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Commercial Question

Effective consultation

updated on 25 January 2011

Question

Why is it so important that public bodies conduct proper consultations?

Answer

"Test ideas in the marketplace. You learn from hearing a range of perspectives. Consultation helps engender the support decisions need to be successfully implemented." Donald Rumsfeld

Duty to consult
When an organisation performing a public function is preparing to take a significant decision, it will often be required to consult with those parties most likely to be affected. This legal duty may arise from specific legislation or from the general requirement that all public bodies must act fairly. A public body may also bind itself to consult on its proposals by signing up to a code of practice - making a promise to take particular steps or canvas the views of particular stakeholders. Because this duty to consult is so often engaged, consultations are frequent features of British public life. For example, Thames Water recently began consulting on its plan to build a £3.6 billion ‘super sewer’ deep beneath London, while HS2 Limited will soon begin consulting on the route for the new £30 billion high-speed rail link from London to Birmingham, northern England and Scotland.

Whenever a public body embarks on a consultation exercise, it must conduct it correctly. The consulting body must issue a genuine invitation to appropriate consultees, inviting them to give advice. It must also genuinely intend to afford each response proper consideration. If the public body fails to meet these requirements, the lawyers for opponents of whatever decision it ultimately takes could ask for a judge to rule on the lawfulness of the decision by applying for judicial review.  If the judge finds the decision to be the result of an improper consultation procedure, he has the power to quash the decision and require the decision maker to take it again on the correct basis. Not only is defending a judicial review fraught, uncertain and expensive in its own right, but a finding of procedural impropriety could force the public body to rerun the entire consultation exercise, with serious consequences in terms of embarrassment, further expense, and delays to the implementation of the decision in question. 

More importantly, failing properly to consult prevents public bodies from taking account of all relevant considerations when they make significant decisions. This increases the risk of the wrong decision being made. Conducting a proper consultation must, therefore, be in both the reputational and commercial interests of the consulting body and in the public interest. 

Requirements for proper consultation
In recent years, the courts have quashed various high-profile decisions because of improper consultations. Notably, Greenpeace succeeded in having a government decision to back nuclear new-build as part of the United Kingdom’s future electricity generating strategy struck down because the consultation paper contained no clear proposals, insufficient information and inadequate discussion of the implications for the public (R (Greenpeace ltd) v Secretary of State for Trade and Industry [2007]). The decision of the National Institute for Health and Clinical Excellence (NICE) to prevent a particular drug from being used to treat NHS patients with mild Alzheimer’s because it was not cost-effective was also quashed because the company that marketed the drug was not given access to a version of NICE’s economic model that would have enabled it to challenge NICE’s findings on cost-effectiveness (Eisai Ltd v NICE [2008]). These outcomes had significant implications not only for the decision maker, but also for the nuclear and pharmaceutical industries, environmentalists, doctors and patients.

In handing down such judgments, the courts have incrementally established a test for determining what proper consultation entails. In brief:

"To be proper, consultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken." (R v North and East Devon Health Authority ex p. Coughlan [2001]). 

The precise meaning of each element of this test depends on the subject matter and circumstances of the consultation exercise in question; the nature, scope and implications of the ultimate decision; and the contribution consultees can reasonably be expected to make. However, as the test is applied more systematically and in more situations, it is becoming easier for public bodies to correctly identify what is expected of them, and thereby minimise the risk of their decisions being challenged through judicial review. For example:

  • Still at a formative stage: Proposals must be "crystallised" enough for meaningful consideration but "must not be the subject of any final resolution"; in other words consultation cannot occur too early (before concrete proposals emerge) or too late (after a decision has effectively been reached). Public bodies must still be weighing their preferred options against other alternatives. While not all viable options must be considered, those which are particularly significant should be addressed.
  • Clear, informative and reasoned: There is no need for public bodies to articulate the arguments against their proposals. Similarly, consultees are not entitled to all relevant material, so public bodies should not feel obliged to publish all the evidence and submissions on which their proposals are based. However, certain material should be disclosed, for example if it would be impossible to meaningfully evaluate the proposals or understand their rationale without it.
  • Conscientious consideration: The decision maker must be "prepared to change course, if persuaded". Consultations will therefore be invalid if the decision maker fails to consider all consultation responses when taking the final decision. However, decision makers need not agree with consultees’ views and need not modify the proposals consulted on to reflect them.

Commercial message
Particularly if the outcome of a consultation may be controversial or politically sensitive, public bodies are advised to instruct lawyers at an early stage. By assessing the legal risks the consulting body faces, lawyers can advise on the preparation of consultation papers and ensure that every effort has been made to conduct a proper consultation. If the legal risks are not considered and an incurable flaw enters the consultation process or if it becomes apparent that the consultation has been framed inappropriately (so that the ultimate decision is not a reasonably foreseeable outcome of the questions put to consultees), judicial review may result and costly re-consultation may be required. 

Similarly, stakeholders who are likely to be affected by decisions that are subject to consultation should seek legal advice when preparing their formal consultation responses. Seeking specialist assistance will not only maximise their chances of securing a favourable outcome by ensuring proper consideration of their submissions; it will also help to make certain that any defects in the consultation procedure are cured before a decision is taken, thus increasing its robustness. Stakeholders would be well advised to spend almost as much time analysing the consultation procedure for defects as formulating their response to the consulting body’s substantive proposals. 

The lawyers acting for all parties interested in the outcome of a consultation must seek to identify weaknesses in the consultation process at every stage; evidence that should have been disclosed, alternatives that should have been considered, clarifications that should have been made. These should be brought to the attention of the consulting body as early as possible. As the cases mentioned above show, decisions that require consultation are generally highly significant for stakeholders’ commercial activities and as a matter of public policy. It is therefore not in anybody’s interest for public bodies to take them in a manner that renders them susceptible to the delay, uncertainty and expense of judicial review.

Nick Wrightson is a trainee in the litigation and arbitration division of Herbert Smith LLP.