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Local Authority ‘Privatisation’ Plans Receive Judicial Blessing

A local authority’s controversial proposals to outsource swathes of its public duties to the private sector have been given the green light by the High Court. Ruling that, save in one respect, a local resident’s challenge to the plans had been brought too late, the court noted that it was not its role to rule on the merits of privatisation.

The disabled resident had attacked the London Borough of Barnet’s ‘irreversible’ proposals as ‘extraordinary’ and amounting to a ‘wholesale export of the council’s core functions’. She and other objectors argued that the plans threatened a serious deterioration in essential services and violated the ‘public service ethos’.

In December 2012, the council announced that it would be awarding a contract to Capita Plc. to provide a ‘new support and customer service organisation’ for the borough. That would see Capita effectively take over the public interface between the council and local residents and service users, as well as back-office functions relating to estates, finance, human resources, information services, procurement, project management, revenue and benefits.

The council subsequently resolved to award a contract, either to Capita Symonds Limited. or E.C. Harris LLP. in respect of development and regulatory services. That contract, the award of which was held up pending the outcome of the court action, would see environment management, various regulatory and design functions, planning, building control, environmental health, trading standards and highways functions move into private hands.

Lord Justice Underhill noted that the critical underlying decisions had been taken by the council in 2010/11 and ruled that all but one of the grounds of challenge to the proposals had been lodged outside the normal three-month time limit that applies in judicial review cases.

He accepted, obiter dicta, that there had been a failure on the council’s part to meet its public consultation duties under section 3(2) of the Local Government Act 1999. However, he noted that that did not mean that the decisions would necessarily have been quashed had the challenge been brought in time.

Dismissing arguments that the council had breached its public equality duties, the judge said that it had plainly had proper regard to equality issues in concluding that public services would be maintained under the privatised regime and that vulnerable service users would not be disadvantaged. The evidence also did not come near to establishing that the council had breached the fiduciary duties that it owed local tax-payers.

Objectors had argued that public services would suffer and that ‘private sector organisations cannot evince the public service ethos which is so important to the delivery of council services’. However, the judge concluded: “It is not for the court to decide whether those fears are justified. The decisions can only be challenged on the basis that the council had not acted in accordance with its legal obligations”.