A London borough’s consultation on its proposed council tax reduction scheme misleadingly implied that it had no alternative but to pass on cuts to its poorest residents, the Supreme Court has ruled.
Lord Wilson’s judgment, published on Wednesday, said Haringey LBC’s consultation “was unfair and therefore unlawful”.
It has led to a warning from legal experts that the ruling will have implications for local authorities in England and Wales to make sure they properly consult people in their decision-making processes.
Alex Rook, a specialist health and welfare lawyer at Irwin Mitchell, the legal firm that acted on behalf of Haringey residents, said: “Following today’s judgment local authorities and other public bodies should be in no doubt that they cannot hide away from the true reasoning behind their decisions, and will be required to give the public more information about the possible options and the reason why they favour their proposal.”
Following a government decision to localise council tax benefit from April 2013, local authorities were required to operate a council tax support scheme with about 10% less funding.
Court papers showed Haringey’s head of revenues, benefits and customer services, Paul Ellicott, estimated that the 10% government cut, combined with rising demand for council tax support, could lead to a funding gap worth up to £5.7m in 2013-14.
The court papers showed that in a letter to residents who were in receipt of council tax benefit, Mr Ellicott said: “The introduction of a local council tax reduction scheme in Haringey will directly affect the assistance provided to anyone below pensionable age that currently involves council tax benefit.” Supporting consultation documentation made a similar assertion.
Following the consultation, Haringey’s cabinet approved a recommendation that those who were previously in receipt of full council tax benefit would have to pay between 18% and 22% of their council tax liability.
Two single mothers, who were in receipt of council tax benefit, asked for a judicial review but their case was dismissed. It was taken to the Court of Appeal but was again dismissed. The case was then referred to the Supreme Court.
Lord Wilson said Haringey’s consultation did not indicate that there were other options, aside from a reduction in council tax, for meeting the shortfall, such as raising council tax, reducing funding for other services, or using its reserves. He said there was no explanation of why Haringey was not proposing to adopt any of those three options.
As a result, Lord Reed, who also considered the case, said: “It [the consultation document] misleadingly implied that there were no possible alternatives to that choice.”
Lord Wilson said “it would not have been onerous” for the local authority to have made “brief reference” to other ways of absorbing the shortfall and concluded: “Haringey’s message to those consulted was therefore that other options were irrelevant and in such circumstances I cannot agree that their assumed knowledge of them saves Haringey’s consultation exercise from a verdict that it was unfair and therefore unlawful.”
The claimant asked the court to order Haringey to undertake a fresh consultation exercise, but Lord Wilson said: “My conclusion is that it would not be proportionate to order Haringey to undertake a fresh consultation exercise in relation to a [council tax reduction scheme] which will have been in operation for two years and which it is not minded to revise.”
A spokesman for Haringey LBC said: “We accept the court’s judgment and will now consider its findings.”