A Court of Appeal ruling on the Education Act 1996 and how the words 'public expenditure' should be interpreted is important for future cases where the local authority is discharging its education functions and considering the effect on budgetary arrangements, writes Aimee Fox.
On 2 April 2014, the Court of Appeal handed down judgment in the case of Wendy Haining v Warrington Borough Council  EWCA Civ 398. In this unanimous decision the Court overturned the decisions of the First Tier Tribunal (Health and Social Care Chamber) and Upper Tribunal (Administrative Appeals Chamber).
Pursuant to section 9 Education Act 1996, the local authority is required to specify the name of the parent’s preferred school in the child’s Statement of Special Educational Needs so long as it is compatible with the provision of efficient instruction and training and the avoidance of unreasonable public expenditure (my emphasis).
In the present case, the Court of Appeal considered the meaning of “public expenditure” and held the words were to be given a wide interpretation to include any expenditure incurred by any public body. In reaching its decision and assessing the cost of each placement, the tribunal had erred by leaving out of account respite care fees and other costs to be met from public expenditure but which were not met from the education budget.
The case concerned a 12 year old (“B”) with significant special educational needs, for whom the local authority made a Statement of Special Educational Needs. The local authority specified a maintained day special school (“GHS”) in the Statement and accepted that it would also provide B with residential “respite care”. B’s parents expressed a preference for him to attend an independent residential school (“WHS”). The total figure for a placement at WHS was £92,900 and the total figure for a placement at GHS was £90,441. The school costs for WHS were £33,448 and £61,238 for GHS. The cost of a placement at GHS included included £29,336 for respite fees. There was no such cost in respect of WHS. The local authority did not dispute that WHS could meet B’s needs but the placement would place more of a burden on the education budget.
The local authority refused to amend the Statement and the parent’s appealed. The First-tier Tribunal (“FTT’’) dismissed the parents’ appeal and concluded “whatever way you look at it, a placement at WHS is much more expensive than a placement at GHS, would be over-provision, and could not be justified on educational grounds”. The parents appealed to the Upper Tribunal (“UT”). The UT took a narrow approach to the meaning of “public expenditure” and decided that when assessing the cost of each placement, the correct approach was to leave out of account the respite care and other costs to be met from public expenditure but which were not met from the education budget.
The Court of Appeal was asked to consider the correct interpretation of “public expenditure” pursuant to section 9 Education Act 1996. The local authority argued that the words “public expenditure” should be given a narrow meaning as to do otherwise would make matters “unworkable or impracticable”.
The case specifically involved the question of fees for respite care. It was submitted that difficulties may arise for a local authority in such a similar situation with a ring-fenced education budget. There would be a risk that costs could not be recouped from other public authorities e.g. heath or social care. The Court did not accept this but added that this could be an example of “another thing” which might justify the refusal to accept the parents’ preference for a particular school as had been set out by Denning LJ in Watt v Kesteven County Council  QB 408. Further, many cases would be straightforward and would only involve the education budget when deciding between two schools and would not involve other authorities.
It was not surprising that the local authority argued that there would be obstacles in obtaining information from another public authority if expenditure from other authorities was to be taken into account. Dyson J, as he then was, had decided C v Special Educational Needs Tribunal  ELR 390 on a similar point when he determined that “public expenditure” must have meant only expenditure related to the education budget. He had largely come to that view due to the difficulty in obtaining information. However, the argument was rejected on the basis that this point had been dealt with by the case of O v Lewisham  EWHC 2139 (Admin) which came after C.
Dyson LJ MR adopted O in the present case. In O the court held that “public expenditure” in section 9 was ‘concerned with the impact of a parent’s choice on the public purse generally and not exclusively with the costs to the LEA.” It was also accepted in O that public bodies were likely to co-operate due to the effect any decision to place a child may have on their budget. Section 322 (1) of the Education Act 1996, expressly referred to in O provides:
“Where it appears to a local education authority that any Health Authority Primary Care Trust or local authority could, by taking any specified action, help in the exercise of any of their functions under this Part, they may request the help of the authority or trust, specifying the action in question.”
The wider meaning of “public expenditure” was also opposed on the basis that it would lead to some difficulty for education authorities as there would be no “mechanism for review” for a local authority to allow for changes in expenditure in other areas. However, this point was swiftly rejected by the Court given Statements are reviewed annually and a Statement can be amended at any time.
The fourth contention was based on the undesirability of education authority staff assessing the reasonableness of expenditure in other fields with which they may be less familiar. Dyson LJ MR did not accept this submission and took a practical approach to the problem when he stated that if someone required to make a decision does not have the requisite information, then it must be obtained.
The Court of Appeal rejected all of the submissions made on behalf of the local authority and gave the words “public expenditure” their natural meaning. It was held that this would not give rise to such serious difficulties so as to make the statutory provision “unworkable or impracticable” as was argued. This wide interpretation encompasses expenditure incurred by any public body as opposed to a private body. Lord Dyson MR opined that if Parliament had intended to “limit the expenditure referred to in section 9 to expenditure incurred by the Secretary of State or local authorities in the exercise of education functions, the section could and would have said so”. Second, if this were not the case the word ‘public’ would not have been necessary. Third, the court referred to the language used in paragraph 3(3) of Schedule 27 of the Education Act 1996 which could be contrasted to section 9. Paragraph 3(3) provides for the local authority specifying of a parent’s preferred school unless “the attendance of the child at the school would be incompatible with the provision of efficient education for the children with whom he would be educated or the efficient use of resources” (my emphasis). The interpretation of “resources” in paragraph 3(3) did not require the meaning “public expenditure” in section 9 to be confined to expenditure by the education authority. Parliament could have used the same wording in section 9. If it had done so it would have been clear that that the resources were those incurred by the education budget.
Judge Williams had not directed himself correctly in holding that “public expenditure” was only expenditure from the education budget. If the respite care costs had not been left out, the cost of B attending WHS, the parent’s choice, was actually lower than the cost of him attending GHS. The appeal was allowed and the matter was remitted to the FTT for reconsideration.