England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Sitting at: Birmingham Civil Justice Centre Priory Courts 33 Bull Street Birmingham B4 6DS
		31 March 2011

Mr Justice Blake:

Introduction

1. This is an application for judicial review made by claimants who are users of Legal Entitlement Advice Services (hereafter LEAS) that have been funded by the defendant Birmingham City Council pursuant to its discretionary powers under section 142 of the Local Government Act 1972. The claimants challenge the decision taken by the defendant's Cabinet on 29 November 2010 to terminate funding for the LEAS and in particular the three LEAS that they use pending new commissioning arrangements coming into force in the summer of 2011.
2. The organisations were notified of this decision on 15 December 2010 following a decision taken the previous day not to call in the Cabinet's decision. There was then an exchange of correspondence between solicitors acting for the claimants in mid-February and these proceedings were issued on the first of March. Directions were given by HHJ Robert Owen QC on 9 March that this application should proceed by way of a rolled up hearing on Friday 25 and Tuesday 29 March 2011, and directions were given for filing of evidence. The urgency in determining this matter is because of the cost implications for the defendant's budget for the financial year from April 2011 if the application were to succeed. The Court is grateful to both legal teams for the speed with which they have assembled the relevant materials, summary grounds of defence, evidence in support, the detailed skeleton arguments and the relevant authorities.

Factual background

3. Mr Rahman, the first claimant, is a Birmingham resident of Pakistani origin. He is 77 years old, in poor health, with limited mobility who cannot apparently read or write or communicate in English. He has been a user of the St James Advice Centre located opposite his home in connection with his welfare entitlements for some 20 years. The St James Advice Centre draws 80 per cent of its clients from the local ward and 93 per cent of its clients are of origins from Pakistan and Bangladesh. The Centre provides free advice in the languages most relevant to the needs of the majority of its clients, Urdu, Bengali and Murpuri. The Centre has been funded to some degree by the defendant Council since 1998 and at the present level since 2004. Until the decision under challenge was made, 85 per cent of its funding comes from the funds supplied by the defendant.
4. This Centre, as indeed all the centres engaged in this judicial review, participated in a consultation in 2006 with the defendant Council that led to a shift in funding strategy from annual spot funding of provision in this sector to a process of commissioning services whereby the defendant made a strategic assessment of what it wanted to support by way of voluntary sector services and entered three year funding agreements with organisations selected to give effect to the defendant's judgment.
5. The St James Centre was aware that a new review was under consideration in 2009 of what voluntary sector services should continue to be funded as a complement to the defendant's own neighbourhood information centres. As part of that review the defendant appointed consultants, Campbell Tickell, to examine existing arrangements and make recommendations to the defendant. On 12 October 2009 the St James Advice Centre received a letter from the defendant in the following terms:

"Advice services provided directly by the Council are being transformed by the introduction of Customer First and changes to the Neighbourhood Office Service. Consequently on 28 Septemberm, Cabinet approved the review of the targeting of the budget for voluntary advice agencies so that the mix of advice services in the city best matches the needs of service users. The review will involve consultation with all stakeholders. In order to allow time for this the commissioning process for future funding originally planned for the autumn of 2009 has been postponed. Pending the outcome of the review the grant currently in payment to St James Advice Centre will be extended beyond 31 March 2010. The extension of grant aid will be for three months in the first instance with the option of further extensions being made as necessary."

6. It is understood that other centres received similar letters. Funding was extended three monthly on a rollover basis by the defendant as the time for considering its review and its priorities under that review were extended. However, on each occasion funding agencies were told that there was no guarantee of an extension and no guarantee that they would secure new contracts when re-commissioning commenced.
7. The second and third claimants, Miss Lee and Miss Chen are of Chinese origin whose ability to communicate in English is poor. They both use the Chinese Community Centre, a long-established service assisting the Chinese community in Birmingham and funded by the defendant since 1979. It gives advice on a variety of problems of particular concern to the Chinese community, as its name might well suggest.
8. The fourth and fifth claimants, Miss Rice and Miss Doyle, have various mental and physical disabilities and they use the services of the Birmingham Tribunal Unit (BTU) with respect to both advice and representation at welfare benefit appeals. It so happens that both had outstanding proceedings before a tribunal at the time of the decision to terminate funding. The BTU has been funded by the defendant since 1986. It considers that its regular free representation in welfare appeals to the Tribunal is a unique service as: Legal Services Commission funded solicitors do not provide such a service and whilst others agencies may do so occasionally, they do not do so regularly.
9. With this brief description of the claimants and the advice centres that they use, no material distinction is hereafter drawn between them in the history of this matter. Each has filed evidence that withdrawal of funding as communicated on 15 December 2010 has led to severe reduction in the services that can be offered to their client communities and redundancy notices have been issued to skilled and experienced staff who provided such advice. The defendants pointed out that there was a transitional fund of £300,000 available to any voluntary sector organisation in Birmingham who were adversely affected by funding decisions generally pending the re-commissioning of services. However, it appears from the terms on which bids can be made for that fund that those funds cannot be used for the payment of normal running costs such as rent and salaries. Thus the advice agencies indicate that they will be severely prejudiced in what they can provide and indeed as to their very future pending a decision on recommissioning of equivalent services.
10. On 29 January 2010 there was a meeting between the various LEAS and the principal officer of the defendants concerned with this issue, Ms Watts (head of Business Projects, Housing and Constituencies),. A record of that meeting was drawn up it seems by one or more of the voluntary sector people attending that meeting that records Ms Watts saying as follows::

"BCC [the defendant Council] remains committed to a mixed economy of advice provision. BCC have put out a tender for a review of advice services in Birmingham. This has been publicised to a list of approved suppliers which is the NCVO list of consultants. This will close in two weeks' time after which there will be a selection period and a consultant will be hired to undertake the review. This will involve examination of current provision, consulting with all the stakeholders - both funded and non-funded agencies - resulting in recommendations on what services BCC should commission in the next round. It is expected that this review will take several months. There will then be discussion within BCC to develop proposals in the light of the review's recommendations. It is expected that these proposals will be presented to the full Cabinet by 10 December 2010. In the meantime contracts with existing agencies will continue at their current level, on a rolling three-month contract. If the review takes less time than expected there is the possibility that the proposals could go to Cabinet earlier and therefore contracts cease earlier. In addition, the funding is not ring-fenced. BCC is facing big cuts from central government because of the recession and will therefore be looking at all expenditure and internal departments to make savings."

11. The consultants' report referred to in that meeting was the Campbell Tickell report completed in March 2010 but not seen by the LEAS until the December decision. The report suggested first new approaches for strategic commissioning and in particular recommended that Birmingham move away from provision on single ethnicity or interest group basis to more general provision, but elsewhere in the report it did note that there was a surplus of demand over supply. The second point is that the report recommended that a mixed economy and advice provision should continue. The third point is that the authors of the report anticipated that there would be consultation on the implications for public sector equality duties before any decision was taken. Fourthly, it is anticipated that there would be a continuity of existing funding pending decisions taken on recommissioning.
12. In preparation for the Cabinet's decision in November 2010 Ms Watts drafted the report containing the recommendations. That report makes plain that the recommendation included "approve the servicing of notice to terminate all funding to organisations currently providing legal entitlement advice for the discontinuation of all existing relationships". It was apparent that that would mean discontinuation of funding before the recommissioned funding was in place and a timetable for that suggested that June 2011 would be the time when assessment and selection of future funders would take place with contracts phased in in the following months and thereafter.
13. Section five and six of that report, are in the following terms:

Evaluation of Alternative Options

"5.1 The 'do nothing' option, applying the same process used in the previous commissioning exposes the Council to the prospect of poor value for money and the purchase of services that over time cease to meet the needs of the citizens of Birmingham.

5.2 Retaining the entire budget in-house to expand the Council's own advice services would afford increased control in terms of securing value for money, responsiveness to the changing context and the targeting of services. However, this does not support the Council's planned objective of achieving a thriving third sector. Neither does it address the needs of the ten per cent of residents who prefer to obtain their advice from independent sources as expressed in the consultation exercise referred to at paragraph 4.3 of the report.

6 Reasons for the decision.

6.1 To ensure that the commissioning of legal of Legal Entitlements Advice Services takes an holistic view of how best to meet the advice needs and preferences of Birmingham's residents whilst achieving responsiveness to shifting contexts and value for money.

6.2 To ensure that the services commissioned complement the advice services provided directly by the Council in order to ensure the resources are used to best effect and deliver a coherent customer journey.

6.3 To enable recommissioning to commence."

14. The report lists the background documents used to compile that report. Those included the consultants' report already mentioned and also something described as Advice Services Consultation Findings March 2010 which is what was being referred to at paragraph 5.2 and paragraph 4.3. This document was a user survey commissioned by the defendant from a research body in March 2010. It transpires that this was an exercise in information gathering with a number of people whose identities were made available through a standing survey arrangement in Birmingham but consisted of 200 people, 30 who responded by post and 170 on-line. There is various detail provided as to the break-down of the respondents and the answers that they have given, but it suffices to note for present purposes that 171 of those who responded described themselves as white British, eight as white Irish and other classes of ethnicity would have compromised the remaining 21 respondents.
15. Not mentioned in the background documents is a document that Ms Watts herself was prominent in compiling by the first of November 2010, namely the Equality Impact Needs Assessment (EINA) which is a document which plays a significant role in the subsequent history and the legal challenge to the defendant's decision. There were further developments in the history of the decision making to which reference will be made in due course.

The issues

16. The claimant's case, advanced by Ms Mountfield QC, is that the defendant's decision was unlawful for three reasons:-

(1) It was taken without consultation with the LEAS affected or their users in circumstances where there was an expectation of consultation.

(2) It was taken in breach of the Public Sector Equality Duties (PSED) principally the duties with respect to race and disability. Each PSED includes the need to give due regard to the statutory concerns when decision makers reach conclusions within the scope of those duties.

(3) The defendant's decision is irrational and vitiated by a failure to take into account considerations of such importance that a reasonable decision maker had to take into account and/or took into account irrelevant matters that should have played no part in the decision.

17. In my judgment by far the most important of these grounds of challenge is the second and it is that that I will consider first in due course. The defendant appears to have recognised this and that it might have had problems in resisting the challenge based on the PSED ground because, although Ms Watts had prepared the EINA before the 29 November meeting, that EINA was not referred to in the background documents or the body of the report to counsellors and it transpires had not been seen by most of the counsellors who took the decision. The lead counsellor for this area was Councillor Khan. He had apparently been shown a version of the EINA or something similar at an earlier stage but there is no witness statement from Councillor Khan as to what he had read before the decision and what he understood of what he read and how he approached the discharge of the PSED in reaching the decision.
18. Accordingly, after this challenge had been lodged, it seems that on the advice of leading counsel, the defendant decided to make a fresh decision on 14 March 2011. The briefing note for that decision reads as follows:

"1. Members will appreciate that the decision concerning the commissioning of Legal Entitlement Advice Services has already been considered by Cabinet on 29 November 2010.

2. However, that earlier decision has been subject to judicial review proceedings. Leading counsel has advised the Council that the EINA is one of the documents that the Cabinet should consider when making its decision and the commissioning question has therefore been brought back to the Cabinet in order that Cabinet can give fresh consideration to the recommendations made in the report.

3. In considering the decision afresh, it is important that members have a clear understanding of how they should approach their decision. It would be unlawful if members took the view that they were being asked to rubber-stamp a decision they made on 29 November. As members will appreciate, it is unlawful for members to approach decision makers by having a closed mind or giving the appearance of having a closed mind.

4. When taking a decision members much approach that process with an open mind. They must have regard to the relevant considerations and give fair consideration to all of the points raised, whether in the report or in any representations or arguments made to them. They are required to decide the issue on its individual merits. Members are not required to cast aside views they have formed and they are entitled to express earlier views on the issues under consideration. They should, however, revise those views in the light of any new material put before them for the purpose of taking a new decision, including in particular the contents of the EINA."

19. There was a report also before the Cabinet on that occasion with the decisions recommended being described as follows:

"1. Note the EINA attached to appendix one and the narrative at 3.5 of this report.

2. Approve and reaffirm its decisions taken on 29 November 2010."

20. At paragraph 3.5 of the report, under the question "Have the main risk management and inequality impact assessment issues been considered or concluded and, if yes, what are they and how will they be carried forward to deliver the Council's objectives?", the report continues:

"Independent consultants were engaged for one strand of the review of commissioning advice services, concluded that supporting culturally specific agencies is unsustainable and recommend a shift towards culturally sensitive general provision. An equalities impact needs assessment relating to the decommissioning and recommissioning of advice services is attached to appendix one. A further EINA is to be completed as part of the recommissioning process specifically relating to the service specification prior to engaging with the market."

21. The Cabinet decided to uphold the 29 November decision. In the summary grounds and both the written and oral submissions deployed by Mr Clayton QC the defendant has only sought to defend its decision against Ms Mountfield's second ground of challenge, the PSED, by reason of the 14 March decision. Ms Mountfield nevertheless submits that the second decision does not avail the defendant in responding to this application for the following summary reasons.:-

(1) The November EINA itself was not based on consultation despite the defendant's own code of guidance saying that it would be, and despite references in the EINA itself to consultation having taken place.

(2) The EINA was inherently flawed in itself in terms of its assessment of the impact of the termination of funding of the LEAS on vulnerable users pending recommissioning.

(3) The equality duties engaged were not merely to have regard to have an EINA prepared by the defendant's officer, but to give due regard to the statutory grounds in the light of all available material. An EINA is only a means to an end. Apart from the inherent defects in the EINA prepared in November, the claimants submit that by March 2011 there was abundant further evidence available as to the adverse impact on disadvantaged service users, in particular the evidence of the claimants and the managers of the respective advice centres, as well as the grounds and correspondence prior to the grounds in the judicial review to which the decision makers could and should have been alerted in some appropriate way but were apparently not.

22. It is important at this juncture to note that the claimant's challenge is and always has been that to the gap in funding the LEAS between the decision taking effect on three months' notice served on 15 December (that is to say the end of March or thereabout) and the timetable for the award of the new commissions intended to be effective in July of 2011. Although the three agencies with whom the claimants are connected have been funded for many years by the defendant Council and had previously been commissioned to provide such services on a three year contract from 2007, it is accepted that they have no right to or expectation of future funding or success in the commissioning process. However, it is said that the defendant has previously acted, when deciding whether to fund this sector at all and, if so how to do so and who to fund in order to provide the services in question, without causing such a gap in the continuity of relevant provision. The consequences of such a gap to the three organisations who have provided evidence in this challenge have already been set out. It is indicated that the services cannot be satisfactorily replicated elsewhere by others in the voluntary sector and application to the transitional fund is inadequate to ensure such continuity.
23. The defendants' response to the claimant's case has changed significantly over the past five weeks. There was correspondence before issue of proceedings and in its response on 22 February 2011 the defendant Council resisted the anticipated claim on the following four broad bases:

(1) There had been sufficient consultation and no more was needed before funding was terminated.

(2) There had been both delay in raising the claim and challenge was made to the standing of the individual claimants to bring it.

(3) The defendant expressed concern about the quality of service provided by the three agencies most connected to this challenge.

(4) It was averred that there had been a discharge of the PSED because an EINA had been prepared at the time of the decision to terminate the funding.

24. That letter gave the following explanation of why funding was terminated before re-commissioning was available:

"The basis of the decision is set out both in the Cabinet report of 29 November 2010 and the Equality Impact Needs Assessment. The principal reason is that the City Council cannot roll over contracts indefinitely and must address the ending of contract periods, in this case 31 March 2010. As the Council is commissioning a service based on a new service specification, it will be seeking bids to deliver these services. This will be an open tender and therefore it is not reserved to organisations who have previously received funding from the Council under a service level agreement. The Council wishes to ensure that there is effective competition and that there is no discrimination in favour of organisations that have been funded to date. Additionally the City Council is under a fiduciary duty to protect public money and it could not have continued contracts with funding organisation which could no longer demonstrate value for money or had moved away substantially from their original agreement. The Equality Impact Needs Assessment demonstrates that consideration was given to the position of both the advice agencies and service users during the period of decommissioning and recommissioning. The mapping of advice service provision across the city gave the authorities assurance that sufficient and appropriate alternative services were available within easy reach of service users. The Council have given advice and guidance to existing contractors enabling them to signpost users to agencies capable of assisting them."

25. On 18 March 2011, pursuant to the court's directions, summary grounds of defence and a detailed witness statement from Ms Watts were served. In substance these indicate:

(1) No submissions were made about standing but complaint was still made of material delay to the prejudice of good administration and the rights of others.

(2) No reliance was placed as a reason to terminate funding on alleged defects in the services provided by the three agencies (it was recognised of course that all 13 agencies had been terminated).

(3) It was claimed that there was no duty to consult on the cessation of funding as opposed to consultation as to the recommissioning process generally.

(4) The November EINA had been properly taken into consideration by the Cabinet on 14 March 2011 and that resolved any breach of the PSED.

(5) It was for the defendant to decide what were the relevant considerations to take into account when deciding on termination of funding before recommissioning could take place, and none of the matters relied upon by the claimant could impugn such a decision since it was for the claimant to make out irrationality on a high threshold given the subject matter was budgetary decision making in a tight financial climate.

(6) It was generally known that with the public sector spending review that central government announced in October 2010 that there was significantly reduced budgetary provision for the defendant.

26. In the course of his submissions and partly in answer to questions that the Court raised with Mr Clayton about important aspects of this case, the following answers were, in my summary, given:

(1) The real reason why funding for LEAS could not continue until recommissioning was started was the need of the defendants to reduce spending as a result of central government cuts.

(2) It was recognised that this reason was not set out in the report to the Cabinet, the answer before letter before action, the summary grounds, the witness statement of Ms Watts and the skeleton argument of the defendant drafted in response to this claim.

(3) The economic exigencies of the day were well-known to all making decisions in this field and the Court was entitled to conclude that they must have been recognised as a pressing concern by the lead member, Councillor Khan, although no evidence had been adduced from him.

(4) But for these financial exigencies it would have been reasonable for the LEAS to have expected a continuity of funding for service provision commissioned by the Council and therefore no funding gap.

(5) The defendant wanted to continue to fund independent voluntarily sector advice agencies in the sector and none of the existing providers had been ruled out of the commissioning process that was by now under way.

(6) The defendant recognised that alternative provision from the Council's own neighbourhood officers or, in the schedule of other voluntary sector advice agencies that it had provided, could not replicate the services provided to these claimants and it was obvious that they would suffer prejudice from the withdrawal of funding to these services. That degree of prejudice must therefore have been in the minds of all counsellors taking this decision.

27. A document was disclosed to the claimant's legal team "as part of the defendant's continuing duty of disclosure" on the evening of 28 March, the evening before the conclusion of the claimant's submissions on 29 March when he began his address. Mr Clayton drew attention to this document that and a part of it headed: "Notes and questions and answers from a consultation workshop re draft service specification LEAS at VVSC Friday 18 March 2011". Question three in that document was: "Could the Council please extend the current grants until the end of September 2011, thereby giving everyone time to consider the draft service specification and an extra month to recommission the service?". A lengthy answer is recorded to that but in substance it includes the averral that the budget now stands at £1.1 million and the cost of rolling over until September 2011 would substantially damage the budget that had been set aside for recommissioned services in the financial year from April 2011 and wipe out the £300,000 transition fund that had been designed to help. Question 11 is: "Why is the Council slashing the budget for this service?". Answer:

"It is not. Previously the total given in grants for advice services was £1.31 million distributed to 13 different agencies. In future the budget is £1.1 million. The LEAS budget has not been targeted for cuts and neither has it been immune to the budget reductions adopted Council-wide to achieve Birmingham's contribution to the national budget deficit. The LEAS budget has not experienced disproportionate treatment."

28. The core submission made by Mr Clayton was that whatever failures the court might find in the decision making process leading to the funding decisions taken in November and March 2010 and 2011, these were procedural defects only rather than ones of binding substantive obligation and accordingly now that the defendant's true case was made plain there should be no relief granted on this application as it would be immaterial or at least no relief granted beyond a mere declaration, leaving untouched the substance of the decisions. The defendant's budgetary problems were real and determinative. If the Court were to quash the decision, terminating support, it would cost the defendants £109,000 per month to continue to fund all 13 LEAS and £25,000 per month to fund just the three services connected with these claimants.

The law

29. The Public Sector Equality Duties (PSED) are to be found in section 71 of the Race Relations Act 1976 (as amended), section 76A of the Sex Discrimination Act 1975 and section 49A of the Disability Discrimination Act 1995 (as amended). All three PSEDs require public authorities to give due regard to the need (i) to eliminate unlawful discrimination and harassment in the respective fields of race, sex and disability; (ii) to promote equality of opportunity between those with a protected characteristic and others; in addition the Race and Disabilities Duties include the need (iii) to promote good race relations; and (iv) to take steps to take account of disabled people's disabilities even where that involves treating disabled people more favourably than others, and to promote positive attitudes towards disabled people and to encourage participation by them in public life.
30. It is now common ground that withdrawal of the services provided by the LEAS to people like the claimants who are disadvantaged because of a combination of age, ethnic origin, language skills and other disabilities creates a prejudicial loss of services. These services had originally been commissioned by Birmingham City Council back in 2006/2007 amongst other reasons to improve precisely the lot of such people and to enable them to better participate in society.
31. The law as to the nature of these PSEDs and the duties of the public authority to take them into consideration and give due regard to them has been established in a number of leading cases in the Court of Appeal, including Baker [2008] EWCA Civ 141, BAPIO [2007] EWCA Civ 1139, R (C) [2008] EWCA Civ 882 and the Divisional Court in Brown [2008] EWHC 3158 (Admin). I have studied all the passages cited to me from those authorities and taken them into consideration. A recent summary of the relevant principles is to be found in the judgment of HHJ Jarman QC, sitting as a deputy judge of the High Court, in the case of R (Boyejo & Ors) v Barnett LBC and Smith v Portsmouth CC (reported together) [2009] EWHC 755 (Admin). I have found that extensive review to be a particularly helpful compendium of undisputed principles and I adopt it with respect and gratitude:

"49. The claimants submit that Barnet and Portsmouth failed to carry out its duty under section 49A(1) of the Act and in particular to have due regard to the needs set out in (d) and (f), namely to need to take account of disabled persons' disabilities, even when that involves treating disabled person more favourably then other persons, and the need to encourage participation in public life. It is clear that neither the Act nor the specified needs were referred to in either decision or the report which informed it.

50. I was referred to a number of authorities on the nature of the duty. In R (Chavda) v London Borough of Harrow [2007] EWHC 3064 (Admin) (2007) 11 CCLR 187, His Honour Judge Mackie QC sitting as a High Court Judge held that the decision of a local authority to restrict adult care services to people with critical needs only was unlawful because the duty under the Act was not complied with. That case dealt with specific care services, unlike the present case. In the course of the judgment this was said at paragraph 40:

'……. I recognise that the general duty on the Council under section 49A is only to have 'due regard' to the listed considerations (but as I have mentioned the Code states that this requires more than simply giving consideration to the issue of disability). These are important duties nonetheless including the need to promote equality of opportunity and to take account of disabilities even where that involves treating the disabled more favourably than others. There is no evidence that this legal duty and its implications were drawn to the attention of the decision-takers who should have been informed not just of the disabled as an issue but of the particular obligations which the law imposes. It was not enough to refer obliquely in the attached summary to 'potential conflict with the DDA' - this would not give a busy councillor any idea of the serious duties imposed upon the Council by the Act.

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It is important that Councillors should be aware of the special duties the Council owes to the disabled before they take decision. It is not enough to accept that the Council has a good disability record and assume that somehow the message would have got across. An important reason why the laws of discrimination have moved from derision to acceptance to respect over the last three decades has been the recognition of the importance not only of respecting rights but also of doing so visibly and clearly by recording the fact. These considerations lead me to conclude that if the relevance of the important duties imposed by the Act had been adequately drawn to the attention of the decision-makers there would have been a written record of it. (I borrow this observation from a similar one expressed by Stanley Burnton J in R (Bapio Action Ltd) v Secretary of State for Health [2007] EWHC 199 (Admin) ). It follows that in my judgment the decision was unlawful on this Disability Discrimination Act ground and that to this extent Ground 3 succeeds.'

51. In R (Brown) v Secretary of State for Work and Pensions [2008] EWHC 3158 (Admin), Scott Baker and Aikens LJJ sitting in the Divisional court considered the duty in respect of proposed Post Office closures. After referring to the judgment of Dyson LJ in relation to analogous provisions under the Race Relations Act in R (Baker) v Sec State for Communities and Local Government [2008] BLGR 239 at paragraph 31, the court said this at paragraphs 82 to 85:

'What is meant by 'due regard'? Dyson LJ stated, in the same paragraph in Baker, that 'due regard' in the Race Relations Act provision meant the regard that is appropriate in all the particular circumstances in which the public authority concerned is carrying out its function as a public authority. The same principle applies here. There must, therefore, be a proper regard for all the goals that are set out in section 49A(1) paragraphs (a) to (f), in the context of the function that is being exercised at the time by the public authority. At the same time, the public authority must also pay regard to any countervailing factors which, in the context of the function being exercised, it is proper and reasonable for the public authority to consider. What the relevant countervailing factors are will depend on the function being exercised and all the circumstances that impinge upon it. Clearly, economic and practical factors will often be important. Moreover, the weight to be given to the countervailing factors is a matter for the public authority concerned, rather than the court, unless the assessment by the public authority is unreasonable or irrational: see Dyson LJ's judgment in Baker at paragraph 34.

What about the six 'needs' to which public authorities must have due regard when carrying out their functions? The 'needs' identified in paragraphs (a) to (c), (e) and (f) are goals, such as the elimination of discrimination that is unlawful under the DDA, or the encouragement of participation by disabled persons in public life. So public authorities have to have a proper regard for the need to achieve those goals.

Paragraph (d) is different, however. That paragraph places on public authorities a duty to have proper regard for the need 'to take steps to take account of disabled persons' disabilities, even where that involves treating disabled persons more favourably than other persons'. The phraseology is convoluted. It does not identify a goal which is an end in itself. However, in our view the paragraph imposes a duty on public authorities to pay 'due regard' to the need to take steps to do two things which are means which will assist in achieving the goals identified in the other paragraphs in section 49A(1). First, public authorities must have 'due regard' to the need to take account of the fact of disabled persons' disabilities in the context of 'carrying out their functions'. Secondly, public authorities must have 'due regard' to the need to recognise that this may involve treating disabled persons more favourably than others. But we emphasise that, in both cases, no duty is imposed to take steps themselves, or to achieve results. The duty is only to have 'due regard to…the need to take…' the two steps we have identified. The court will only interfere if the public authority has acted outwith the scope of any reasonable public authority in the circumstances.

To do both of these things, the public authority concerned will, in our view, have to have due regard to the need to take steps to gather relevant information in order that it can properly take steps to take into account disabled persons' disabilities in the context of the particular function under consideration. We emphasise once again, however, that the duty is to have due, ie. proper, regard, to 'the need to take steps'.'

The court in Brown then went on to consider impact assessments and how, in practice, a public authority fulfils its duty at paragraphs 89-96:

'Accordingly, we do not accept that either section 49A(1) in general, or section 49A(1)(d) in particular, imposes a statutory duty on public authorities requiring them to carry out a formal Disability Equality Impact Assessment when carrying out their functions. At the most it imposes a duty on a public authority to consider undertaking a DEIA, along with other means of gathering information, and to consider whether it is appropriate to have one in relation to the function or policy at issue, when it will or might have an impact on disabled persons and disability. To paraphrase the words of WB Yeats in An Irish Airman Foresees his Death, the public authority must balance all, and bring all to mind before it makes its decision on what it is going to do in carrying out the particular function or policy in question.

Subject to these qualifications, how, in practice, does the public authority fulfil its duty to have 'due regard' to the identified goals that are set out in section 49A(1)? An examination of the cases to which we were referred suggests that the following general principles can be tentatively put forward.

First, those in the public authority who have to take decisions that do or might affect disabled people must be made aware of their duty to have 'due regard' to the identified goals: compare, in a race relations context R(Watkins - Singh) v Governing Body of Aberdare Girls' High School [2008] EWHC 1865 (Admin) at paragraph 114 per Silber J. Thus, an incomplete or erroneous appreciation of the duties will mean that 'due regard' has not been given to them: see, in a race relations case, the remarks of Moses LJ in R (Kaur and Shah) v London Borough of Ealing [2008] EWHC 2062 (Admin) at paragraph 45.

Secondly, the 'due regard' duty must be fulfilled before and at the time that a particular policy that will or might affect disabled people is being considered by the public authority in question. It involves a conscious approach and state of mind. On this compare, in the context of race relations: R(Elias) v Secretary of State for Defence [2006] 1 WLR 3213 at para 274 per Arden LJ. Attempts to justify a decision as being consistent with the exercise of the duty when it was not, in fact, considered before the decision, are not enough to discharge the duty: compare, in the race relations context, the remarks of Buxton LJ in R(C) v Secretary of State for Justice [2008] EWCA Civ 882 at paragraph 49.

Thirdly, the duty must be exercised in substance, with rigour and with an open mind. The duty has to be integrated within the discharge of the public functions of the authority. It is not a question of 'ticking boxes'. Compare, in a race relations case the remarks of Moses LJ in R(Kaur and Shah) v London Borough of Ealing [2008] EWHC 2062 (Admin) at paragraphs 24 - 25.

However, the fact that the public authority has not mentioned specifically section 49A(1) in carrying out the particular function where it has to have 'due regard' to the needs set out in the section is not determinative of whether the duty under the statute has been performed: see the judgment of Dyson LJ in Baker at paragraph 36. But it is good practice for the policy or decision maker to make reference to the provision and any code or other non - statutory guidance in all cases where section 49A(1) is in play. 'In that way the [policy or] decision maker is more likely to ensure that the relevant factors are taken into account and the scope for argument as to whether the duty has been performed will be reduced': Baker at paragraph 38.

Fourthly, the duty imposed on public authorities that are subject to the section 49A(1) duty is a non - delegable duty. The duty will always remain on the public authority charged with it. In practice another body may actually carry out practical steps to fulfil a policy stated by a public authority that is charged with the section 49A(1) duty. In those circumstances the duty to have 'due regard' to the needs identified will only be fulfilled by the relevant public authority if (1) it appoints a third party that is capable of fulfilling the 'due regard' duty and is willing to do so; and (2) the public authority maintains a proper supervision over the third party to ensure it carries out its 'due regard' duty. Compare the remarks of Dobbs J in R (Eisai Limited) v National Instituted for Health and Clinical Excellence [2007] EWHC 1941 (Admin) at paragraphs 92 and 95.

Fifthly, (and obviously), the duty is a continuing one.

Sixthly, it is good practice for those exercising public functions in public authorities to keep an adequate record showing that they had actually considered their disability equality duties and pondered relevant questions. Proper record - keeping encourages transparency and will discipline those carrying out the relevant function to undertake their disability equality duties conscientiously. If records are not kept it may make it more difficult, evidentially, for a public authority to persuade a court that it has fulfilled the duty imposed by section 49A(1): see the remarks of Stanley Burnton J in R(Bapio Action Limited) v Secretary of State for the Home Department [2007] EWHC 199 (Admin) at paragraph 69, those of Dobbs J in R(Eisai Ltd) v NICE (supra) at 92 and 94, and those of Moses LJ in Kaur and Shah (supra) at paragraph 25.'

53. The duty was considered by the Court of Appeal in R (Deborah Domb & Others) v The London Borough of Hammersmith and Fulham and The Equality and Human Rights Commission [2009] EWCA Civ 941. That case involved a decision by a local authority to make charges for the non-residential home care services. Rix LJ, with whom Sedley LJ and Lord Clarke MR agreed, referred to a number of authorities but found the greatest assistance in the judgments of Dyson LJ in Baker and the judgment in Brown and said this at paragraphs 52 and 53:

'….. For present purposes I take from those summaries in particular the observations that there is no statutory duty to carry out a formal impact assessment; that the duty is to have due regard, not to achieve results or to refer in terms to the duty; that due regard does not exclude paying regard to countervailing factors, but is 'the regard that is appropriate in all the circumstances'; that the test of whether a decision maker has had due regard is a test of the substance of the matter, not of mere form or box-ticking, and that the duty must be performed with vigour and with an open mind; and that it is a non-delegable duty.

No authority has been cited as being of particular relevance to the facts of our case. I note, however, that Chavda concerned the activities of councils with respect to their provision of social services. In Chavda, where Harrow restricted home care services to people with critical needs only, there was a total failure to mention the DDA duty in any of the documents produced for Harrow's decision makers. There was no effort proactively to seek the views of the disabled or to refer to the duty in the planning stages of the consultation. There was no equality impact assessment. Harrow nevertheless submitted that it had observed its duty in substance, and had engaged in consultation and other ways with the disabled. However, what Judge Mackie considered as critical was that 'There is no evidence that this legal duty and its implications were drawn to the attention of the decision-takers who should have been informed not just of the disabled as an issue but of the particular obligations which the law imposes' (at para 40). However, I cannot say that I derive any assistance from that, very different, case.

54. At paragraph 79 Sedley LJ added:

'Members are heavily reliant on officers for advice in taking these decisions. That makes it doubly important for officers not simply to tell members what they want to hear but to be rigorous in both inquiring and reporting to them. There are aspects of the evaluation, quoted by Rix LJ, which strike me as Panglossian - for example the ignoring of actual outcome in favour of 'planned outcome' and the limiting of consequential risk to the possibility that charges would not be introduced - and parts of the report to members which present conclusions without the data needed to evaluate them.'

55. The claimants submit that the lack of reference in the decisions and the report to the duty or to any of the needs under section 49A(1) render the same unlawful. In my judgment it is clear from the passages I have cited from Brown and in particular paragraphs 91 and 93, that while it is good practice to do so, a failure to refer to the section is not determinative of whether the duty has been performed. What is required is that the duty is exercised in substance, with rigour and an open mind.

56. I do not accept the submission of Barnet that the claimants must show an absence of due regard in the Wednesbury sense of unreasonableness. In R (Meany & Others) v Harlow District Council [2009] EWHC 559 (Admin) Davis J considered the duty in the context of a decision by a local authority to advertise an invitation to tender for its welfare rights and advice services. At paragraph 72 Davis J said:

'Mr Holbrook submitted that Mr Wolfe either had to show that no regard was had to the statutory criteria or that the decision was irrational. Since Mr Wolfe disclaimed the latter, he was, said Mr Holbrook, left with the former. I do not agree with that submission of Mr Holbrook for two reasons. First, the statutes require that the public body had 'due regard' to the specified matters; and what is 'due' depends on what is proper and appropriate to the circumstances of the case. Therefore, if a challenge is made, the question of due regard requires a review by the court. It is not simply a question of determining whether no regard at all was had to the statutory criteria. Second, if the submission of Mr Holbrook were right it would be contrary to the authorities, which indicate that a tick box approach may not necessarily in any given case give a complete answer. It is true that, as Baker and Brown make clear, how much weight is to be given to the countervailing factors is a matter for the decision maker. But that does not abrogate the obligation on the decision maker in substance first to have regard to the statutory criteria on discrimination.'

57. In my judgment the Wednesbury test applies to the consideration of the countervailing factors there referred to, but not to the question of whether the necessary due regard has been had. I am prepared to accept that such regard was had in the preparation of the respective reports in each case by officers who had relevant training and experience and say that they had the duty in mind.

58. However there was a failure in each case in my judgment to bring the duties adequately to the attention of the decision makers in making these particular decisions. It may well be that the leader of Barnet had a general awareness of the duty, not least because of his involvement in the DES. There is direct evidence, from Mr Wylie in Portsmouth, that he had such an awareness. That leaves open the awareness of the other decision makers in Barnet on 8 June 2009 and in Portsmouth on 14 August 2009.

59. A more fundamental objection however in my judgment is that such awareness does not amount to a substantial rigorous and open minded approach. Although in each case the residents concerned, including those with disabilities, were questioned and consulted, this was part of an approach to residents as a whole. Although references to disabilities may be found with diligent reading of the documentation available to the decision makers, it is not possible to discern from the reports or documentation or the decisions themselves that due regard was had, for example, to the need to take account of disabled persons' disabilities even where that involves treating disabled people more favourably than other persons."

Claimant's Ground Two: The PSED

32. Applying the principles set out in the authorities just mentioned, I accept the claimant's submission (1) that the November 2010 decision failed to have due regard to the PSED since it was not in the minds of all the decision makers taking the decision. I also accept the submission (2) that the March decision failed to have due regard to the PSED.
33. I briefly give my reasons for those conclusions. In my judgment the November decision is clearly defective because there is no evidence to suggest that each of the decision makers were aware of the duty and how it was engaged in these decisions at the time they took the decision. The inference from the absence of reference to it in the reports is that it forms no part of the material consideration even if Councillor Khan were aware that an EINA had been undertaken. I note that there was no submission to the contrary deployed by the defendant.
34. The position is different with respect to the 14 March decision. By this stage I accept that each of the decision makers was aware of and had their attention drawn to the EINA and the need to take it into account. However, in my judgment that decision was also defective for two essential reasons, namely that there were substantial defects in the EINA that had been prepared in November 2010 and secondly that the duty is not merely to have regard to the EINA but to have due regard to the PSED and the particular needs spelled out earlier in this judgment.
35. I expand that reasoning in the following respects:

(1) I accept Ms Mountfield's submission (summarised at paragraph 129 of her skeleton argument) that the EINA assessment of prejudice to service users is inadequate in its examination of the evidence and its compliance with the approach recommended by the defendant's own guidance code for such documents. In a number of respects the content of that EINA seem to have been driven by the hopes of the advantages to be derived from a new policy rather than focussing upon the assessment of the degree of disadvantage to existing users of terminating funding arrangements until new arrangements can be put in place. There is more than a hint of what Moses LJ called in the case of Kaur and Shah [2008] EWHC (Admin) 2062 of policy based evidence rather than evidence based policy.

(2) The EINA was not based on consultation about the impact of termination of funding with the service providers who, in my judgment, would have been best placed to explain the consequences of termination of funding in the absence of satisfactory alternative provision or service users. In particular the March 2010 user survey, upon which considerable reliance appears to have been placed both in the EINA and the report to Cabinet of November 2010, was neither consultation nor relevant information gathering with vulnerable people upon the impacts of the funding gap. It was of course relevant background information as to the view of the 200 people who had communicated as to which services they used and where, but little more than that.

(3) Consultation was primarily necessary in order to discharge the PSEDs in this case because the defendants had not obtained the relevant information from the user survey or the general list of voluntary service providers or from any other informed sources and it needed that information in order to make evidence based decision making.

(4) Consultation was also the step indicated as appropriate best practice in the defendant's own corporate EINA Guidance Manual revised in 2009. Various passages from that manual are relevant to this point but it is sufficient to quote Step Two:

"Step Two, involvement and consultation. Consultation is a key part of an impact assessment. The extent of consultation should be matched to the degree of impact and level of proposed changes and the range of groups that may be affected. As a minimum the following questions should be addressed.

What individuals are likely to be directly affected by the policy or function?

What relevant groups have a legitimate interest in the policy?

How do we ensure that those affected by or with a legitimate interest in the policy are consulted?

What methods of consultation will be used?

Questions under Step Two consist of the following:

Briefly describe what you did, with whom, when and where. Provide a brief summary of the responses gained and links to relevant documents as well as any actions. Consider the following:

- What do previous consultations show about potential take-up of any resulting activities or services?

- Have you identified all the equality groups likely to be affected by the proposed policy directly and indirectly?

- Which organisations and individuals are likely to have a legitimate interest in the policy?

-What methods of consultation are most likely to succeed in contacting those you want to reach?

- Have you made resources available to encourage full participation by groups that have proved hard to reach?

If meetings are to be held, have you made sure that the practical arrangements, dates, times and venues do not coincide with religious customs or festivals, also that venues and facilities are accessible?

How will information pre- and post- consultation be made available?

Have you made arrangements to translate the consultation material and the publicity material for the consultation and to have interpreters or an induction loop at meetings and to staff any help lines you have set up?

Answering the questions above should help ensure that you involve and engage everyone who is likely to be affected by the policy in meaningful consultations."

One only has to contrast that to the user survey to see the defects in that document as a form of consultation.

(5) An indication that consultation will be had with relevant bodies in a policy guidance manual can in itself and alone found the legitimate expectation of consultation to which legal effect should be given. I refer without citation to a similar conclusion in Boyejo at paragraph 66 as per HHJ Jarman and I agree. (6) Here the expectation of consultation was enhanced by other communications saying that stakeholders would be involved in the process of commissioning services. On a fair reading of the correspondence as a whole, in my judgment decommissioning of services already commissioned before new commissioning services were in place would all appear to be part of the revised process rather than something wholly distinct. This impression is supported by both past practice in the absence of any funding gap, the expectations of the consultations (although I recognise that that could not have founded an expectation of the LEAS at the relevant time), but also in a letter to a local MP written during this period on 13 September 2010.Finally, that impression is enhanced by the fact that Miss Watts had asserted both in the EINA and elsewhere in the decision making process that there had been consultation, whereas the truth of the matter was that the user survey was not consultation but only information gathering of limited utility to the present issue.

(7) The evidence as to the reconsideration in March 2011 suggests that it was limited to an examination of an adequate EINA rather than a fresh assessment of the need for due regard to all available evidence of prejudice and what might reasonably be done, consistent with the intended policy, to mitigate it. That of course included the witness statements of the claimants in this case launched a few weeks earlier. The authorities emphasise the point that the ENIA is not an end in itself but a tool to decision making that meets the standards set by the statutory duties. Further, the extracts from counsel's advice that were before the Council at the Cabinet on 14 March and the document noted earlier in this judgment indicated that the EINA was merely one source of information on the duty and not the only source.

(8) The legal principles summarised earlier in this judgment and the defendant's own guidance manual which, in my judgment, is consistent with those principles at Step Four requires consideration of whether there are ways of mitigating adverse impact and alternative ways of achieving the same goals:

"Coming up with alternative ways for delivering the service where the impact will not be as adverse is also important. For example, you may need to develop delivery strategies for different groups to ensure that the service you are delivering is appropriate and accessible to them all. Altering your proposals is another option, to change them so that they meet the needs of others not initially identified when the proposal was at first being drawn up."

36. In the context the obvious thing for any decision maker to consider was whether continuing the existing services at least in those areas where there was no reasonable equivalent that vulnerable users could access until re-commissioning took place and recognising that may not be able to travel far and had language problems and/or may have needed representation as well as advice). It is striking that the case for doing this for some or all of the service users was never set out in the report before the officers or the terms of the decisions themselves, or in evidence subsequently filed by the defendants in this case. Proper consideration of this issue might have elicited what the countervailing factors were that pointed against this course. They could then be duly noted, recorded and assessed.
37. I accept Mr Clayton's submission, not disputed by Ms Mountfield, that where the PSED has been properly complied with the weight to be attached to the countervailing factors for adopting the policy impugned is for the Council and can only be reviewed by this Court on a challenge to an appropriate demanding test of irrationality having regard to the subject matter. I accept that there is no duty to fund these services and in a pressing financial climate difficult choices for the defendant have to be made. However, the defendants can only resist the challenge on this ground if they have complied with their PSEDs. I have concluded that they have not done so. None of the reasons set out in the report are reasons to stop funding in the interim. In particular there was no need to stop funding in order to start the recommissioning process. Fair competition in that process did not require existing suppliers to be prevented from continuing to supply that advice. There was no prior notice given that there would be such a gap and as already noted the general terms of the background correspondence was that it would continue until recommissioning was complete.
38. The peculiar fact is that the only public reason given by Councillor Khan for the funding gap decision when questioned by other councillors and when making a statement was a reference to the Transfer of Undertaking Protection of Employment regulations. I accept the evidence of Ms Watts in her witness statement that although there was reference to the TUPE this was not in fact a material reason for the decision. I accept Mr Clayton's submission that it would be very odd if it were since it would be entirely remote from the public law duties and would in any event have probably been ineffective, having regard to the state of the law on the topic first discussed in the judgment of the House of Lords in the case of Litster v Forth Dry Dock Co Ltd [1990] 1 AC 546. However, the fact that the only public explanation that might have had some form of explanation for this decision was an irrelevant one, merely serves to highlight the absence of evidence that is before the court as to really what was in the minds of the members when they took this decision.
39. For similar reasons, in my judgment it is at first blush peculiar that if you envisage existing contract providers still being able to bid for future commissioned services and you wish to prevent any unfairness to them, as I accept Ms Watts says she does in her witness statement, that you would consider it prejudicing small organisations such as the three services used by these claimants to the extent of them possibly losing valued staff and experience and indeed perhaps not even being in existence at the time when the recommissioning would fall for consideration. None of those factors would be absolute factors requiring the local authority as a matter of law to have continued the funding pending recommissioning, but each were such obviously cogent points in the context of the PSEDs and the duty of mitigation of adverse impact on disadvantaged persons to suggest again that there has been a failure of compliance with that duty.

Claimant's Grounds One and Three:

40. In the light of my conclusions on ground two that I have considered first the other grounds can be dealt with summarily. Clearly these conclusions have already drawn in the need for consultation and what factors were necessarily relevant factors in considering the duty to give due regard to the PSEDs for the reasons already set out. Stripped of that context I doubt whether, by itself, merely the history of the decision making, the terms of the letters or any other consideration of public law relied upon the claimant, could independently have justified a conclusion of illegality or illegality that might have resulted in any substantive relief. However, for reasons already given, I consider the true context of those factors lies within rather than separate from the PSED duties.

Relief

41. Having reached the conclusion that both decisions - November 2010 and March 2011 - were unlawful for failure to comply with the PSEDs then the question of what relief, if any, should be granted arises. As already indicated, this was the major theme of Mr Clayton's submission. Since the conclusion of the oral hearing the Court has received and noted a brief written submission from both claimants and defendants on the question.
42. Ms Mountfield objected to Mr Clayton being able to rely upon the minutes of 18 March 2011, the question and answer session noted earlier in this judgment in order to demonstrate that the true reason for the November and March decisions was the deleterious impact upon the budget for the recommissioned services. She says that post-decision explanations of why the defendant acted are unreliable and should not generally be received by the Court. She relies upon the observations to that effect in the Court of Appeal in the case of R v Westminster City Council ex p Ermakov [1996] 2 All ER 302, at page 316 of the report, point four. That was a homeless person's case where there was a statutory duty to give reasons. Mr Clayton submits that that is the explanation of that decision and he can point to words that affect point five of that report:

"I also wish to emphasise that all that I have said is with reference only to the provisions of section 64 of the 1985 Act."

43. I accept therefore that Ermakov only provides a limited assistance on the general position regarding admission of post decision evidence. However, in my judgment there was, albeit that there was no statutory duty on the defendants to explain reasons why funding should be terminated pursuant to the section 142 power under the Local Government Act, by the time this case came before me on 25 March a duty on the defendants to file summary grounds on any evidence in support. That is a duty set out in CPR 54.8 and in particular CPR 54.16 that provides that no written evidence may be relied on unless (a) it has been served in accordance with any rule under this section or direction of the court or the court gives permission. Clearly HHJ Roberts had given directions for the filing of the evidence and this evidence was not filed then or, indeed, shortly after and was not filed before the start of the hearing when the impact upon the reasoning process could have been assessed. It was served extremely late without satisfactory explanation or excuse and indeed was not even served as part of the defendant's evidence but simply a document that had come to light in the on-going process of disclosure.
44. I accept that this is a rolled up hearing for permission where the possibility of subsequent development is always a relevant circumstance, but the timing and manner of this evidence, when the person who made the statement had already made a witness statement the previous day, did not suggest that it would be fair to admit it as the sole basis for understanding the decision in question or the sole basis for refusing any relief because it would be academic or incapable of having any substantive effect.
45. In principle, in my judgment, the claimants are right to submit that the vindication of the Public Sector Equality Duties engaged in this case requires relief to be granted. I rely upon the observations of Buxton LJ in C v the Secretary of State for Justice (citation already given), paragraph 54:

"In considering that issue I am strongly influenced by the failure to produce an REIA. Although here characterised as a procedural defect, it is a defect in following a procedure that is of very great substantial, and not merely technical, importance, as the observations of Arden and Sedley LJJ make clear. It continues to be of the first importance to mark that failure by an appropriate order."

46. I therefore conclude that some relief should be granted. Even where the context of decision making is financial resources in a tight budget, that does not excuse compliance with the PSEDs and indeed there is much to be said for the proposition that even in the straightened times the need for clear, well-informed decision making when assessing the impacts on less advantaged members of society is as great, if not greater. In general terms I consider the advice recently issued in non-statutory guidance by the Equality and Human Rights Commission ("Using the equality duties to make fair financial decisions") to be of assistance to decision makers such as this defendant in the no doubt very difficult decisions that have to be taken in this field, but it is not necessary to prolong this judgment by citation from them.
47. I therefore propose to grant a declaration that the decisions impugned were unlawful because they were taken without due regard to the PSEDs. This leads to the next question, whether I should quash the decisions that led to the termination of funding to all 13 LEAS.
48. I have concluded that quashing a decision with the consequence of restoration of funding to all 13 is neither necessary nor appropriate in this case for the following reasons:

(1) Although all other ten agencies were served as interested parties, it seems that none have filed evidence of the impact of the decision on them or have indicated a wish to be heard in support of such wide-ranging relief. At least two such agencies seem to have expressed a positive wish to disassociate from this claim.

(2) The impact on other agencies of the funding cuts is not known and therefore the impact on their service users cannot be known, therefore a poor evidential base for the application of the PSEDs is lacking in their cases. That was the substantive failure that leads me to the conclusions of illegality in these cases.

(3) Even without receiving the minutes of the questions and answers of 18 March I am satisfied from the evidence that was filed and the submissions made about it that the continued funding of all 13 agencies until the end of the summer at a rate of £109,000 a month would have significant impact on a small budget where resources are scarce and priorities are of great importance.

(4) Although again it is not a matter flagged up in the evidence, by the conclusions of Mr Clayton's submissions I am informed and accept that the effect of any general quashing order might be particularly unfortunate in the present period when local elections are to be held on 5 May and at least by constitutional convention we are now in what is called a purdah period where councillors cannot take politically controversial decisions as apparently this decision is perceived to be.

I accordingly conclude that no relief other than the general declaration should be given that would have impact wider than the three service providers with whom the present five claimants are concerned.

49. I now turn to whether I should give relief and, if so, what relief in respect of the three services that the five claimants use. I can dismiss a number of the defendant's submissions as to why relief should not be granted.

(1) Insofar as it appeared in the letter before action there is no doubt that each of the claimants would have standing to press at least for this relief. (2) The claim of delay in waiting until February to raise a contended challenge is significantly weakened by the realisation that the November 2010 decision was inherently flawed and once those flaws were pointed out would have to be re-taken. In any event, I do not consider that there has been lack of promptness between 15 December when the claimants were notified of the decision and 16 February when they first challenged it in a letter before action, bearing in mind the season. It was at all times open to the defendants to have set aside the decision without litigation and invited any further representations they considered appropriate to comply with the PSEDs and to have made a fresh decision promptly thereafter. (3) This is not a case where, if any relief is granted, I would have to quash the whole budget under section 66, sub-section three of the Local Government Finance Act 1992. I am not considering giving relief in respect to a section 66(2)(c) calculation made under section 33 of that Act and I reject the submission, if it was advanced, that any relief in judicial review proceedings that causes the defendant extra costs has such an effect.

50. In principle therefore an unlawful decision that violates the PSEDs should not stand and should be set aside as regards the three bodies here concerned as a result of the accepted losses of services to these claimants. I appreciate that continued funding of these three services to the tune of £25,000 a month has significant budgetary implications and bearing in mind the "purdah period" it seems that at least two months would be the shortest period in which the defendants could make a future lawful decision having regard to the PSEDs. That, of course, is not a subject of a ruling, just a reflection of the practical realities.
51. I do not consider that sums of that order even combined with a costs order are so significantly detrimental to the Council's duties as custodian of the public purse to deter such a course. I can see no reason why any such sums should come out of the transitional fund set aside for assisting other agencies generally, whether previously funded or not, to cover the gap. The sums of money result from an important error of law in decision making and in principle I would have thought should come out of any contingency reserves available. Those of course are matters for the defendant and not the Court. Of course if funding were to be continued the three organisations would have no claim to duplicate funding for the same purpose from the transitional funding unless and until a lawful decision is taken. I cannot speculate as to how and when a lawful decision might be taken to terminate funding. Despite the moratorium on decision making during the election period there seems to be no reason why officers should not gather in any further information necessary to perform their legal duties and set a prompt date for receipt of such information that the claimants may still wish to supply, although one suspects that their best case has now been put forward.
52. It is in respect of future decision making that the matters contained in the minutes of 18 March 2011 have been noted by the Court and may well have substance as to the timescale and nature of future decisions. If the defendant performs the duty that the law requires in the manner that the law requires it may decide either to continue to fund these agencies until recommissioning is operative or to bring recommissioning forward more speedily in the timetable than was intended, or it may decide that having due regard to the PSEDs there should still be a funding gap. Consultation and decision making will be much more focused given it is only three organisations and their clients whose needs would have to be considered in this context.
53. In response to points made in supplementary written material I see no reason, as a matter of law, why, if a fresh negative decision were taken a further three months notice period would need to be given. That of course is the period that is indicated under the Council's compact with voluntary service providers would normally given, but I do not understand that the compact is a binding contractual provision in private law terms, although doubtless would form the expectation of behaviour in the absence of compelling reasons to the contrary.
54. I therefore had to consider with some anxiety what relief I should grant in respect of the agencies. My intention is to ensure that current funding continues until the first of either recommissioning of services is operative or a lawful decision to terminate funding before recommission is taken having regard to the PSEDs
55. I am presently minded that such a result could be achieved by a second declaration that the notices of termination of funding given to St James, the BTU and the Chinese Community Centre shall not take effect until either the recommissioning process is complete or a fresh lawful decision is made by the defendants. However, given the nature of the issue it may be that I shall hear further submissions before finally drawing up the terms for relief. For those reasons this application is allowed.

MR JUSTICE BLAKE: Now, declaration two. Is that going to do the job?

MS MOUNTFIELD: My Lord, my present thinking is that it may not because what happened was that on 15 December the contracts were terminated without notice and with a three month payment in lieu of notice without a monetary order that roll-over funding is given that, in my view, would not do the trick. It may be, however, that I need to take instructions on this and it may be that it is something that can be dealt with and some sensible agreement in view of the very clear indication your Lordship has given about your intention. I wonder if we might have five or ten minutes.

MR JUSTICE BLAKE: Certainly. I picked up Ms Busch's and Mr Clayton's note this morning before coming into Court and I did see, as your second or third worst option, the idea of partial quashing. It is just conceptually a little tricky to partially quash resolutions. I then thought should we focus upon the notice to the three agencies and in a sense what I was hoping to do was to keep them in suspense rather than to bring the cuts down because, for reasons I have made plain, it seems to me that there may be contingencies where what I have indicated might happen would do. If that can be achieved that would probably be appropriate. I will certainly give you a chance to think about it.

MS MOUNTFIELD: I would have thought it is something that can be dealt with by way of undertaking. If not, then it may have to be that the declarations are a mandatory order. That is another idea to plant but let me take instructions.

MR JUSTICE BLAKE: I have given some thought to it in my judgment so I hope there is sufficient there to assist you both with any further thoughts. Is there anything else?

MS MOUNTFIELD: My Lord, yes. We are very grateful to you for giving a detailed judgment so quickly; I know it is quite a difficult thing to do. I made a note of some ten slips of the tongue, some not particularly important but might as well be corrected, and some of importance. I wonder if the easiest thing is for me to give you a note of them.

MR JUSTICE BLAKE: There will be a chance to correct the transcript

MS MOUNTFIELD: We had a similar problem with a really quite important judgment that has now been put on the websites without the judge's corrections because of the delay so I am quite keen that when you correct it you have these in mind. Perhaps I can write them down and email them to you and copy them to Ms Busch.

MR JUSTICE BLAKE: You can certainly email to my clerk.

MS MOUNTFIELD: I meant to your clerk.

MR JUSTICE BLAKE: The reality is that today is Thursday and even with an expedited transcript it is not going to be available by the end of the week so it will be back in London.

MS MOUNTFIELD: I understand that. The transcript I mentioned was delayed by several weeks and is now on websites uncorrected with quite serious implications.

MR JUSTICE BLAKE: I directed expedition last week for something a little shorter than this and it took four days to get me a transcript.

MS MOUNTFIELD: I will email my notes to you and your clerk then I will not forget them.

MR JUSTICE BLAKE: If you can get those to me promptly so I can consider them before four o'clock tomorrow.

MS MOUNTFIELD: It may be I will sit outside Court and write them up. Well, whatever, I will do that in writing. The other thing is that I would ask for the defendants' costs for this application.

MR JUSTICE BLAKE: I do not think that can be resisted in the light of the unfortunate history of this case.

MS MOUNTFIELD: Also a detailed assessment of costs.

MR JUSTICE BLAKE: I do not think it is a case for summary assessment probably.

MS MOUNTFIELD: No.

MR JUSTICE BLAKE: Obviously if your team have got any slips I have made about the decision making process, I am not entirely sure whether it was Miss Watts' report in November; I saw it was someone else's name on it.

MS BUSCH: My Lord, I too am grateful for the judgment which is extremely clear. In the absence of my leader I am asked to request permission to appeal. I recognise that ascertaining grounds might require some degree of thought in the very clear nature of the judgment. I can only say in support that clearly it raises issues of importance and interest.

MR JUSTICE BLAKE: I recognise the concerns and I would be curious to see what the grounds were. I did get a message late last night that Mr Clayton might want to come down here but since I rather thought we were starting off with the judgment today I did not think it was appropriate. I am not really going to benefit from hearing him ask for permission to appeal, am I? Surely you can tell me anything.

MS BUSCH: I safeguard the position in his absence.

MR JUSTICE BLAKE: I am going to refuse the application. You will have to go elsewhere if you want permission to appeal. Thank you.

(Short adjournment)

MS MOUNTFIELD: My Lord, we are nearly but not able to agree as to the form of wording. We have clearly in mind your Lordship's intended outcome. You will see that document is my proposed wording. Can I tell you where Birmingham disagrees with it?

MR JUSTICE BLAKE: Yes.

MS MOUNTFIELD: They want to limit the order so that it says that it is ordered that the funding for the organisations continue at current levels until the recommissioning decision is taken with respect only to phase one of the recommissioning decision. You will recall that, contrary to the advice of Campbell Tickell, Birmingham has decided to phase in the recommissioning of legal entitlement services and Mr Clayton said to you the period is much longer than four months because some will be recommissioned from the summer of 2011 and others will not be recommissioned until the summer of 2012. It has been suggested to me that the recommissioning of phase one does not really matter because Birmingham takes the view that most of the services provided by these organisations come within phase one. I have a couple of page references for you, but there are certainly some services which appear not to and when I have asked what is in phase two and phase three the answer is that Birmingham does not yet know. That appears to me to create the very gap problem we are concerned with.

MR JUSTICE BLAKE: It is less of a gap problem and frankly there is a limit to what I can do to speculate as to when things happen.

MS MOUNTFIELD: That is why I wanted the wording that just covered the recommissioning gap.

MR JUSTICE BLAKE: If that could mean until the entire process is finished in two years' time, I do not think that is necessary.

MS MOUNTFIELD: Not if it is in relation to the Legal Entitlement Advice Services provided under the rules of contract.

MR JUSTICE BLAKE: All right, that is the issue.

MS BUSCH: My Lord, our preferred wording is "the commencement of phase one of the commissioning process". The reason for that is that the types of services that are provided by the three agencies are services that are to be provided pursuant to phase one. One can see that from the specification document, in particular page 389 in the second bundle. That specifies that phase one will cover welfare, benefit and debt tribunal representation and immigration advice. If I could just explain, the way this is intended to work is that phase one is supposed to cover the bulk of standard services and phases two and three in accordance with intelligent commissioning will involve investigations as to what additional services are required and put into place. I do not want to trawl through all the papers, but I have just one other reference which is that you can see at page 283 --

MR JUSTICE BLAKE: Which bundle are we in?

MS BUSCH: Bundle two. This is an appendix, a briefing paper to the Cabinet. The only significance of it is that it sets out the types of services that the agencies have been providing. The only point in issue as far as I can see is the Chinese Community Centre at paragraph ten. You will see a reference at sub-paragraph (d) to social secure housing for clients. The suggestion has been made that that is not covered by the phase one services but in fact, if you go back to that, at page 392, paragraph 2.1.4, as one might expect one of the benefits in respect of which advice is to be supplied is of course housing benefit. So arguably housing services would in fact be covered.

MR JUSTICE BLAKE: So that substantially addresses the gap. So what do you want me to put? "Phase one recommissioning decision" or "recommissioning decision phase one".

MS BUSCH: "Phase one of the recommissioning process commences …"

MR JUSTICE BLAKE: "The defendant is ordered to ensure that funding of the said organisation continue at current levels from 31 March 2011 until either (1) the phase one recommissioning decision taken with respect to Legal Entitlement Advice Services provided under the former contracts with the said organisations is fully operative." Just adding that in would clarify it, would it? Ms Busch, do you have a copy of Ms Mountfield's current proposals?

MS BUSCH: We have discussed it.

MR JUSTICE BLAKE: What I am being told, I think, is that the phase that deals with LEAS are nearly all there and if one slice of one centre's work may arguably in some respect not come within it that is comparatively marginal compared to the burdens imposed upon Birmingham City Council.

MS MOUNTFIELD: I have now lost a reference I had to page 43 of volume three. My Lord, what I say is that housing benefit is not the full gamut of what the Chinese Community Centre ----

MR JUSTICE BLAKE: You may be right, but what is left of the gap is not worth arguing.

MS MOUNTFIELD: My Lord, if Birmingham City Council had not been so slippery about what a review means, what a consultation means, we would not be so worried because we all know what your Lordship means. You said, "Until the recommissioning decision is fully operative". We are nervous about what phase one is --

MR JUSTICE BLAKE: I have your draft and the question at the moment is do I add in phase one? The recommissioning decision with respect to Legal Entitlement Advice Services, if that is covered by phase one then that seems to me to give a finite point in a somewhat elongated process so people know where they stand.

MS MOUNTFIELD: "Provided under the present contract" which is those in phase one if what you are being told is right, but it is not all of what is being provided in phase one.

MR JUSTICE BLAKE: I am perfectly prepared to accept there may be something which is not covered but so far - this is your last chance to persuade me to the contrary - I am persuaded on the balance of the order. In the interests of clarity and certainty it should have that addition entered.

MS MOUNTFIELD: In that case, my Lord, so be it. The recommissioning decision taken with respect to the Legal Entitlement Advice Services provided under the present contracts by the providers as set out in phase one (a) and (b) is fully operative.

MR JUSTICE BLAKE: I think it might be courteous to show Ms Busch.

MS MOUNTFIELD: I did show it to her.

MR JUSTICE BLAKE: I am not suggesting you are being discourteous but since she has the disadvantage of not having the text in front of her I do not particularly want to spend the next two hours coming back in to sort out sub-clause16 and 17. It might be a good idea to just check if there is anything else I can properly give my attention to. I think that if that is it then that is my decision.

MS BUSCH: I share the concern that the order should be as clear as possible. There may be a degree of ambiguity about what "fully operative" means. As I understand the upshot of the judgment --

MR JUSTICE BLAKE: Yes, until they are able to get the service which they are presently getting, possibly from someone else or whatever services you think they ought to be given. It may be you can make the decision not to give those, but it means more than a decision in principle because, as I recall looking at the document again last night, your draft timetable as of last November was that in June you would decide who you are going to award to and then award the contracts in July. So there is a short gap between decision and award. Presumably if something important like Chinese language services to Chinese only speakers is not provided for in between decision to provide to the Birmingham CAB with its new Chinese interpreter section - whatever it is, I do not know - then that is the problem. I think that is what it means, does it not? If you want to further define that you can go ahead but I do not really want to micro-manage this otherwise we are back to a declaration and I do think you have enough steer in my judgment.

MS MOUNTFIELD: My Lord, the final thing is a list of errata which may be helpful when you are checking your draft. They are all uncontroversial except one. They are names of judges and dates of statutes and so on. I can just hand it up; I have shown it to Ms Busch and she is content.

MR JUSTICE BLAKE: And the one?

MS MOUNTFIELD: At the very end you made some observations which were not the subject of argument either way, where you said that of course, in light of the fact that these organisations will get this rollover funding, as it were, they would obviously not be eligible for the transitional fund. That was not subject of argument and I would like you to consider, before handing down judgment, removing that from the judgment. I know not whether my clients are or are not eligible for the transitional fund but the transitional fund criteria do not say that it is only if you have had your funding by Birmingham City Council cut that you are eligible and the purpose of the fund is to enable bodies - I can take you to the criteria if you want - which have suffered problems with their funding in the 2011/2012 financial year to look at restructuring their procedures and so on. For example, although you have now made an order that means that the Chinese Community Centre's day-to-day funding is secure for now, the writing would appear to be on the wall that subject to a change of heart as a result of a proper implementation of public sector equality duty, Birmingham is minded to stop funding Legal Entitlement Advice Services through that sort of organisation and leave them to more general organisations with translators. If that is the case then whilst providing its day-to-day services for now the Chinese Community Centre may say to itself that within the 2011/2012 financial year they are quite likely to suffer a cut in their funding and they need to think about whether they restructure to turn themselves into a signpost service and to bid for some different kind of funding for that. That is different. They cannot do that and the day-to-day funding. The draft criteria for the transitional fund which are in volume three do not expressly exclude them unless they have had all their funding cut by Birmingham. Ms Busch said she thought it was rather helpful in your judgment and I am anxious that it was not properly argued.

MR JUSTICE BLAKE: I will consider that passage and see what is in the list. I think I am still going to leave something in about it but I may just soften the effect.

MS MOUNTFIELD: May I invite you to look at paragraph 1.2 in volume three at page 80? Anything that is said that they were not eligible would not be right.

MR JUSTICE BLAKE: Not eligible for the same funding as I am giving them under this otherwise they are getting double portions. That is what I am trying to say.

MS MOUNTFIELD: Precisely.

MR JUSTICE BLAKE: I do not need look at the criteria.

MS MOUNTFIELD: I would not want it to be said that the judge says you cannot consider it.

MR JUSTICE BLAKE: If they get a fund for something else then that is something else. That is what I meant, no double portions.

MS MOUNTFIELD: That we are content with. Can I hand up my list?

MR JUSTICE BLAKE: Yes, you can.

MS MOUNTFIELD: I have drafted it as neatly as I can. If it is more convenient for me type it up and email it to your clerk then I can.

MR JUSTICE BLAKE: I wonder if I left this with the shorthand writer they can make the corrections themselves.

MS MOUNTFIELD: I do not think they would know where in the transcript it was, my Lord.

MR JUSTICE BLAKE: Do not worry; I will deal with it. That is it; thank you very much.

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