Barnet hails "clear victory" as High Court challenge to £320m outsourcing fails

The London Borough of Barnet has successfully fought off a High Court challenge to its controversial One Barnet change programme.

The council’s Leader, Cllr Richard Cornelius, hailed the ruling as a “clear and complete victory”, although the claimant’s lawyers are reported to have announced plans for an appeal. Defending the case has already cost Barnet £300,000, it has emerged.

The judicial review was brought on behalf of Maria Nash, a disabled local resident, and sought to challenge Barnet’s decision on 6 December 2012 to award a £320m contract to Capita to provide a “New Support and Customer Service Organisation” (NSCSO), running back office services.

The challenge was also against the council’s planned joint venture with a private sector partner – either Capita or EC Harris – to provide development and regulatory services (DRS). Barnet had been due to make a decision on this proposal on 31 January.

The claimant advanced three grounds of challenge, namely that the council:

1. did not comply with its statutory and other consultation obligations relating to the decisions;
2. failed in reaching the decisions to have due regard to the considerations in s. 149 of the Equality Act 2010; and
3. would, if it entered into the proposed contracts, be in breach of its fiduciary duty to council tax payers.

Lord Justice Underhill in the High Court refused permission to apply for judicial review in respect of all the grounds argued by the claimant.

The judge concluded that the application for judicial review was out of time and that he was not prepared to extend time.

“On the approach which I have taken, these proceedings were brought 18 months or more after they should have been,” he said, pointing to decisions taken by the council in November 2010 in relation to the DRS contract and in March 2011 as regards the NSCSO contract.

Lord Justice Underhill said: “During that time the council has been proceeding on the basis that the decision to outsource the functions and services in question was lawful, and it would be contrary to all principles of good administration for that basis now to be put in doubt.

“It would also, on the evidence, risk considerable wasted expenditure. There has been nothing covert about the council’s proceedings. The 2010/2011 decisions were formally taken and recorded. They have been common knowledge to interested persons in the borough and on the evidence have been controversial since they were first proposed.”

Lord Justice Underhill said that Barnet never set out to consult about its outsourcing programme. “The essential is simply that the representatives should have been given the opportunity to express views or concerns about outsourcing the functions or services in question that could inform the council’s decision-taking both on whether to proceed and on matters requiring attention in the arrangements eventually made,” he found.

If the application for judicial review had been made in time, the judge would have held that the council had not complied with the consultation obligations under s. 3(2) of the Local Government Act 1999 in respect of the decisions taken in 2010/11 to outsource the performance of its functions and services, covered by the proposed NSCSO and DRS contracts.

However, he added: “It does not…. follow that I would necessarily have quashed those decisions or the decision of 6 December 2012.

“I would have wished to give serious consideration to the council’s argument that even if the claim was in time on a Burkett basis it would be right nevertheless to withhold relief on the basis that, because substantially the same challenge could have been made to the earlier decisions, there could be said to have been undue delay within the meaning of section 31(6)(b) of the Senior Courts Act 1981: certainly, a case of detriment to good administration could be made out."

Cllr Cornelius said: "This is a clear and complete victory for the council. We won and our opponents lost. We can now get on with making budget savings of £12m a year in our back-office costs while investing in service improvements and protecting our frontline services.”

He added: "Lord Justice Underhill could not have been clearer in ruling the application for judicial review as out of time and in accepting that the council had met equalities criteria. I hope the applicant and her lawyers will carefully consider the wise words of the judge before embarking upon an appeal and incurring even more costs that will have to be met from public funds.”

The council insists that its One Barnet change programme would save close to £150m over the next ten years.

Philip Hoult