The Localism Bill, published on 13 December, is a substantial and important piece of legislation. It has 207 clauses in eight parts and 24 schedules in 406 pages.

The much-trailed general power of competence in part 1 aims to confer on English local authorities the power of individuals, subject to various boundaries, limits and powers reserved to the secretary of state. Since (despite the June 2009 judgment of the Court of Appeal in the London Authorities Mutual Limited (LAML) case) well-being remains a broad and useful power if properly applied, the new ‘competence’ provisions presumably aim to restore and unleash creative confidence in local government which had been considerably depleted by the LAML decision. As to the future of well-being, when the competence powers are enacted, the current well-being powers will be limited to authorities in Wales. No doubt the Welsh Assembly will be considering how it wishes to take these matters forward.

Despite the expressed breadth of the competence power, authorities will, of course, be subject to the usual administrative law principles, including reasonable and fair exercise of statutory discretion, and compliance with convention rights and fiduciary duty.

The death of predetermination has been much exaggerated in political and policy announcements over recent months. Clause 13 of the bill does no more than reflect the current common law position. This acknowledges the democratic mandate of councillors who, for these purposes, should therefore not be regarded in the same light as judges who have to determine matters judicially. Clause 13(2) provides that a local authority decision-maker is not to be taken to have had a closed mind when making a decision ‘just because’ the decision-maker ‘had previously done anything, that directly or indirectly indicated what view the decision-maker took, or would or might take, in relation to a matter’.

The law on bias and predetermination therefore remains unchanged. Since councillors may lawfully have a predisposition towards a certain decision (connoting an open mind at material times), as the appeal court has pointed out, ‘clear pointers’ will be required if a councillor’s ‘. . .state of mind is to be held to have become a closed, or apparently closed, mind at the time of decision’.

The current standards regime is to disappear, with internal ethical regulation becoming a matter for the discretion of authorities. For while clause 15 imposes a duty on relevant authorities to promote and maintain high standards of conduct by authority members, there is to be no mandatory policing mechanism for conduct. Members will, however, be subject to criminal sanction for breaching interests requirements as prescribed in statutory regulations.

The Localism Bill contains many other important proposals, most of which were publicised before the bill was issued. These include: provisions in part 4 for a new duty on authorities to hold a local referendum on a ‘local matter’ (see clause 44(4)) if specified criteria are met; community rights to challenge (expression of interest by voluntary or other body or group in providing a council service to which the council must consider and respond), and buy (statutory list of assets of community value for which communities will be able to bid when they come on the open market); and controversial provisions to enable the secretary of state to order a specified authority to cease operating its existing form of governance and to begin to operate a mayor and cabinet executive (paragraph 9N of schedule 2).

The government intends to make an order ‘whereby the council leaders for Birmingham, Bradford, Bristol, Coventry, Leeds, Leicester, Liverpool, Manchester, Newcastle upon Tyne, Nottingham, Sheffield and Wakefield would become shadow mayors, and be given the powers available to existing council mayors’. There is therefore likely to be considerable tension between the government and the authorities affected if (as seems probable) these proposals are taken forward in their current form.

Seeing reasonUnder domestic law, public authorities must give reasons for their decisions when fairness requires this. Article 6 of the European Convention on Human Rights is likely for practical purposes to be analogous in this context. But what if an authority finds giving reasons too onerous in a particular instance? Is there a ‘get-out-of-jail-free’ card? Unfortunately not, if the legal obligation of fairness applies. That does not of course mean that reasons need to rival the Bayeux Tapestry in length and substance. While brevity can still be the soul of wit, reasons must nevertheless be sufficient in the circumstances.

This was the broad essence of a decision of the appeal court on 28 October on personal care budgets (R (Savva) v Royal Borough of Kensington and Chelsea [2010] EWCA Civ 1209). The case concerned Rafaela Savva (the appellant) who is disabled and virtually housebound. She launched ­judicial review proceedings against the council for failing to provide adequate reasons for its calculation of her personal budget.

Disabled personsSection 2 of the Chronically Sick and Disabled Person’s Act 1970 requires a relevant local authority to provide specified services in respect of a ­disabled person if the authority is ­satisfied in the case of any such person that any such services are necessary to meet that person’s needs. Regulations made under section 57 of the Health and Social Care Act 2001 authorise authorities to make direct payments to those owed a duty under section 2 of the 1970 act. The section 2 duty will be discharged by the authority making a monetary payment, so long as the authority is satisfied that ‘the need which calls for the provision of the service will be secured by. . .the payee’s own arrangements’.

Department of Health guidance emphasises transparency in the ­decision-making process; ‘clear, upfront allocation of funding’ which provides recipients with clarity on how decisions are made. The guidance also encourages use of ‘resource allocation systems’ (RASs) but prescribes no individual form for these. A RAS is not intended to set down a precise method of producing a definitive ­personal budget in any individual case, but to give a provisional or indicative figure. However, as the appeal court pointed out, once an authority has decided that it is necessary to make section 2 arrangements, it has ‘an absolute duty to provide the individual with the services or . . .personal budget with which to meet the assessed needs’ (R v Gloucestershire County Council, ex parte Barry [1997] AC 584).

Question of contextLord Justice Maurice Kay (who gave the judgment, with which Lords Justices Longmore and Patten agreed) noted that there was no specific duty either in statute or guidance to give reasons in the particular case. But the question is whether the context is one where common law requires reasons to be given. This is when fairness requires it and, as the court pointed out, ‘there is a recognised trend in the direction of requiring reasons’.

In the circumstances, the appeal court agreed with the judge at first instance that fairness did in fact require the provision of reasons in this instance. Transparency in the decision-making process was a consistent theme in relevant guidance. As Lord Justice Kay pointed out, when ‘a local authority converts an established right – the provision of services to meet an assessed eligible need – into a sum of money, the recipient is entitled to be told how the sum has been calculated’. And while the authority submitted that such a duty would be ‘excessively onerous for a local authority’ (as well as being unduly costly), in the view of the appeal court, this is nevertheless ‘what simple fairness requires’. For, if an authority ‘were entitled to notify a bald figure without any explanation, the recipient would have no means of satisfying himself or herself that it was properly calculated’. And a lack of explanation would make any challenge to such a decision impossible.

But this may not be as overwhelming a duty as it might first appear. As the appeal court pointed out, in many cases ‘the provision of adequate reasons could be achieved with reasonable brevity’. And in the present case, it would be adequate to list the required services and assumed timings together with the assumed hourly cost, which would not be unduly onerous. And while some recipients with more complicated arrangements would require ‘more expansive reasoning... if that is what fairness requires, it must be done’.

The appeal court also reflected on whether a duty to provide reasons in this context might be satisfied by notice in the decision letter that ­reasons will be provided on request. While there is a dearth of relevant authority on this point (and what there is ‘seems equivocal’), Lord Justice Kay considered that, if an authority makes a timely offer to provide reasons on request, ‘the court would reject an application for judicial review based on a failure to provide reasons where no such request had been made’.

In fact some months ago the council had revisited the particular decision and provided relevant reasons; the point therefore was somewhat ­academic. Nevertheless, the case highlights the increasing reach of the duty on public authorities to provide reasons for their decisions where ­fairness requires it. And fairness is something of a chameleon which adapts its requirements to changing circumstances.

Dr Nicholas Dobson is a senior consultant with Pannone specialising in local and public law, and is also communications officer for the Association of Council Secretaries and Solicitors