Challenging public decision-making

Arts Council England (ACE) notified its Regularly Funded Organisations on 12 December 2007 as to the intended level of funding for 2008/09 and subsequent years. For 20% it appears the proposal is for a total cut or a reduction in funding. Organisations have until 15 January to submit a ‘response’ to ACE, and decisions as to funding will be made on a regional basis on 21 January. It is only in early February that final confirmation of funding is to be made. For those losing funding many, if not most, face a cut effective on 1 April 2008, and so may have less than two months from receiving confirmation of the decision.

We have been contacted by many organisations who feel that the decision-making process and the way in which the bad news has been communicated is unsatisfactory and are considering the legal remedies that may be available. The principal remedy for such decisions is Judicial Review – the legal process by which the legality of decisions made by public bodies can be challenged in court. This can seem appealing to anyone who has been subject to a decision that they do not like, particularly decisions cutting funding.

ACE is subject to Judicial Review of its decisions as it is a public body. Courts primarily look at two features of the decision in order to decide whether it may be challenged. First is whether the process adopted in coming to the decision was fair or not. In considering fairness, the courts will look at factors such as whether the person affected by the decision was given a fair opportunity to comment prior to the decision being made, and, whether the decision-maker was biased in any way. Recent ACE reviews of organisations should be key indicators of whether at that time ACE considered there were outstanding issues that may lead to a cut in funding. If on the basis of the feedback from ACE an organisation has a legitimate expectation that funding at a similar level would continue then the fairness of the decision may be challenged on that basis.

Secondly, the courts look at the decision itself. This aspect of the court’s function is commonly misunderstood. The court is not deciding whether the decision is right or wrong, it is deciding whether a reasonable decision-maker could have properly made the decision in question given all the facts available. It is a high hurdle to show that a decision was so irrational or unfair that a reasonable public body could not have made it. Even when the hurdle is passed, a court may not quash the decision in question but send the entire issue back to the public body. It can seem that the public body has a second chance to put its procedural house in order whilst arriving at exactly the same decision. The courts will resist imposing their decisions for ACE as their role is to ensure that decisions are made properly.

A frustration of many organisations is the belief that either inadequate reasons for the funding decision have been given or that the reasons given are not the real reasons. I would recommend that organisations consider making a request under the Freedom of Information Act. Though there is generally a 40-day period within which public bodies must respond to such requests, I feel that it is unsatisfactory for ACE to have imposed a limited time for organisations to ‘respond’ to letters. This in effect precludes the organisation receiving relevant information under a FoI request relating to the decision-making process before the funding decision is finalised. I suspect that ACE will receive many requests for information and the results of those requests could form evidence in Judicial Review applications.

In 1998 the Government established the Compact – a code for Government to work with the voluntary sector. Last year John Stokes, ex-Charity Commissioner, was appointed Commissioner for the Compact with the explicit intention of enhancing the status of the Compact. The Compact sets out principles for all aspects of the relationship including funding. The Government undertakings include giving sufficient notice of the end of grants and contracts and transparent decision-making. Not-for-profit organisations may consider whether they feel the Compact has been adhered to in the context of ACE decisions and if not may seek to complain to the Commissioner.