Thursday, 8 March 2012

Privatising development control

There is some speculation at the moment on the scope for privatising development control functions (a.k.a. development management). This is not new; I believe Westminster City Council was the first authority to do it quite some time ago. However, political and financial pressures are persuading more local authorities to look at the possibility of privatising this service.

I have always felt that it is cheaper in the long run to keep services in-house, and that out-sourcing (even within the private sector) causes more problems than it solves, not least due to loss of control over the delivery of the services in question, and the resulting threat to standards of performance. In the case of development control, however, it seems to me that there is also a potential legal problem.

Some years ago, I acted for a housing association which had in fact been the housing department of the local authority until the whole department was hived off and set up as a free-standing organisation. The Council had appreciated that there were certain functions they had to retain in-house, one of which was the determination of homelessness claims. But they nevertheless farmed out the processing of the homelessness casework to the housing association, reserving to themselves only the final decision as to whether the applicants were homeless within the statutory definition. This is where they came a cropper.

The way in which the processing of the casework had been delegated meant that the officers of the housing association were responsible for all the relevant investigations and they then compiled a report which included a recommendation to the Council as to whether the applicants should or should not be found to be unintentionally homeless, and therefore entitled to re-housing by the authority. An aggrieved applicant challenged this procedure in the High Court, on the basis that the Council had delegated so much of the process to the housing association as to be acting as no more than a rubber stamp for a decision which had already effectively been made by the officers of the housing association. The point is that the Council had no right to delegate this decision-making function to anyone outside the authority. It was the Council which had the statutory duty to make the decision, and they had gone too far in delegating the casework to the housing association. It is no longer fashionable for lawyers to quote Latin tags, but the maxim is – Delegatus non potest delegare.

Consider now how this principle would apply to development control. It is the local planning authority which has the statutory duty to determine planning applications and to make various other determinations under the Planning Acts. One can imagine that a certain amount of the processing of planning applications and similar casework might be out-sourced, but at what point would this impinge on the decision-making function of the Council, which they are not at liberty to delegate? This particularly applies to those decisions (an increasing number) which are delegated to officers for decision.

If a Council attempts to delegate only the basic processing of the application to an outside contractor, reserving to one or two officers retained within the Council’s own employment the exercise of the actual decision-making function (where this is not to be reported to a committee for determination), there is clearly a significant danger that they might fall foul of the rule which tripped up the housing authority mentioned above. A point could all too easily be reached where the processing of the application had gone so far as to impinge on the actual decision-making function. It is very difficult to draw the line, and if Councils were to proceed on the precautionary principle, there might be little point in outsourcing the processing of applications at all, when a substantial part of the procedure, including the analysis and assessment of the application might have to be dealt with in-house in any event in order to avoid the accusation that the Council had unlawfully delegated its decision-making function to someone outside the authority’s employment.

Even those applications determined by a committee of elected members might in principle be open to challenge if the report to the committee recommending that they either approve or refuse the application could be said to go too far in pre-determining the decision, as was the case with the homelessness applications I mentioned earlier.

In practice, the refusal of a planning application is unlikely to be the subject of a successful application for judicial review, because the courts generally take the view that where a statutory appeal process is available (in this case an appeal to the Planning Inspectorate), the court should not exercise its discretion to grant relief, even where there is a clear legal error or where the authority’s procedure is flawed. However, in the case of the grant of planning permission, applications for judicial review are a distinct possibility on the ground that the local planning authority has gone too far towards delegating its decision-making power to an outsider. A decision to issue an enforcement notice might be similarly open to challenge if taken on the advice of an outside contractor.

These are points which local planning authorities who are contemplating privatisation of their development management functions would do well to ponder.


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