Local authority — Power to transfer management functions to agents — Approval of Secretary of State required — Proposal to award contracts to three different housing associations — Approval refused — Application for judicial review — High Court holding Secretary of State entitled to withhold approval — Council failing to comply with EC Council Directive and statutory obligation under Housing Act 1985 section 27A(1)
In performing their responsibilities under the Housing Acts, housing authorities were empowered to arrange for their management functions to be exercised by another person acting as their agent but only with the approval of the Secretary of State. Under section 27A(1) of the Housing Act 1985, the authority were responsible for ensuring that the tenants affected by the proposals were given satisfactory information about specified matters. In October 1994 the Secretary of State refused to approve council proposals, under section 27, that housing management contracts should be awarded to three different housing associations.
Contracts awarded by the council fell within the ambit of EC Council Directive 92/50 dealing with public service contracts. In accordance with the directive, the award of contracts had to be based either on the lowest price, or the most economically advantageous, after all eligible tenderers for the contracts had been considered. The council sought judicial review of the Secretary of State’s decision that they had failed to comply with the directive or with its statutory obligation to consult their tenants in accordance with section 27A(1).
Held The application for judicial review was refused.
1. The Secretary of State was entitled to conclude that contracts were “essentially for the provision of housing management services”; potential tenderers were limited to housing authorities; and potential contractors who could provide the relevant management services, but lacked the capacity to or commercial interest in accepting the long-term transfer of ownership, were excluded. He decided that the contracts in question did not accord with the directive’s provisions.
2. Further, the Secretary of State was right to conclude that the practical consequence of the council’s decision, ie to limit successful applicants for housing management contracts to housing associations in the UK to those capable of accepting transfer of the property at a later date, was to introduce a restriction on eligibility which was contrary to the provisions of the directive. Notwithstanding the long-term expression of the council’s intentions in relation to voluntary transfers, and the link drawn at earlier stages between competitive tendering and voluntary transfers, the Secretary of State was entitled to refuse to grant approval under section 27A of the 1985 Act.
3. The time available for the tenants affected to make representations was significantly curtailed. It was not unreasonable for the Secretary of State to conclude that this part of the consultation process was flawed. He was therefore justified in inviting the council to reconsider and to withhold approval until further consultation had taken place.
David Mole QC and Tim Kerr (instructed by the solicitor to Harrow London Borough Council) appeared for the council; John Howell QC (instructed by the Treasury Solicitor) appeared for the Secretary of State.
