R (Ealing London Borough Council) v Audit Commission
| Jurisdiction | England & Wales |
| Judge | Lord Justice Keene |
| Judgment Date | 16 May 2005 |
| Neutral Citation | [2005] EWCA Civ 556 |
| Docket Number | Case No: C1/2005/0388 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 May 2005 |
[2005] EWCA Civ 556
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
Mr Justice Walker
CO6415/2004
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Phillips of Worth Matravers, Mr
Lord Justice Latham and
Lord Justice Keene
Case No: C1/2005/0388
Richard Gordon QC & Maya Lester (instructed by Messrs Clifford Chance) for the appellant
Andrew Arden QC & Jonathan Manning (instructed by Messrs Eversheds) for the respondent
This is the judgment of the court.
This appeal concerns the way in which the Audit Commission for Local Authorities and the National Health Service in England and Wales ("the Audit Commission") exercises its powers under section 99 of the Local Government Act 2003 ("the 2003 Act") to categorise the performance of local authorities. Section 99 provides:
"(1) The Audit Commission must from time to time produce a report on its findings in relation to the performance of English local authorities in exercising their functions.
(2) A report under sub-section (1) must (in particular) categorise each English local authority to which the report relates according to how the authority has performed in exercising its functions."
The respondent is an English local authority, Ealing London Borough Council ("Ealing"). On 13 December 2004 the Audit Commission notified Ealing that it had characterised Ealing's performance as "weak", on a scale which has five categories: excellent, good, fair, weak and poor. Ealing challenged that characterisation by bringing a claim in judicial review and succeeded before Walker J. He held that the Audit Commission had acted unlawfully by adopting a rule which automatically downgraded a local authority which had received a zero rating from another statutory body, the Commission for Social Care Inspection ("CSCI"), in respect of its social services performance. It had thereby refused to apply its own mind to the reasons why CSCI gave that star rating and whether those reasons warranted downgrading. From that decision the Audit Commission now appeals and Ealing cross-appeals.
The Audit Commission is a statutory body set up originally by the Local Government Finance Act 1982 and now largely governed by the Audit Commission Act 1998. Amongst other things it is responsible for making recommendations for improving economy, efficiency and effectiveness in local government and certain other parts of the public sector. Even before the 2003 Act, the Audit Commission had been using a Comprehensive Performance Assessment ("CPA") in order to assess the performance of local authorities. In 2003 Ealing had been categorised as a result of this process as being "fair".
In 2004 the Audit Commission, after extensive consultation, published a document entitled "Comprehensive Performance Assessment Framework 2004". The background to this document, in terms of government policy as set out in a White Paper in 2001 and of consultation with local authorities and their representatives, is described in Walker J's judgment in the proceedings below [2005] EWHC 195 (Admin) at paragraphs 4 and 5, and we do not repeat those passages here. The 2004 Framework document spelt out the methodology which the Audit Commission would adopt in performing its duties under section 99 of the 2003 Act. In its most relevant passages, it stated as follows:
"10. The CPA framework brings together judgments about:
• Core service performance in education, social services, housing environment, libraries and leisure, benefits, and use of resources; and
• The council's ability measured through a corporate assessment.
…
12. Each of the individual service judgements and the use of resources judgement are awarded a score of 1 to 4, with 1 being the lowest score and 4 being the highest. These are then combined into an overall core service performance score of 1 to 4.
13. Each of the themes scored within the corporate assessment (ambition, prioritisation, focus, capacity, performance management, achievement of improvement, investment, learning and future plans) are also awarded score of 1 to 4. These are then combined to reach an overall council ability score ranging from 1 to 4.
14. The overall CPA category ('excellent', 'good', 'fair', 'weak' and 'poor') is reached by combining the overall core service performance and council ability scores in the form of a matrix (see below). Where a council has not yet achieved a specified level of performance on education, social care or financial management (or scores a 1 on any other service), rules apply which limit a council's overall category, see paragraphs 29 -30.
CORE SERVICE PERFORMANCE
Scores 1 2 3 4
COUNCIL 1 poor poor weak fair
ABILITY 2 poor weak fair good
3 weak fair good excellent
4 fair good excellent excellent
…
Rules
29. Rules limit a council's overall CPA category where a council's score falls below a specified level on education, social care or financial standing, or scores a 1 on any other service.
30. The rules are as follows:
• [Rule 1] A council must score at least 3 (2 stars) on education, social services star rating, and financial standing to achieve a category of 'excellent' overall;
• [Rule 2] A council must score at least 2 ( 1 star) on education, social services star rating and financial standing to achieve a category of 'fair' or above; and
• [Rule 3] A council must score at least 2 ( 1 star) on all other core services to achieve a category of 'excellent' overall."
What happened in the case of Ealing is that it achieved for 2004 scores of 3 on each of core service performance and council ability. Consequently, applying the approach set out at paragraph 14 of the CPA Framework it would have been categorised as "good", if the matter had stopped at that point. However, Ealing had received a zero star rating from the CSCI, with the result that under Rule 2 Ealing could not be categorised as better overall than "weak", which indeed is how it was categorised. As the judge below pointed out, this meant in effect that Ealing dropped two categories.
Although Rule 2 does not expressly refer to the source of the star rating in respect of social services, paragraph 112 of the 2004 CPA Framework does make it clear that this is a reference to star ratings produced by the CSCI. That paragraph states:
"112. CSCI also produce overall star ratings, given as 0* to 3*, with 3* being the highest. The overall star ratings are not used in the CPA social care core service score but will be used to determine whether a council will be held back by a rule limiting the CPA category they can achieve. (see paragraphs 29 – 30 in section one of this document for further details on rules)."
CSCI is a statutory body established by section 42 of the Health and Social Care (Community Health Standards) Act 2003. It is required by section 79(1) of that Act to conduct a review in each financial year of the social services provided by each local authority in England. In this respect it performs functions previously mainly performed by the Social Services Inspectorate ("SSI"). Section 79(2) provides that after conducting such review the CSCI "must award a performance rating to that authority".
In practice the CSCI arrives at its star ratings by combining two judgments in respect of services for children and two judgments in respect of services for adults. Those two judgments for each category and the way in which they are used was helpfully summarised by the judge below at paragraph 10 of his judgment, as follows:
"…the first is as to whether the authority is serving people well (no/some/most/yes), and the second is as to capacity for improvement (poor/uncertain/promising/excellent). It will be seen that an authority's capacity for improvement has an important effect on the star rating"
This process is set out in an SSI/CSCI document entitled "SSI Performance Assessment 2004 Operating Policies" and dated 13 January 2004, paragraph 5.6 of which states:
"5.6 This results in a total of four judgments underpinning the overall rating, as shown in the table of examples below. Once the judgments have been reached, a set of rules is used to combine them with the weightings to produce a final star rating. The rules are detailed in the SSI Chief Inspector's Letter C1 (2002)4, and are also available electronically at htt://www.doh.gov.uk/pssratings/guidance
Performance
Children's services
Adults Services
rating
Serving people well?
Capacity for improvement?
Serving people well?
Capacity for Improvement?
Council 1
—
No
Poor
Most
Promising
Council
*
Some
Uncertain
Some
Promising
Council
**
Most
Promising
Yes
Uncertain
Council
***
Most
Excellent
Yes
Promising"
A comprehensive matrix for translating the four judgments into a star rating is provided by Annex 1 to that SSI/CSCI document. It is of importance, given the issues in this appeal, and we therefore attach a copy of it (as did Walker J.) to this judgment as an appendix. It will be seen that the judgments on a local authority's performance in respect of adults and children are set out as horizontal and vertical axes, so that once those judgments have been arrived at, one can read off the resulting star rating for that authority.
That methodology does not appear to have been new in 2004. It seems that the SSI used a similar approach before the creation of the CSCI, since an SSI publication entitled "A guide to social services performance ' star'...
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