Liverpool JR of Refusal to Confirm their Selective Licensing Scheme

20th April 2020 Commercial Litigation

It was reported on Friday 3 April that Liverpool City Council has issued Judicial Review proceedings against the Secretary of State for Communities and Local Government (SoS) over the refusal to confirm its blanket selective licensing scheme.It was reported on Friday 3 April that Liverpool City Council has issued Judicial Review proceedings against the Secretary of State for Communities and Local Government (SoS) over the refusal to confirm its blanket selective licensing scheme.

The rules on approvals were tightened for England in April 2015. The new scheme allows that a selective licensing schemes requires confirmation unless the scheme affects less than 20% of their geographical area and less than 20% of all private sector rented homes in their area. The Liverpool scheme, covering all of the City clearly affects more than 20% of their area of responsibility and so requires explicit confirmation.

Interestingly, the news reports specifically mention the question of reasons given and so it seems that a large part of the complaint that Liverpool are bringing forward is about whether the SoS gave them proper reasons for the refusal to approve their scheme. In some ways this is a far more interesting issue. Historically, the SoS appears not to give reasons for decisions to confirm or refuse confirmation of schemes and the decision-making process seems to be something of a black hole. This is, no doubt, frustrating for local authorities if they are refused confirmation as they will find it hard to judge what they need to do in order to fix things. So, leaving aside any view you may take on the value of Liverpool’s scheme it would be potentially useful to force the SoS to actually give reasons.

However, this is a problem. There is no absolute duty on statutory decision makers to give reasons for a decision. However, the Courts have slowly moved toward the view that there should be and they have certainly held that reasons can be required where they are necessary to allow scrutiny of a decision. If the Courts are to have any effective function in reviewing the decisions of government for lawfulness their role is clearly hampered by not being able to understand the process that went into the making of the decision. In fact, it was partly this refusal to give reasons that led to the recent Supreme Court decision to overturn the prorogation of Parliament on the basis that as the Prime Minister refused to explain why he had sought to prorogue Parliament the Court had little option but to impute a reasoning process to him that was not to his advantage.

Given that a decision to confirm or refuse a scheme lies entirely within the purview of the SoS but presumably has to be based on the statutory criteria and a view of the local authority evidence for them pursuing the scheme then it would seem that not recording any reasons for refusal of consent, which must necessarily involve a different view of the evidence and criteria than that taken by the local authority, is a risky line for the SoS to pursue.

As against this the SoS could very well argue that his role is not to approve the scheme, but rather to confirm it. Arguably this is an entirely discretionary decision-making process which is simply not within the Court’s remit. I am sure that some people reading this will be of the view that the Courts interfere too much in political decisions but actually they do so far less than many people think and they are cautious not to trespass into decisions that they consider to be political in nature. So this argument may very well be effective.

The other line that the SoS might pursue is to point out that the legislation allows for blanket confirmation of schemes. Indeed there is a blanket approval of additional HMO licensing schemes in England and, prior to 2015, there was blanket approval of Selective licensing schemes in England as well. Clearly, if a blanket approval mechanism is in place then there is no ability to give reasons why each individual scheme is to be approved, they are all approved. Arguably, if a general approval can be given, the converse must be true. A general disapproval can also be given. In a sense limiting the scope of a general approval, as has occurred with selective licensing schemes, is by its nature a disapproval of all schemes that do not fit into the approval criteria as they need special confirmation on an individual basis. If the SoS is not required to give reasons for having a general approval or disapproval then why should he be required to give reasons when an individual scheme is brought before him.

It would be better for decision-makers to give reasons for all decisions, and they usually do, but the executive has generally been reluctant to be forced to do this for everything and the Courts, while they have tried to push the point, are not prepared so far to change the rules. In fact, they are unlikely ever to do so as that would inevitably be a political decision. Whether the Courts are prepared to pull this decision into the category of decisions that require reasons will probably be the core issue between Liverpool and the SoS. If that is resolved then Liverpool will also want the Court to rule that the reasoning of the SoS is wrong.

Lastly, the SoS may still be able to get round the issue because he may well accept the ruling of the Court that he must give reasons then still refuse to confirm the Liverpool scheme with reasons. Ultimately therefore, while it would be generally useful for the Court to rule that reasons must be given for confirming or refusing a scheme, for Liverpool this is not enough and they also need the Court to rule that their scheme should have had approval regardless.

The rules on approvals were tightened for England in April 2015. The new scheme allows that a selective licensing schemes requires confirmation unless the scheme affects less than 20% of their geographical area and less than 20% of all private sector rented homes in their area. The Liverpool scheme, covering all of the City clearly affects more than 20% of their area of responsibility and so requires explicit confirmation.

Interestingly, the news reports specifically mention the question of reasons given and so it seems that a large part of the complaint that Liverpool are bringing forward is about whether the SoS gave them proper reasons for the refusal to approve their scheme. In some ways this is a far more interesting issue. Historically, the SoS appears not to give reasons for decisions to confirm or refuse confirmation of schemes and the decision-making process seems to be something of a black hole. This is, no doubt, frustrating for local authorities if they are refused confirmation as they will find it hard to judge what they need to do in order to fix things. So, leaving aside any view you may take on the value of Liverpool’s scheme it would be potentially useful to force the SoS to actually give reasons.

However, this is a problem. There is no absolute duty on statutory decision makers to give reasons for a decision. However, the Courts have slowly moved toward the view that there should be and they have certainly held that reasons can be required where they are necessary to allow scrutiny of a decision. If the Courts are to have any effective function in reviewing the decisions of government for lawfulness their role is clearly hampered by not being able to understand the process that went into the making of the decision. In fact, it was partly this refusal to give reasons that led to the recent Supreme Court decision to overturn the prorogation of Parliament on the basis that as the Prime Minister refused to explain why he had sought to prorogue Parliament the Court had little option but to impute a reasoning process to him that was not to his advantage.

Given that a decision to confirm or refuse a scheme lies entirely within the purview of the SoS but presumably has to be based on the statutory criteria and a view of the local authority evidence for them pursuing the scheme then it would seem that not recording any reasons for refusal of consent, which must necessarily involve a different view of the evidence and criteria than that taken by the local authority, is a risky line for the SoS to pursue.

As against this the SoS could very well argue that his role is not to approve the scheme, but rather to confirm it. Arguably this is an entirely discretionary decision-making process which is simply not within the Court’s remit. I am sure that some people reading this will be of the view that the Courts interfere too much in political decisions but actually they do so far less than many people think and they are cautious not to trespass into decisions that they consider to be political in nature. So this argument may very well be effective.

The other line that the SoS might pursue is to point out that the legislation allows for blanket confirmation of schemes. Indeed there is a blanket approval of additional HMO licensing schemes in England and, prior to 2015, there was blanket approval of Selective licensing schemes in England as well. Clearly, if a blanket approval mechanism is in place then there is no ability to give reasons why each individual scheme is to be approved, they are all approved. Arguably, if a general approval can be given, the converse must be true. A general disapproval can also be given. In a sense limiting the scope of a general approval, as has occurred with selective licensing schemes, is by its nature a disapproval of all schemes that do not fit into the approval criteria as they need special confirmation on an individual basis. If the SoS is not required to give reasons for having a general approval or disapproval then why should he be required to give reasons when an individual scheme is brought before him.

It would be better for decision-makers to give reasons for all decisions, and they usually do, but the executive has generally been reluctant to be forced to do this for everything and the Courts, while they have tried to push the point, are not prepared so far to change the rules. In fact, they are unlikely ever to do so as that would inevitably be a political decision. Whether the Courts are prepared to pull this decision into the category of decisions that require reasons will probably be the core issue between Liverpool and the SoS. If that is resolved then Liverpool will also want the Court to rule that the reasoning of the SoS is wrong.

Lastly, the SoS may still be able to get round the issue because he may well accept the ruling of the Court that he must give reasons then still refuse to confirm the Liverpool scheme with reasons. Ultimately therefore, while it would be generally useful for the Court to rule that reasons must be given for confirming or refusing a scheme, for Liverpool this is not enough and they also need the Court to rule that their scheme should have had approval regardless.

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David Smith is a Partner located in Londonin our Commercial Litigation department

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