more focused county council, working closely with the rural districts.”

58.	The Secretary of State later explained when his “compelling reasons” had first entered into the assessment and whether any of the consultation exercises invited comment specifically on either the Secretary of State’s view about the probable benefits of the economic out turn or the Total Place approach. He said that his approach in 2007 and in 2010 had involved consideration of whether, if a proposal did not meet the criteria, there was nonetheless a good reason still to implement it. “This consideration… involved having regard to all the representations received”. Representations had been made between 7 December 2009 and 19 January 2010 setting out how the two unitary City authorities would be a “far more potent force for delivering positive economic out comes.” Although he said that representations had been made about Total Place, the representations he mentioned had not specifically referred to it but they, and these were from opposing councils, had spoken about other local initiatives which had the same aim: joint working providing better services, although these Councils had seen this as achieving the same or better outcomes than would unitary city authorities. 

59.	The Ministerial statements to the House of Lords in the debate on the draft Orders added a little to the way the issues were expressed. The proposals were approved, despite failing to meet the criteria, “… not least because when the Total Place approach is factored into consideration, the outcomes for services in Norwich generally would be as good, if not better, than the outcomes envisaged by the “value for money services” criterion.  For both Norwich and Exeter, we judge that the risks of a slightly longer payback period are outweighed by the benefits for the local economy.”   

60.	But there would be a “partnership of equals” between City and County Councils to meet all needs with economies as well. The two cities were “the engines of economic activity and potential in their sub-regions.” The fact that much of the activity which they drew in was located in other district council areas did not alter the fact that they located there because of the pull of the cities.  The new strategic leadership in the two unitary authorities would benefit the county areas. The changes would be the best outcome for the people of Devon and Norfolk. 

61.	The Orders were approved by the House of Lords but with a motion of regret along the same lines that had led to the Orders being drawn to their special attention; it expressed concern about consultation. This led to a further written Ministerial statement to the House of Lords, which again I refer to for what it may or may not show of the Government’s reasoning behind the decisions being challenged. The Minister took the view that the public and stakeholders had been more than adequately consulted:

“Any case for further consultation can be justified only if some who might have expected to have been consulted have not been, or those consulted have not been given sufficient information to comment on the proposals.  The Government is clear that neither of these circumstances arises.”

62.	The Minister referred to the large numbers who had made representations in 2007 and in 2009/ 2010 to the Boundary Committee and to the Government. The Parliamentary debate had also conveyed the views of many:

“The range of comments received demonstrates that consultees had more than sufficient information to comment fully on the proposals.  Many focused their comments on the merits of the two-tier status quo arrangements, without necessarily referring to the criteria or to how particular unitary proposals matched up against those criteria.  Others commented, again without necessarily referring to all or any of the criteria, about how any change to unitary structures was unnecessary as the two-tier system as modernised was delivering the same benefits as could be expected from unitary local government.  Many referred to the impact of the current economic climate, some seeing this as reasons for not implementing unitary proposals, others seeing this as a reason for so doing.
Moreover, the longer-term outcomes specified by the strategic leadership and value for money services criteria are closely interconnected with questions about how the unitary structures would impact on the local economy and how the new Total Place approach could affect the delivery of local public services.  Some when commenting referred to economic questions and collaborative partnership working characterised by the Total Place approach.”

63.	The Minister reiterated that neither proposal met the affordability criteria that changes “should have a payback period of no more than five years and that all costs incurred as a result of reorganisation are met locally without increasing council tax.” The payback periods were a little longer. It added this about Norwich:

“The Government also accepts that the Norwich proposal, before the new Total Place approach to service delivery is taken into account, does not meet the value for money on services criterion.  But considered on their merits, the Government is clear that the risks of a slightly longer payback period are outweighed by the benefits for the local economy that unitary councils would bring, benefits the likelihood of which is supported not least by the evidence heard in Monday’s debate, and that with the new Total Place approach, Norwich will be able to shape and jointly deliver high-quality services across the whole area, with the economies that brings, but which also meet the diverse needs of urban and rural communities.”

64.	Between the conclusion of the Secretary of State’s own consultation process in 2010 and the announcement of the decisions, there had been internal discussion within the Department about what was proposed. The Permanent Secretary and Accounting Officer wrote in that capacity to the Secretary of State on 8 February 2010, saying that the approach which the Secretary of State intended to take, and in the end did take, left him “concerned” that this made it “difficult” for him “to meet the standards expected of me as Accounting Officer”. In that capacity he had responsibility for the efficient use of resources and for value for money. His main concern was for value for money to the public purse. The evidence for the economic gains which the Secretary of State envisaged from the unitary authorities, which might offset the net costs over five years of £400,000, was “mixed and representations that you have received provide no evidence to quantify such benefits.” The Total Place approach might open the way for improved public services, but that would be dependant on the collaboration of all the councils “and as yet there is no clear evidence of the costs and benefits that may arise.” He contrasted this outcome with the savings to the public purse which would accrue were the Minister to accept the Boundary Committee’s view of the costs and savings, in these two Counties and in Suffolk.  This was all grist to Mr Straker’s rationality and lack of evidence arguments. 

65.	Mr Straker also made understandable forensic play with how the Permanent Secretary’s letter continued:

“Moreover, any departure from the criteria when taking your statutory decisions also raises feasibility, as well as value for money, concerns.  Whilst there is no statutory basis for the criteria, there is a legitimate expectation that they will be the basis of your decisions.  Your proposed approach of implementing a unitary Exeter and Norwich, and not implementing a unitary council for Suffolk would be a departure from the criteria, and whilst I recognise you could adduce your reasons for this as public policy grounds for not meeting the legitimate expectation, my clear legal advice is that the risk of decisions for a unitary Exeter and Norwich, and indeed for not taking action on  Suffolk, being successfully challenged in judicial review proceedings is very high.  You have been advised that there is every likelihood of such judicial review proceedings being commenced.”

66.	The Permanent Secretary then asked for his written instruction to proceed as the Secretary of State was proposing. The reply of 10 February gave the written instruction. It repeated the reasoning which I have already set out, maintaining the Secretary of State’s view that this was the better course. He acknowledged that he had been advised of the high risk of a successful legal challenge. This exchange was annexed to the House of Lords Merits Committee Report and was also produced in Court. 

The submissions

67.	Mr Straker QC for the County Councils submitted that the consultation duty imposed by s7 of the 2007 Act on the Secretary of State required his consultation process to meet the criteria for fair consultation adopted in R v Brent LBC ex parte Gunning (1985) 84 LGR 168 and applied since in so many cases.  Those requirements include that there should be sufficient information about the proposals being consulted on to enable an intelligible response to be made by consultees, and the responses should be conscientiously considered by the decision-maker before making the decision. 

68.	What needs to be published about the proposal is very much a matter for the judgment of the person carrying out the consultation, to whose decision the courts will accord a very broad discretion, as Mr Drabble QC for the Secretary of State submitted. But, in my judgment, sufficient information to enable an intelligible response requires the consultee to know not just what the proposal is in whatever detail is necessary, but also the factors likely to be of substantial importance to the decision, or the basis upon which the decision is likely to be taken.  I accept what Silber J said in R (Capenhurst) v Leicester City Council (2004) 7 CCLR 557.  

69.	Where, as here, for the purposes of the consultation process, the decision-maker does in fact set out his crucial criteria and precisely how he will use them in his decision-making, this would, as intended, affect  what topics were covered by consultees, in what depth or with what focus, and would affect what is omitted.  Where criteria and their precise role are expressly stated, a fair and lawful statutory consultation may prevent departure from criteria and their stated significance, without further consultation enabling representations to be made on that changed basis.  Mr Straker submitted that the departure here was so radical that a further round of consultation was required on the altered basis for decision-making.  Mr Drabble submitted that that was not so.

70.	I accept the contention of Mr Drabble QC that a flawed consultation exercise is not always so procedurally unfair as to be unlawful; R (Greenpeace) v Secretary of State for Trade and Industry [2007] Env LR 29, Sullivan J. He said, para 63, that  for a consultation process to be held unlawful on the grounds of unfairness would require the court to find that something had gone “clearly and radically” wrong, as Mr Drabble had submitted to him. Valuable though that contrast is, I have a reservation about treating that contrast between something going merely wrong, which would not suffice to show an unfair and unlawful consultation process, and something going “clearly and radically” wrong, which would suffice to show such an error, as the litmus test.  Not all cases could readily be fitted into one or other category, as if they were the only two categories of error available to be considered, with no unexcluded middle.  That phrase should not become the substitute for the true test which is whether the consultation process was so unfair that is was unlawful.  A judge is well placed to make that judgment. Nor do I accept Mr Drabble’s citation of Hodgson J’s dicta in Gunning, that it was “only the most extreme of examples of bad administration which can successfully attract judicial review”, as a useful statement of law, or prediction of outcomes. 

71.	Mr Drabble submitted that the Secretary of State could change the way he used the criteria, and could take account of additional factors in reaching a decision on the creation of single tier authorities for Exeter and Norfolk which were lawful in substance under the Act. Mr Drabble contended that the proposals had never changed; they had always been for the creation of single tier authorities for the two cities. The only issue which then arose was whether he needed to consult again having first alerted consultees to his potential change of approach. 

72.	The Court, he submitted, should be slow to conclude that that was necessary. He cited what Schiemann J had said in R v Shropshire Health Authority ex p Duffus [1990] 1 Med LR 119 to the effect that, as the facts underlying any consultation process were liable to be in a state of flux, the danger of a court being too liberal in its approach to consultation, requiring consultation on any change, was that consultation would never end; decisions would never be taken and those with a legitimate expectation that they would be taken would be confounded.  The same would apply, I accept, to an unduly legalistic or pernickety approach.  Silber J made much the same point in R (Smith) v East Kent Hospital NHS Trust [2002] EWHC 2640 (Admin): a balance had to be struck between the strong obligation to consult and the need for decisions to be taken; reconsultation was only required where there was a fundamental difference between the proposals consulted on and the proposals which the authority now wished to adopt. The Secretary of State, submitted Mr Drabble, was not required to consult on every nuance of the proposals. A departure from criteria without reconsultation, as the Counties contended had happened, would only be unfair if the departure was sufficiently fundamental as to prevent an intelligible response. 

73.	On the facts of this case, he continued, the five criteria formed the basis of the decisions and had not just been cast aside as the Counties contended. The Secretary of State had concluded that only compelling reasons would permit a departure from them. The departure was marginal, a limited relaxation rather than  fundamental: in Exeter’s case, one sub-criterion had been departed from to the extent of a payback period that was up to six years rather than five; in Norwich’s case there were risks to the financial case. There had been radical changes in economic circumstances since the publication of the original criteria in 2006, and in 2006 “Total Place” had yet to be launched; the outcomes to be delivered had not changed, and the change in circumstances was of the sort that  Schiemann J had recognised in Duffus did not require a further round of consultation. The compelling reasons relied on by the Secretary of State were closely related to the failed criteria; indeed Mr Drabble submitted at one point that they were  really aspects of the criteria or of the topics covered by the criteria, and so there was in reality no departure from them;  relevant considerations within the criteria were just weighed differently.

74.	Mr Goudie QC for the two City Councils, as interested parties, submitted that caution was required both because of the “macro-political” nature of the judgment and decision about the merits of unitary authorities for these two Cities, and because the whole process had culminated in Parliamentary Orders.  The criteria should not be regarded as set in stone; rather a wide policy discretion had been conferred by Parliament.  Consultees did not in reality stick to the criteria.  A decision-making process should lead to a decision, and the Secretary of State and Boundary Committee had carried out very full consultation exercises.  The Secretary of State could not provide information about an approach he did not yet have in mind, and consultees should expect his decision to be based on circumstances as they were when he took his decision.  

Conclusion

75.	The basis upon which the Secretary of State consulted “partners and stakeholders” was clear.  The Secretary of State chose to set specific criteria of his own devising, and chose to use them, not as guides, but   as the keys to the gateway through which each proposal had to pass. Meeting the criteria did not guarantee that the proposals would be taken forward, since there might be others which had also passed through the gateway but which had a greater claim on the limited resources for such unitary changes. But a failure to meet each of them did guarantee that a proposal would not be taken forward. The criteria were to be given what I have termed this decisive negative role.  It was the Secretary of State‘s decision to require all proposals to meet every criteria, and to give them a decisive negative role.  At no time did he suggest in the consultation process, or in statutory guidance or in letters to “partners and stakeholders”, or anywhere in public that he might approve a proposal were it, say, to fail one criterion narrowly and pass others with flying colours.  
  
76.	The Secretary of State maintained that position from first to last and throughout the whole process, although there were many opportunities for him to change his position before announcing his final decisions. It was set out in the White Paper of 2006, and in the Invitations. Importantly it was affirmed in the statutory guidance in January 2007 and in the changes to that guidance in February 2008. The terms of the consultation process in March 2007 and June 2007 maintained this approach. It was the basis of the 5 December 2007 decisions. He asked the Boundary Committee in February 2008 to advise about how the proposals met the criteria because of the role they played in the decisions he was to make.  The Committee reported on that basis without any suggestion that there were other factors which might influence the Secretary of State upon which their advice had not been sought.  When time for their further reports was extended in January 2009 to July 2009, there was no suggestion that there was any change in circumstances which altered the content of the criteria,  their separate individual importance or their decisive negative role or that there were other relevant factors upon which the Committee’s advice was not being sought. This was therefore the basis upon which the Committee carried out its work and its own consultation process. Mr Rowsell’s important letter of 29 June 2009, setting out the Secretary of State’s intended approach to his decision-making, confirmed the position. The letter of 7 December 2009 sent the same day that the Boundary Committee’s reports were published, emphasised the continuity of approach, setting out the relevance of the criteria from the June 2009 letter, and requiring that earlier representations be not repeated. There was no suggestion that they had become redundant or that other factors now needed to be addressed. The delegations were never told of any change in approach, actual or potential.

77.	The Secretary of State had many opportunities to change the criteria; he did so on one occasion in February 2008 to emphasise the need for strong economic leadership to help regenerate the areas in question. But he never added anything to them expressly to reflect either “Total Place” or the effect of the recession. He also had many opportunities to say that a proposal which failed narrowly on one criterion but passed others strongly might well proceed. He never suggested that he might attribute greater weight to passing one criterion than to failing another. He never suggested that  he might proceed with a proposal which had failed the criteria, the tests which he had chosen to erect, if there were what to him might be “compelling reasons” to do so; nor did he at any time say what those reasons might be.

78.	He had ample opportunity to say that he was of the view that the serious economic downturn, which started before 2009, might require a different approach to the decisions he had to take.  Its existence was obvious to all, but with possibly conflicting effects on the need for economic growth and the avoidance of wasteful public expenditure.

79.	By contrast, “Total Place” was a policy new in December 2009.  The results of the pilot studies were not reported until a White Paper in December 2009.  The Minister mentioned “Total Place” in a meeting with the Devon County Council delegation in the context of MPs being alarmed by it, but reassured the Council that it was based on ideas and initiatives people were already working on.  This would have conveyed nothing of its imminent import.  The only references by consultees to it in the final round of consultation were by Devon County Council, as a policy which would be impeded by the split created by an Exeter City unitary authority, and by an unidentified consultee, as a policy which favoured a unitary county authority.  Although the Secretary of State had the opportunity in the final round of consultation to alert consultees to its possible importance and to invite representations about its effect, either on whether the criteria were met or should be treated differently, or on its impact as a factor outside the criteria, he simply never did so. The whole process was conducted on the basis that the criteria were unchanged and their role remained just as it had always been described. 

80.	On the face of it, the decisions taken by the Secretary of State and Minister simply made a mockery of the consultation process. A different approach to the decisions was adopted from the one that the Secretary of State had always said he would adopt, and which had been the basis of the consultations by Government and the Boundary Committee. It was adopted without any warning at all so as to enable representations to be made either about the changes to the role of the criteria, or the nature of any “compelling reasons”, or about the effect of the changes on what they had previously said. Worse, the whole public stance was to emphasise the absence of change, and to avoid any resemblance of an alert to what may have been coming. If the Secretary of State had this change in mind at the time of the final round of consultation, that round would have been conducted by him on a basis which he knew to be false. There is no evidence however that he had that change in mind until after the closure of the consultation process. It appears to have been representations received in that final round which led him to the view that the role of the criteria should be changed, and that he should now at the last adopt a different approach to his decision-making from that which he had always said would be the case.

81.	It follows that there was no opportunity or reason for consultees to anticipate and deal with this last minute change of stance.  Those whom he consulted were entitled to respond on the basis of the framework which he gave them.  He had not set out an unlawful approach in his criteria or to his criteria. The approach he then in fact adopted at the very end was on its face fundamentally different.  Had he not changed his approach, he would have rejected each proposal.  If he had wanted to adopt so fundamentally different an approach to the role of the criteria, it would have been simple for him to identify it in the consultation process at some stage, for example by announcing in December 2009 that compelling reasons might lead to a failed proposal nonetheless succeeding, if there were strong reasons either in or outside the criteria.  He alerted no one, and none were able to address the principle of changing the role of the criteria or his two specific reasons for now allowing a proposal to proceed despite not meeting all of the criteria.  On the face of it, it appears that something has gone very wrong. 

82.	Mr Drabble however contends that there was no need for further consultation to avoid unfairness to the point of unlawfulness.  I accept part of his argument.  The proposals themselves were unchanged and the factors which the Secretary of State   took into account in his decisions were legally relevant.  Mr Drabble submitted that once it was accepted that the factors which he took into account were legally relevant, as they are, it would have been unlawful for the Secretary of State to ignore them in his decision-making. Depending on their significance, that is correct. And the Secretary of State was entitled to reach the view he did on the merits of the proposals; it was obviously not an irrational view.  Mr Drabble is also right that the Act does not set out the criteria nor prohibit the final approach to decision-making adopted by the Secretary of State.

83.	Of itself these points cannot show whether consultation was so unfair as to be unlawful.  An unlawful procedure can produce an otherwise lawful substantive decision.  If the Secretary of State’s framework states that he will not give any factor such weight as to enable him to proceed with a proposal which fails one or more criteria, it is irrelevant to the fairness of the consultation that the factor which leads him to change the basis of his decision is relevant to the proposal meeting a different criterion.  It is significance for the approach and decision rather than relevance which matters here.  Even if his criteria had excluded a relevant factor and he brought it in later so as to reach a lawful decision, the consultation would be unfair if he did not alert consultees to the need to address it – unless perhaps it was so obvious no alert was necessary.

84.	So the second stage of Mr Drabble’s argument is that, in reality, the new points were very closely related to the criteria, and on one view could be regarded as falling within them. The extent of the proposals’ failure against the criteria was marginal.    Fresh consultation on such issues was therefore not necessary for the process to be lawful.  Indeed as the factors relied on as “compelling reasons” were legally relevant, consultees should have known that, if they fell outside the criteria, the decision would not be made exclusively by reference to the criteria.  If the factors fell within the criteria, consultees have nothing to complain about.  This argument was attractively put. And it is this which lies behind the difference between what on the face of it was a striking departure from the Secretary of State’s public position requiring further consultation to be fair and what Mr Drabble submitted was not a point of significant departure at all, which did not require further consultation for fairness and lawfulness.

85.	Mr Drabble’s submissions do not however meet the gravamen of the asserted unfairness.  As I have said the Secretary of State set the criteria and repeatedly stated the role, the decisive negative role, they would play.  Whether the two specific factors, the economic downturn and “Total Place”, fell inside or outside the criteria, the unfairness lay in the change to the role of the criteria so that failures were no longer decisive against a proposal, without any opportunity being given to deal with that change or with the merits of the recession and “Total Place” as factors to warrant such a change.

86.	I accept that pursuing economic growth in an economic downturn is a factor within the strategic leadership criterion and that the effect of the recession on the importance of local leadership for economic growth was a topic which consultees could have been expected to deal with.  There could be no complaint at a judgment that this might help the criterion to be met and met strongly.  But this does not and is not said to bear on the affordability criterion.  Indeed, this criterion could tell more strongly against less effective public spending.

87.	The significance of the recession to the one criterion could not therefore alert a consultee to the fact that the Secretary of State was no longer to require another one or two criteria to be met, or that meeting one strongly could outweigh failing another, or would do so in part for that reason.

88.	Consultees could not anticipate this change to the decisive negative role of the five criteria, and the Secretary of State even during the final round of his own consultation in December 2009 to January 2010 did not alert any one to what he might do.   He did not alert any consultees to the fact that it was the economic situation which would give the leadership criterion such decisive importance, instead of the avoidance of public expenditure insufficiently justified, as in the failed affordability criterion.  He had plenty of opportunity to alert consultees to this during 2009, if he had thought of it; and if he had not thought of it, it is quite unrealistic to suppose that the consultees could have anticipated both the change to the role of the criteria and the downturn as one of two factors which would justify it. I regard these as crucial points rather than incidental points which either do not bear significantly on the fairness of the process, or which should be regarded as reflecting the flexibility which a Minister should be expected to have in the way he approaches decisions of such a political nature.

89.	I do not find it difficult to imagine that rather more would have been said by consultees about the important role of the affordability criteria in avoiding wasteful expenditure, how uncertain were the advantages of unitary authorities in achieving strategic leadership and economic regeneration, and how the criteria were developed to require a positive case for the cost and disruption of re-organisation to be made on all fronts. I am not prepared to assume, in view of the last minute change of mind, and from the rather general nature of the representations which persuaded the Secretary of State, that his consideration of other points of view, expressly provided in response to a signalled change of stance, could not have persuaded him to revert to a position the force of which he had proclaimed for over three years through changing economic fortunes. It was just very unfair of him not to give the consultees that chance in the light of all that he had said, and not said, over that long period. It was so unfair that his decisions were unlawful.

90.	Of course, if the Secretary of State had been introducing a new factor, outside the criteria, that would reinforce the unfairness rather than counter it.  He would have been reversing his stated approach to decision-making in yet a further way, and it is no answer to that further unfairness that the unlawfulness of his ignoring the point meant that his reliance on this well disguised but pivotal point should have been anticipated.

91.	I accept Mr Straker’s submission that the Secretary of State did not say the shortfall on the affordability criterion was marginal, for either City, or that the failing was marginal for Norwich on the value for money on services criterion.  Mr Drabble’s characertisation of them as minor shortfalls invites the Court to reach a judgment not reached explicitly by the Ministers as part of their justification for changing the role of the criteria by reference to the “compelling reasons”.  I decline to do so.

92.	I turn to “Total Place”.  This was relevant to the Exeter decision as a further compelling reason for proceeding.  The Secretary of State’s decision is clear that each proposal failed the affordability criterion.  Mr Rowsell’s 4th Witness Statement suggests that the Cabinet was told that it was only the affordability criterion was not met by either proposal.  It was also relevant to the Norwich decision.  The Secretary of State’s letter to colleagues setting out his reasoning on 1 February 2010 says that with “today’s approach to service delivery”, he had decided to depart from the 2007 conclusion that Norwich also failed the value for money on services criterion, and had concluded that that was now met.  But that position must have changed because the decision, as the Minister also told Parliament, was that the 2007 conclusions were maintained.  The Secretary of State’s decision is clear that Norwich failed the value for money on services criterion as well as affordability.

93.	It does not appear likely that “Total Place” was however irrelevant to every criteria and it is to the “value for money on services” criterion that it is most likely to have been relevant, albeit for the purposes of the final decision as announced, falling short of enabling Norwich to meet it.  It was not suggested that it related to “affordability”.  “Total Place” aims to increase the effectiveness of public expenditure in one place, from the many sources from which it may spring, through   better co-ordination and eliminating duplication of function. All Councils responding to the unitary proposals knew that the benefits or otherwise of the changes proposed, and in particular the value for money criterion, depended on the co-operation of councils either at the same levels or within the hierarchy.  I accept that how local public expenditure can be made more effective is an issue which the consultees were already addressing.  

94.	What appears to be new about “Total Place” is the existence of the policy itself, and it is impossible for the Secretary of State to argue that the policy was of no significance in itself.  He regarded the future application of the policy itself as the compelling reason which justified a departure from the whole policy he had espoused for so long.  And the policy may bring newly or more sharply into focus the way in which public money, from all sources, can be used more effectively to provide public services.

95.	Whether “Total Place” was within a criterion or not, its existence as a policy could not have led Devon-related consultees to foresee that it would justify a departure from the stated role of the criteria, so that as with the effect of the downturn, a proposal which failed the affordability criterion could nonetheless proceed.  Norfolk-related consultees could not have foreseen either that, coupled to the effect of the recession, it would justify a change in approach so that a proposal which failed two criteria could still proceed.

96.	Its pilot phase had only been reported on in a White Paper at about the same time as the Secretary of State’s own and the final consultation process began.  It is not discussed there for its potential impact on whether unitary or two tier authorities are better, let alone better in identified authorities. After all, it was intended to be applied whether a local government area was unitary or two tier.  It is not suggested that the effect of this policy formed part of the Boundary Committee’s thinking.  It was mentioned but once to a delegation in a different context, despite the opportunities he had to mention its new potential in all the Ministerial meetings with delegations.  And yet, this specific policy and its supposed effect became one of two compelling reasons for the adoption of a fundamentally different approach to the criteria. This is such a large consequence to flow from a very new and recently announced policy, that the only way for the consultation to be lawful would have been for the Secretary of State to alert consultees to its enormous potential significance.  Even if the effectiveness of all public expenditure in changed or unchanged structures was a key point in the value for money criterion, what could not have been foreseen by consultees was that the decisive negative role of the criteria would be altered in part because of the effect of this new policy; and still less so if it was a new point outside any criterion.

97.	I have no difficulty in seeing that consultees would have wished to contest the value of “Total Place” as a basis for the change of stance in relation to the role of the criteria, and its value as a basis for a judgment (if it was the judgment) that the value for money criterion was met and met in a way which meant that the failure to meet the affordability criterion was overcome. Above all I can see that consultees would have wished to argue that there was evidence that showed that the effect of “Total Place” told at least as much in favour of the existing structure as it did in favour of change.  The point is even stronger if it was used to overcome, in Norwich’s case, failure to meet two criteria.  This was a last minute change of heart by the Secretary of State, and I see no reason to suppose that he would have been impervious to the argument that he should adhere to that which had persuaded him for so long, and that “Total Place” was a slight rather than a compelling reason for changing the stance he had adopted for over 3 years.

98.	I am satisfied that this change in approach was also unfair and deprived the County Councils of the opportunity to make their case in the consultation process. This was in the end carried out on one basis which they addressed; but the target was moved by the Secretary of State in a way which he could readily have signalled, and without any or at worst any great delay. I do not suppose that the unfairness was intended but it was real, plain and unlawful.

99.	I recognise that the question of whether the two Cities should or should not be unitary authorities is a political one at heart and involves issues which it is not for the court to rule on. I fully accept that the Orders have been approved by Parliament after debate, which included the merits of the Orders and the processes whereby the decisions were made, and that that is part of the statutory process. It may well be that the courts should be slower to hold that the prior process was so unfair as to be unlawful in those circumstances.  But those points, if good in themselves, do not provide a sufficient answer here. Parliament enacted the 2007 Act, requiring statutory guidance to be given, and enabling the Boundary Committee’s advice to be sought on the application of the guidance to the issues a proposal gives rise to, and requiring consultation; it is taken to know that the courts examine the lawfulness of that process what ever view Parliament may take of the merits and wisdom of approving the Orders.

100.	Mr Drabble makes the perfectly sound point that there has to be a conclusion to a consultation process, and that the process is not necessarily unfair because responses made by one consultee are not known to another but may yet influence the decision. Nor does a Minister have to announce a preliminary decision so that consultees know what may well be decided so as to focus their responses on it.

101.	But that is not the essence of the unfairness here. This was not a case in which the final round of responses as such contained material from other consultees which the County Councils say was so new, unexpected and fundamental that they should have been told about it were it to influence the decision. The short point is that the Secretary of State set out repeatedly the basis upon which he would refuse proposals, and without any warning adopted a wholly different approach, and reached decisions which, on the original approach, he would not have reached.  A fair process need not have been prolonged let alone endlessly iterative.  The process would not have had to start again, an alert could have been given in December 2009, without creating any delay at all; and it would not have required a very long further round, if he really did leave thinking about his decision-making approach as late as it appears he did. The problem arose entirely because of his late choice to change his approach, having failed to take any of the many opportunities to signal the problems in advance.

102.	Mr Straker submitted that what the Secretary of State did was also a breach of the County Councils’ legitimate procedural expectation that the decision would be reached by applying to the criteria the decisive negative role he had always said they would play, unless the County Councils were given an opportunity to make representations about any new basis upon which the Secretary of State was to reach his decision.  That does not, as I see it, add anything to the duty to consult.

103.	Indeed, in this case,  submitted Mr Straker,  the oft repeated and consistent way in which  the Secretary of State had described the role of the criteria throughout the whole process until he announced his decision on 10 February 2010, the reliance placed upon that by the County Councils in putting so much time and effort into their responses, coupled to the importance of the subject matter of the proposals to their areas, all created a substantive legitimate expectation that  the decision would go against the City Councils as their proposals did not meet all of the five criteria. In my judgment, that goes too far. The Secretary of State was not obliged by statute to make his decision on any particular basis; he was not obliged to consider a proposal once and then to accept or dismiss it, never to return to it. He would have been entitled to change the criteria or to have none and then to reconsider the same proposal, reconsulting on that new basis. That is no different from reconsulting on these proposals having publicised the new basis for his decision. In substance therefore, it adds nothing to the duty to consult.

104.	I do not accept Mr Straker’s submission that the decision was pre-determined; rather there was a last-minute change of approach and I see no reason to suppose that a fair consultation process might not have persuaded the Secretary of State to revert to what he had maintained for so long.

105.	Mr Straker’s submission that it was irrational to rely on the downturn and “Total Policy” as justifying a change of approach to the criteria and being treated as “compelling reasons” to do so, is a difficult one to make good in view of the high level of general political judgment involved.  The same applied to the argument that this change was unsupported by evidence.  I was not persuaded by it.

106.	However, for the reasons which I have given the Orders are quashed. This does not prevent them being put forward for approval after what need be only a short period of consultation.