Budgets and Special Educational Needs

Traditionally, not a lot happens in the world of education in the summer holidays. The school children are off. The teachers have retreated to Tuscany. And even time stops running in the First Tier Tribunal, with a nod to the practice some centuries ago in the common law courts.

Bucking this historical trend, on 3rd August 2018 an interesting decision was handed down in the High Court in the case of R v Bristol City Council on the application of KE and others [2018] EWHC 2103 Admin. The judgment of Judge Cotter QC sitting as a Deputy High Court judge. The case concerned a challenge by way of judicial review of some swinging cuts to special educational needs provision in Bristol. The case considered whether those cuts had been lawfully arrived at and concluded they had not.

The case repays careful study, as it illustrates in text book fashion how a claim may be structured, drawing on the public sector equality duty and various duties to consult imposed on a public body, either by statute or common law and how they may be met by a medley of defences including prematurity, an alternative remedy and lack of promptness in bringing the claim. Given that a number of authorities have or are proposing to reduce special educational needs funding, the decision is topical and relevant.

The issues in the case were summarised as follows:

1. The Claimants seek permission to challenge the decision of the Defendant made on 20 February 2018 to set a schools’ budget which included a reduction in expenditure of approximately £5 million in the high needs block budget (the sums set aside for provision for those with special educational needs ; “SEN”). They seek relief confined to declaratory relief and an order quashing the budget allocation for special educational needs.

And in more detail:

7. It is the Claimants’ case that the Defendant is seeking to implement a significant reduction in expenditure under the high needs block budget which will affect vulnerable children who possess a range of protected characteristics under the  Equality Act 2010. Further, the decision in relation to the deduction was made without consultation in breach of duties set out under the Equality Act 2010 and the Children and Families Act 2014. Specifically, consultation was required to discharge the ‘duty of inquiry’ inherent in section 149 of the 2010 Act and was also mandated by section 27 of the Children and Families Act 2014. Further, the decision also breached the provisions of the Children Act 2004 and the common law duty of fairness. It is said that the Defendant proceeded to make these cuts without assessing or consulting in relation to the needs of children with special educational needs or undertaking any equality impact assessment. As a result the Defendant cannot therefore know if it is proper to make any cuts at all or how to adequately mitigate against the likely adverse impacts of any cut to the funding.

The Defendant’s position was:

10. It is the Defendant’s case that no decision has yet been taken such that the Defendant is in breach of any duties relied upon. The duties, if applicable at all, fall to be taken into account at a later stage when service provision proposals are developed/determined within the funding envelope. Indeed the full council has no power to decide details of service provision, these being matters for the executive. There remains flexibility as to how the services will be delivered and the Defendant intends to fully comply with the applicable duties at the appropriate point i.e. before service provision decisions are made. The claim is therefore without merit and/or premature.

11. It is also the Defendant’s case that even if there was fault on the part of the Defendant it is highly likely that the outcome of the claim would not have been substantially different; see s 31(2A) and (3D) Senior Courts Act 1981 so that permission or, if it granted relief, should be refused, also that there is alternative remedy (a right of appeal under s51 Children and Families Act 2014) and, in any event, that the claim was not filed promptly.

In essence, the Claimants won and the Defendant lost on every single point. The decision usefully cites the key case law on section 149 of the Equality Act 2010 (the public sector equality duty) one of the provisions of public law, that is perhaps the most overloaded by authority. In this case, it was brought into battle to allege that a failure to consult on the reductions was a failure to have “due regard” to the equality implications of the decision: the other statutory duties relied upon and the common law duty to consult said to arise in this context buttressed this key ground. The Defendant’s answer was to argue that no duty to consult had yet arisen, because in essence the position was inchoate. This was rejected by the judge who observed:

90. Careful consideration of the factual context is necessary in any public law challenge. It is always necessary to carefully examine the precise nature and extent of a decision and the surrounding circumstances. 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. Indeed, when setting a high level national budget it would often (but not invariably) be difficult to compile a sufficiently detailed consultation document or undertake a focussed impact assessment (although as conceded in Fawcett it may be both possible and necessary for certain elements). Also if, as in the JG and MB-v- Lancashire case, the door remains open, following the future result of a targeted consultation, to avoid any cut and thus any reduction in services at all, and/or to gain funding from another service, again there is nothing wrong in principle in not undertaking a detailed assessment of the impact until the result and impact of the consultation is known. However, due regard under the PSED (and if necessary consultation), consultation under section 27 of the 2014 Act and regard under section 11 of the 2004 Act must be essential preliminaries to any significant, sufficiently focussed, and in financial terms apparently rigid, decision to impose a reduction in spending, even if taken as part of the setting of “a budget”.

He went onto conclude:

91. So what of the decision here? It was a decision to cut funding to a specified area within the education budget. It followed on from detailed consideration of historic overspend which identified how the savings could be achieved. In my judgment this was indeed a significant, sufficiently focussed and in financial terms apparently rigid decision to engage the duties to which I have referred. There was no problem with the detail of likely impact being not available or the decision being somehow too distant from the actual affect upon the services provided to children with special needs to make inquiry into likely impact and/or consultation meaningless or even difficult. It was a decision to cut the extent of services to a defined group who were, on the Defendant’s own analysis, struggling with the extent of current provision.

He then found:

96. As a result, any responsible public authority will inevitably strive to limit its expenditure to budgeted amounts to the greatest possible extent (indeed, this was acknowledged in the report to Council when the budget was set) and as result the public have an expectation and understanding that, unlike a MTFP, the funding limits in a budget are set in stone. The public will also expect that any challenge at a later stage to an inadequate level of funding for an element of a service provided by the Defendant (e.g. funding for pupil referral units) will be likely to be met, at the very least in part, with the response that a decision has been taken as to available funding for the service as a whole, which cannot be revisited. In my judgment legitimate public expectation is that the time to influence and challenge a proposed reduction to the funding of a specified element, such as special educational need provision, within a departmental budget is if, and when, it is considered by the Council as part of the process of setting a budget and not at some later stage when a reduction can be viewed as a fait accompli.

And:

105. In my view this is a case where the Defendant was under a duty to acquire further information, including through consultation, in order to comply with the PSED, yet did not do so. Members were referred to the duty in brief terms at sections 20 and 21 of the report before them, but duty requires substance, and not form, in its consideration. Also, general regard to issues of equality is not the same as having specific regard by way of conscious approach to the statutory criteria. Here the members were engaged in policy choices in respect of which regard to the PSED was particularly important. Due regard to the specified needs may have led to a decision that it was not appropriate to reduce funding at all.

The defences based on sections 31(2A) and 31(3C) failed, as did the argument there was an alternative remedy which would have formed a discretionary basis for refusing relief and the relief granted was carefully targeted at the offending cuts:

150. The relief sought by the Claimants (alongside declaratory relief) is a quashing order in relation to the High Needs Block budget allocation. In my judgment this form of relief is proportionate, as it requires the Defendant to reconsider its funding allocation in this area in the light of the resources available at the material time, without disturbing other aspects of the budget or in particular the Council Tax calculation and without the Court telling the Defendant how its resources should be expended.

151. Mr Oldham Q.C. submitted that given developments in terms of the budget after 20th February 2018 , which has meant a smaller reduction that required i.e. a much better than expected position, and that the Defendant is plainly aware of the need to consult and assess equality impacts in developing service provision changes, it is inappropriate to grant any relief. I do not agree. The obvious flaw in his submission is that a significant reduction to the SEN budget remains in place, even with the better outcome. I am not satisfied that had the Defendant acted lawfully there would necessarily have been any reduction at all.

I suspect that though this may be one of the first decisions on cuts in this context, it shall not be the last.

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