Power game – council v executive

Who calls the budget shots on executive arrangements? Council or executive? Can full council require an elected mayor to spend additional budget provision as the council dictates, even if that directly contravenes an existing mayoral policy decision?

The Court of Appeal sought on 8 October 2013 to draw a line under these issues in R (Buck) v. Doncaster Metropolitan Borough Council [2013] EWC Civ 1190. The lead judgment was given by Master of the Rolls, Lord Dyson with which McCombe and Gloster LJJ agreed.

Background

The claimant, local library user, Ms Carol Buck, challenged a decision by former directly elected mayor, Peter Davies, not to spend some £382,250 additional contingency budget provision on reversing cuts to local library services which he had previously effected. But, per Lord Dyson, although the litigation was now academic since the additional monies were not spent on the library service, the claim nevertheless "....raises important issues as to the division of powers between a directly elected executive and the full council of a local authority".

Before the Local Government Act 2000 (which introduced radical changes in internal local authority governance) all decisions were taken by either full council or one of its committees, sub-committees or officers. However, following the 2000 Act, which brought in a system of local authority ‘cabinet’ governance, there was a clear divide between those decisions to be taken by the cabinet (the authority’s executive) and those which were the responsibility of full council. By default (under section 9D of the 2000 Act, and unless otherwise specified in regulations [1]) all decisions (including those concerning libraries) are those of the executive.

There are two potentially material exceptions in the relevant statutory regulations.[1] The Court summarised these as follows, namely: "....where the executive is minded to determine a matter (i) in a manner 'contrary to or not wholly in accordance with the authority’s budget', or (ii) in terms 'contrary to [a] plan or strategy adopted or approved by the authority' unless it is authorised by the authority’s 'executive arrangements, financial regulations, standing orders or other rules or procedures to make a determination in those terms’."

Ms Buck consequently argued that in refusing to implement the budget amendment concerning library services, the mayor had acted: (i) contrary to and not wholly in accordance with the budget and; (ii) contrary to a plan or strategy adopted or approved by the authority.

First Instance

Hickinbottom J had rejected the challenge on two bases. Firstly, as a matter of construction, the full council’s budgetary amendment was not a direction to spend the allocated monies. It was rather a contingency fund and was so treated by the Mayor. Secondly, even if the amendment had been such a direction, the mayor would not have been bound by it. For how to run libraries was a matter for the mayor as an executive function.

Decision of the Court of Appeal

As indicated, the first constructional ground of challenge was now academic since the financial year in question had now passed without the additional budgetary resource having been spent on reversing the library cuts. Consequently, the "court should not devote its resources to deciding such issues". The case therefore concerned the second challenge head, namely that the mayor had acted contrary to the budget and to a plan or strategy adopted or approved by the authority.

However, the Court rejected these contentions for reasons "which in substance are the same as those given by the judge" below.

Contrary to budget

The Court pointed out that setting "a budget is not the same as deciding what expenditure will in fact be incurred". For budgeting involves estimating likely expenditure and making financial provision accordingly. The Local Government Finance Act 1992 requires the council in setting the annual council tax to "calculate the aggregate of various estimated amounts on the credit and debit side of its affairs, in order to find the shortfall to which its council tax base has to be applied".

In the Court’s view, determining a matter in a manner "contrary to or not wholly in accordance with the authority’s budget" means " . . determining a matter which will result in incurring expenditure in excess of that for which budget approval has been given by the full council." (Emphasis added).

So although full council is the final arbiter of what goes into the budget and may if it wishes allocate more or less funds than requested by the mayor in his proposed budget the law "....does not allow the full council to micro-manage the authority’s functions and interfere with the executive functions of the mayor."

For whilst the budget process is "geared to avoiding any budget deficit by ensuring that the revenue expenditure will not be exceeded", what full council cannot do is "require the mayor to expend money in a particular way, or, unless he proposes to act in a way contrary to the plans and strategies reserved to the full council, to expend money on a particular function". Consequently, Ms Buck’s contentions on this aspect were rejected.

Contrary to plan or strategy

For this contention to succeed Ms Buck would need to show that "(i) there was in existence a 'plan or strategy' in relation to the relevant function; (ii) this plan or strategy had been 'adopted or approved' by the full council; and (iii) the mayor’s decision to proceed with the library proposals in November 2011 was contrary to that plan or strategy." The Court, however, considered that the argument failed at the first two stages.

In the context of the functions and responsibilities regulations, [1] ‘plan or strategy’ "denotes something that operates at a general level’ and ‘cannot embrace any and every decision that may be taken on an individual issue". For, if it were to do so "....it would undermine the basic distinction between executive and non-executive functions which lies at the heart of the relevant part of the 2000 Act". The Court considered that the mayor’s library service budget proposals (which the Court noted were a small part of the overall budget for 2012-13) "did not comprise a “plan or strategy” for that budget". "At most,’ said Lord Dyson they "were an expression of a small aspect of the policy which formed the basis of the budget".

But even if there had been a strategy for material purposes "full council did not adopt or approve that strategy". For "full council never determined that it should take the decision about whether to approve it as a plan or strategy. It simply passed the amendment (or approved the amended budget)." And the council in any event (and in the light of its constitution) "had no power to adopt the mayor’s budget proposals as a plan or strategy within the meaning of the Functions and Responsibilities Regulations [1]. So this argument fell similarly.

Comment

As the Court of Appeal noted, Buck is an important case in seeking to settle the uncertain boundaries of power and responsibility between executive and full council. For, as the Court noted, the scheme of the Act is to devolve most functional decisions to council executives except those limited to the council under relevant regulations. But, echoing Hickinbottom J below, the Court of Appeal made clear that the scheme of the 2000 Act does not permit the council to micro-manage and interfere with executive functions.

The budget-setting process is also a creature of determining the amount of council tax needed to cover the shortfall to which the council tax base is to be applied. It is not a prescriptive direction as to how budget heads are to be spent. For, as the Court noted, the council cannot require the executive to spend money in a particular way unless it proposes to act contrary to a material plan or strategy to spend money on a particular function. Such was not so in the instant case.

So a senior Court of Appeal (led by the Master of the Rolls) has reconsidered the matter carefully and come to the same conclusion as the court below. In the circumstances this issue may well rest as settled where it lies. However, remains to be seen whether a further appeal may be sought, or whether Ms Buck stops here.

Dr Nicholas Dobson is a Consultant with Freeth Cartwright LLP specialising in local and public law. He is also Communications Officer for Lawyers in Local Government.

© Nicholas Dobson