Lawyers will probably spend much time and treasure crawling all over the High Court judgment a month ago in the case affecting cuts in Special Educational needs (SEN) provision by Bristol City Council. But for hundreds of Councils in England, there is no time to absorb legal technicalities; they need to know very quickly what they must do differently in this year’s Budget cycle.

First the case itself. In a nutshell, the Council felt it needed to make substantial savings on an overspent budget and the Cabinet approved recommendations that then went to a full Council meeting which approved a £5m reduction for ‘high needs block budget.’ Claimants successfully argued that the Council was in breach of specific statutory requirements under the 2014 Children and Families Act and 2011 Children’s Act but the main argument was about consultation. The Council had failed to consult, or to prepare Impact Assessment on an assumption that this would only be necessary when the details of service changes were published, but this case suggests that such an approach cannot be right if the ‘nature, extent and impact’ of the overall changes are such as to warrant proper consultation. Its implications will be considerable.

The Institute has always drawn a distinction between the shape of a budget and its substance. There have been several legal challenges to reductions in services from Libraries to day centres, but they have almost always been to proposals ad followed preliminary budget allocations that have been political priority decisions taken by Council leaders usually following a period of stakeholder engagement rather than more rigorous consultation. For the first time, we have a judgment that suggests that there are occasions when this will not suffice. Note the wording of Judge Cotter:-

“If the budget decision under challenge is sufficiently far removed from a final decision affecting the provision of an element of a service, then there is nothing wrong in principle in not undertaking a detailed assessment of the impact until specific policies have been formulated. The distance may be because the budget is sufficiently high level or, as in the case of a MTFP, not set in stone.”

In this case however, he deemed the Council to have made a “significant, sufficiently focussed and, in financial terms, rigid, decision to impose a reduction in spending.” And in that case, consultation was an “essential preliminary.”

Councils have developed their own processes for Budget consultations. Some do it comprehensively, but many others have sailed close to the wind for years. The Institute will expect to provide Advice and Guidance or run Workshops for those anxious to safeguard their positions. Anticipating the key issues that will arise, what are the main issues? Here are four preliminary points:-

1. Prudent Councils will review their entire budget-making process to ensure they are not vulnerable to the kind of challenge that arose in Bristol.
2. The distinction between shape and substance becomes more nuanced. Whereas it is still sound practice to consult on proposals (normally part of the substance), there will be occasions where the overall spending decision – even though not yet converted into firm proposals – implies a set of impacts that demands effective public consultation.
3. Great care must be taken with those services with separate statutory requirements for consultation. In the Bristol case, a failure to enquire into the likely impacts led to decisions not only being unlawful, but also irrational. Changes to the shape of a budget that affects these services may require that statutory consultation that might previously have been deferred till a later point in the budget cycle should now be subject to consultation much earlier.
4. Elected members need a far better understanding of their responsibilities for public engagement and consultation when taking critical budgetary decisions. Taken alongside the recent Northamptonshire CC (libraries) case and two critical decisions affecting legal aid, the bar for a lawful consultation has been raised considerably, and Councillors need to know this.

This case is not without its problems. Far from clarifying the law, it probably makes it more complicated. It obliges Councils to ask themselves whether a change in preliminary budget allocations warrants the earlier as opposed to the later consultation. Would it be easier just to consult on the shape of the budget in the first place? The trouble is that insufficient may be known at that time about the true impact of the proposals, as the whole point of dialogue is to find better solutions. Hmm!

Along with six other recent Judicial Reviews, we will, of course be featuring this case in our forthcoming Law of Consultation courses. For Institute member organisations, we can also offer a half-day interactive Workshop on the theme of Recent developments in the Law of Consultation.

If anyone is interested, please contact Rebecca Wright on 01767 318350 or email rebeccaw@consultationinstitute.org.