news analysis of test case involving Leonard Cheshire

A recent test case has alarmed human rights campaigners
about the legal implications of local authorities outsourcing
services to independent providers. Lauren
Revans reports.

When does an independent provider become a “public authority” in
the eyes of the law? As the boundaries between the public, private
and voluntary sectors become increasingly blurred, and the Human
Rights Act 1998 becomes more widely used, this is a question that
judges can expect to be asked over and over again in the months and
years ahead.

Lord Chief Justice Lord Woolf concluded in the court of appeal
last week that while the degree of public funding of the activities
of an otherwise private body is certainly relevant as to the nature
of the functions performed, by itself it does not determine whether
the functions are public or private.

In what has been widely recognised as a test case of “general
public importance”, the three judges ruled that the role performed
by disability charity Leonard Cheshire Foundation (LCF) in
providing residential care for local authority-funded residents
with disabilities “manifestly did not involve the performance of
public functions”.

“Except for the resources needed to fund the residents of (LCF’s
first-established home) Le Court, there is no material distinction
between the nature of the services LCF has provided for residents
funded by a local authority and those provided to residents funded
privately,” their written judgement concludes. “There is no other
evidence of there being a public flavour to the functions of LCF or
LCF itself. LCF is not standing in the shoes of the local
authorities.”

The appeal was the latest legal step by three residents of Le
Court who mounted a judicial review challenge last April following
the charity’s decision to cease to operate the 50-bed home in its
present form.

The residents, who claimed they had been promised a “home for
life”, argued that the planned “redevelopment” would infringe their
rights under article eight of the European Convention of Human
Rights, which guarantees respect for private and family life.

But a High Court judge dismissed their challenge, ruling that
LCF was not a “public body” within the meaning of the 1998 Act, so
it did not have duties imposed by it and its actions were therefore
not capable of being judicially reviewed.

Lord Woolf has now reinforced that dismissal, agreeing that “the
claimants have no public law rights”.

This decision has not only disappointed the three local
authority-funded residents who brought the challenge – and who are
now applying to the House of Lords for leave to appeal – but has
alarmed human rights campaigners concerned about the implications
for other service users whose local authorities have outsourced
their services to independent providers.

Human rights pressure group Justice believes that defining
exactly what constitutes “public functions” at a time when more and
more public services are being delivered through partnerships is “a
problem of great significance”.

In a written submission to the court in support of the appeal,
Justice argues: “[A public function’s] nature cannot be
fundamentally altered by the adventitious fact that such a function
is being discharged using contracted third parties who are
ostensibly ‘private’ entities. If it is or would be a public
function when discharged by a pure public authority, it is no less
a public function when discharged by a third party.”

The group also stresses that, just as a local authority cannot
avoid its statutory obligations by means of delegation, neither can
it lawfully contract out of them. “It follows that any contacts or
arrangements made by a pure public body must comply fully with the
1998 Act if they are not to be unlawful,” its submission
concludes.

The complexities of determining when a private or
voluntary-sector organisation’s functions are “functions of a
public nature” – and therefore when an organisation is a “public
authority” under section six of the 1998 Act – are highlighted by
the differences between the LCF judgement and Lord Woolf’s
judgement in a separate case last April in which the claimants
accused a housing association of breaching their human rights by
attempting to re-possess their home.

In this case, Poplar Housing and Regeneration Community
Association Ltd v Donoghue (see box), Lord Woolf deemed the role of
the housing association to be “so closely assimilated” to that of
the local authority that it was in fact performing public functions
to which human rights provisions applied.

The appeal court judgement – the only one other than the LCF
judgement really to address the “public function” definition issue
since the 1998 Act came into force in October 2000 – states that
when an outsourced body performs an activity that a local authority
would otherwise be legally bound to perform it does not mean that
that activity is necessarily a public function, but then goes on to
refer to “a feature or combination of features which impose a
public character on the act”.

Such features might include the extent of control that the
outsourcing body continues to exercise over the outsourced
function; the degree to which the outsourced activity is enmeshed
with the activities of the outsourcing body; how directly the
outsourced activity is funded by a public authority; and whether
the organisation carrying out the outsourced function has powers or
duties derived originally from statute.

Claire O’Brien, Human Rights Act project researcher for the
London School of Economics, says the decisions made in these two
cases illustrate how “complicated and subtle” the interpretation of
section six of the 1998 Act remains in the absence of any real
guidance.

“This proves there is not going to be one rule for everything
across the board,” O’Brien says. “It is not the case that
everything outsourced is or is not human rights territory.”

O’Brien believes the courts are struggling to balance
Parliament’s decision to pass legislation allowing local
authorities to outsource services in order to raise standards
against the need to protect people’s human rights. She suggests
that government departments should produce relevant guidance for
local authorities, against which outsourced functions can be
measured to determine human rights eligibility.

Human rights solicitor Bernadette Livesey believes the courts’
lack of clarity about what does or does not constitute a public
function is the result of “badly drafted” legislation and a
deliberate decision by the Lord Chancellor at the time the bill was
going through Parliament not to define it properly, but to leave it
to be determined through litigation.

Although local authorities retain an obligation to service users
of its outsourced functions under the National Assistance Act 1948,
Livesey argues that this does not amount to an effective recourse
for people wishing to complain about those services.

“Your remedy is against the local authority. But what do you do
when it is not the local authority that is making you unhappy? They
are not in a position to do anything about it. The remedy lies with
someone who is not actually causing the problem.”

Calling for the House of Lords to define the remit of the 1998
Act, Livesey warns: “There’s a real worry that people who carry out
public services for public authorities after this judgement seem to
have fewer obligations and, as the way that services are provided
has changed, inevitably that raises the question about how people
who use these services are protected.”

The Poplar case

The appeal court concluded that Poplar Housing and Regeneration
Community Association was a public authority under the 1998 Act
because it was created by Tower Hamlets local authority; was
subject to supervision and regulation by the local authority; was
in receipt of grants from it; and had statutory duties to
co-operate with local housing authorities.

By comparison, Leonard Cheshire Foundation was not acting under
any statutory power, was not subject to the same extent of
regulation and was not created by any local authority. There was no
material distinction between services for privately or publicly
funded residents; the degree of public funding for placements was
not determinative; and there was no integrated relationship between
LCF and any of the relevant purchasing authorities.