Best value revisited

Equality 146x219Nicholas Dobson looks at the issue of Best Value and analyses the High Court's recent ruling on the Barnet outsourcing.

Best Value was once the great hope for the future. To a local government sector feeling bruised by years of compulsory competitive tendering (CCT) with all its labyrinthine complexity, best value offered a refreshingly simple way forward. Forget all the rocket-science, equational intricacy of evaluating CCT bids (‘T’ calculation anyone?). Local authorities would simply be under a duty to yield best value for their communities.

Birth

But a blissful state of primeval innocence rarely endures. When the Labour Government came to power in May 1997, in June of that year then Local Government Minister, Hilary Armstrong, announced that the Government was "pressing ahead with its Manifesto commitment to replace the failure of Compulsory Competitive Tendering (CCT) with a new duty for local authorities to ensure best value for the public". And so, with the enactment on 27 July 1999 of the Local Government Act 1999, Best Value was born, getting fully under way on 1 April 2000.

As every self-respecting Best Value train-spotter will know, the core duty in section 3(1) requires a best value authority (section 1) "to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness".

And for the purpose of deciding how to fulfil this duty such authorities are required (under section 3(2)) to consult specified stakeholder representatives including tax and ratepayers, service users and representatives of those interested in any local authority functional area. Authorities must also have regard to any guidance from the Secretary of State in deciding how to fulfil the duty and also as to whom to consult and "the form, content and timing of consultations".

A Best Value Complex

But what started out as a delightfully simple concept soon became mired in byzantine bureaucracy with Best Value Reviews, Best Value Performance Indicators, Performance Plans and many other manifestations of swollen regulatory architecture.

So local government which had once viewed the new regime with gilded optimism became somewhat resentful and parts began to manifest symptoms consistent with a Best Value Complex. This is where the patient demonstrates active hostility to many ingredients of the regime. But although successive Labour administrations did seek to streamline the regime, the core regulatory underpin was difficult to shed.

2011 Statutory Guidance

But for the present Conservative-led Coalition, the prevailing ‘localism’ zeitgeist presents itself as seeking to reduce regulation wherever possible. As Secretary of State Pickles put it in his Foreword to the Government’s September 2011 Best Value Statutory Guidance, the aim is to free authorities "from excessive and prescriptive guidance and duties in return for a ‘social responsibility’ deal which asks that they continue to give support to local voluntary and community groups and small businesses".

So this Guidance notes the revocation of some pillars of Labour Best Value. These were: Handling of Workforce Matters in Contracting, the Code of Practice on Workforce Matters and the whole of the 2008 Statutory Guidance: Creating Strong, Safe and Prosperous Communities. This had included Best Value guidance on commissioning.

At the same time, the Guidance redirects its focus to the way authorities should work with "voluntary and community groups and small businesses". For "when facing difficult funding decisions" the Guidance states that it allows authorities "the flexibility to exercise appropriate discretion in considering the circumstances of individual cases, without Government trying to predict every possible variable".

Amongst the key elements of the 2011 Guidance is that authorities should when reviewing service provision "consider overall value, including economic, environmental and social value". ‘Social value’ is "about seeking to maximise the additional benefit that can be created by procuring or commissioning goods and services, above and beyond the benefit of merely the goods and services themselves". As to the consultation duty (which the Guidance states "is not optional"), this is so that authorities "achieve the right balance".

The document consequently notes that: "Authorities must consult representatives of council tax payers, those who use or are likely to use services provided by the authority, and those appearing to the authority to have an interest in any area within which the authority carries out functions."

Local voluntary and community organisations and small business should be included in such consultation which "should apply at all stages of the commissioning cycle, including when considering the decommissioning of services". But in marked contrast to previous approaches "it is not necessary for authorities to undertake lifestyle or diversity questionnaires of suppliers or residents".

Barnet case

So much legal and quasi-legal stuff (e.g. Government ‘guidance’) has been hurled at authorities over the years that they have often tended to become rather punch-drunk. Guidanced-out, you might say. So as each new missile has landed, authorities have done what they can to deal with it and then tried to get on with making things happen as best as can. But, particularly since the fall of its ‘Berlin Wall’ (i.e. weighty superstructures like Best Value reviews), Best Value had seemed to become largely subliminal: a shadowy spectre occasionally haunting remoter wings of the municipal mind.

That was until the Barnet case on 29 April 2013: (R (Nash) v. London Borough of Barnet [2013] EWHC 1067 (Admin)) (Underhill LJ) which seemed to bring Best Value back from the undead. Although the prime essence of the case was whether the judicial review permission application was in time (for most elements it wasn’t – time being held to run from when the substantive determinative decision is made) Underhill LJ nevertheless gave substantive consideration to the best value consultation duty. This was because "....I am told that there is no case-law, and in view of the thorough and expert submissions made to me it may be of some wider value if I expressed my views".

Barnet had been challenged for its decisions to outsource a large proportion of its functions and services to private sector organisations on the basis (amongst other things) of alleged failure to comply with statutory and other material consultation obligations.

The Court therefore considered the best value duty including the requirement to consult and noted the relevant passage in the 2011 Guidance (indicated above). Barnet’s contention that its consultation concerning relevant budget processes had been sufficient was rejected, Underhill LJ noting that "there is no real dispute that it did not constitute consultation about outsourcing as such".

However, in the material context, the Court considered that the consultation duty: "....connotes high-level choices about how, as a matter of principle and approach, an authority goes about performing its functions." But: "....in the light of the legislative background outlined above the 'ways' in which functions can be performed must include whether they are performed directly by the authority itself or in partnership with others: indeed that would seem to be a paradigm of the kinds of choices with which section 3(1) [of the 1999 Act] is concerned."

As to the reference to making arrangements to secure continuous improvement in the exercise of functions, the Court did not think "....the draftsman was concerned with administrative 'arrangements'".

For: "It may have been thought that to impose a duty simply 'to secure improvements' would expose authorities to legal challenges from those who contended that particular decisions were for the worse, or that authorities were wrong in failing to take particular steps which it was asserted would make things better: the reference to 'making arrangements' would make it clear that the duty was concerned with intentions rather than outcome. It may also be that the draftsman wanted to emphasise the need to build the fulfilment of the best value duty into authorities’ plans and procedures. Or perhaps it is just circumlocution."

However, said Underhill LJ, "whatever the explanation, the important point for present purposes is what the arrangements are aimed at, namely securing improvements in the way in which authorities perform their functions." Consequently, one of the effects of the duty of best value "is to require local authorities to outsource. . . the performance of particular functions where it considers, having regard to the specified criteria, that that would constitute an improvement."

In the circumstances, Underhill LJ could not see "how it is possible to consult for the purpose of deciding whether to undertake a major outsourcing programme without inviting views on the proposal to undertake that programme". Representatives, therefore, "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." Nevertheless, in the particular circumstances, the challenge failed on the time issue.

Comment

Although (in the instant context) the Court held that the consultation duty implies high-level choices about how an authority goes about performing its functions, nevertheless consultation should always be fit for its particular purpose in the Gunning sense (R v Brent LBC ex p Gunning (1985) 84 LGR 168). The core elements are that:

  1. consultation must be at a time when proposals are still at a formative stage;
  2. the proposer must give sufficient reasons for any proposal to enable intelligent consideration and response;
  3. adequate time must be given for consideration and response;
  4. the product of consultation must be conscientiously taken into account in finalising any proposals.

If the Gunning principles are demonstrably and conscientiously followed in any consultation then it is likely that the duty will be discharged, whatever its manifestations. But if, as the ancient saying goes, time and tide waits for no-one, unfortunately for the claimant, it certainly didn’t hang around in Barnet.

Dr Nicholas Dobson is a lawyer specialising in local and public law. He is also Communications Officer for Lawyers in Local Government.

© Nicholas Dobson