The Rent Service v Heffernan [2007] EWCA Civ 544

“10. It is evident that the local reference rent is a blunt instrument which can depress an individual’s benefit below a level which is neither “significantly” nor “exceptionally” high, but cannot elevate it if for other reasons it falls below the local reference rent level. It is also evident, both from the text and from its history, that this effect is intentional. So an argument simply from hardship cannot succeed. Nor, however, should an argument simply from economic policy succeed – for example that it is consonant with the intent of the Order that as large an area as possible should be taken in order to depress the local reference rent level for better-off areas and so limit the housing benefit bill. Mr Fetherstonhaugh rightly disavows any such construction: he accepts that the comment of Lord Bingham MR in Ex parte Gibson . . . that the benefit assessment procedure is not designed to produce homelessness is as true of the [as then] amended Order as it was of the earlier version. Both counsel accordingly have concentrated their submissions on making sense of the words on the page. 11. Although both counsel start from the proposition that it is an ordinary English word, “locality” as used here, while certainly not a term of legal art, necessarily has a meaning, or a range of meanings, geared to its context and purpose. The context, Mr Luba submits, includes the use of the same word in the three preceding paragraphs to denote a plainly more restricted area than has been adopted for paragraph 4. While paragraphs 1 to 3 do not use the word “locality” to mean some defined geographical or administrative area, in all three places it clearly requires regard to be had to the near neighbourhood of the subject letting: why else would two of the three paragraphs need to contain fallback provisions introducing some elasticity into the concept of locality in the interests of practicability? But as Mr Fetherstonhaugh points out, wholly different meanings of this very word within a few lines are not unknown – for example as used in subsections (1) and (2) respectively of s.70 of the Rent Act 1977 (see Metropolitan Property Holdings Ltd v Finegold [1975] 1 WLR 349, DC). It does not follow, therefore, that the meaning in paragraph 4 is necessarily the same as in the preceding three. 12. To decide whether it is the same or not, and at all events whether it is on any view large enough to encompass the whole of Stockport, it is necessary to consider the policy and objects of this Order in its [then] amended form. We are not concerned here with policy in the sense of what ministers hoped or intended to achieve in financial terms, but with what the amended Order itself (which by s.122(6)(a) of the Housing Act 1996 was subject to negative resolution in Parliament) displays as its essential objective. This, in my judgment, is to limit the housing benefit which is otherwise payable on grounds of reasonable individual need to the median point between the upper and lower ends (excluding exceptional cases) of the local market in dwellings with similar living space (actual or assumed) and in a reasonable state of repair. To this extent, but no more, its purpose is to intervene in the market. It is not to drive people who have had to fall back on housing benefit out of more affluent areas where the benefit rules would otherwise have enabled them to remain and into poorer areas. If that were desired, it would require clear provision – for example by a recasting of paragraph 3, which is designed to avoid subsidising market-priced but excessively comfortable accommodation. It cannot fairly be deduced from the terms of paragraph 4. 13. It follows that it offends the purposes of the Order to take as the relevant locality an area so large that the poorer dwellings in it will inexorably bring the median, and with it the cap, down to a level which drives out or pauperises otherwise eligible housing benefit claimants. The fundamental purpose of the housing benefit scheme is the very opposite: it is to ensure that people who are not under-occupying property and not over-paying rent are not made homeless through genuine inability to pay. This is the context in which the purpose of the local reference rent has to be established. While, as a limiting procedure, it undoubtedly qualifies the basic purpose, it is not designed to negative it. Its objective, in its context, is that a rent should not be subsidised above the median or average level (the two are mathematically the same here) for the locality. That in turn implies a necessary geographical and demographic restraint on what can be legitimately regarded as the locality. Just as the court will intervene if too narrow an area is taken to accommodate the statutory purpose (Metropolitan Property Holdings Ltd v Finegold [1975] 1 WLR 349, DC), so it must intervene if too large an area is taken. 14. As the Secretary of State pointed out in the memorandum referring his proposals to the Social Security Advisory Committee (paragraph 20), “Localities are fluid representations of property markets and can be quite variable in size.”

“I therefore conclude that Mr Spedding a. used a meaning of “locality” in his determination which was inconsistent with that in the Order b. relied on the inadequate work done before he made his redetermination c. when making his redetermination, failed to make any assessment of the matters required under subparagraph 4(b) of the Order. [4(6)(b) must have been intended] I express no view at all on whether a Rent Officer might properly conclude that Sheffield is a “locality” for the purposes of the Order. All that I do say is that such a conclusion must be reached properly, and not in the very unsatisfactory way in which this one was.” a. used a meaning of “locality” in his determination which was inconsistent with that in the Order b. relied on the inadequate work done before he made his redetermination c. when making his redetermination, failed to make any assessment of the matters required under subparagraph 4(b) of the Order. [4(6)(b) must have been intended] I express no view at all on whether a Rent Officer might properly conclude that Sheffield is a “locality” for the purposes of the Order. All that I do say is that such a conclusion must be reached properly, and not in the very unsatisfactory way in which this one was.”

“The second criterion requires an analysis of health, education, recreation, personal banking and shopping provision from the point of view of a tenant in the dwelling under consideration, albeit not the particular tenant. That analysis requires that attention is given to both type and standard. It is agreed before me, and I so hold, that “standard” requires consideration of the quality of the facility or service in question. If one considers education for example, “type” will refer to the type of school (e.g., primary, secondary, independent, sixth form college etc) and “standard” will relate to its quality. Mr Strachan, despite his acceptance that “standard” required a qualitative assessment, also submitted that (for example) in terms of education, “standard” meant no more than type, and that it would be a wholly subjective exercise for a rental officer to assess the quality of one school against another. I reject that argument as illogical and unrealistic. It is illogical because it would make the words “and standard” otiose. It is unrealistic because it overlooks what actually occurs. As set out by Ms Fletcher in her evidence for the claimant, Local Education Authorities and the Department of Education now publish data relating to school examination results and performance. In my judgment, the inclusion of the words “and standard” must have been designed to require a qualitative judgement. The degree of analysis may of course be less substantial, probably much less so, than a prospective parent would carry out.”

“An hour or so spent considering the published material and in discussion with an LEA officer once a year would enable information to be provided which could be used to inform the choice of locality for determinations over the next 12 months.”

“All such information is readily available, whether in Health Authority or Local Planning Authority material, in written form or often on the internet. The NHS, for example, keeps information on which GP practices have spare capacity for new patients.”

“These are matters often considered by valuers, or by house builders and other developers or their advisors, or by local authority planning officers. A broad brush approach may well suffice, provided that the criteria are addressed. But most importantly, the criterion in the Order is explicit that a judgement must be formed on such issues when considering how a locality is to be determined.”

“Meaning a broad geographical area comprising a number of neighbourhoods with a mix of property types and tenure, where a tenant could, as an alternative to the dwelling in question, reasonably be expected to live and benefit from similar amenities.”

“I also considered in my professional judgement that the whole of the city of Sheffield and some of its surroundings formed a cohesive area in which a prospective tenant living in Sheffield Central could in fact exercise reasonable choice when looking for a home and within which he might reasonably be expected to live having regard to the factors identified above. Access to services of the same type and similar standard throughout Sheffield is broadly the same, and travel times by both private and public transport allow cross-city travel for access to these services and facilities. Although there are a number of locally named areas throughout the city, I concluded that there were only 13 distinct areas of residential accommodation within the locality, having regard to the definition of neighbourhood in paragraph 3(5)(a) of Schedule 1 to the Order. I considered that the rural hinterland was an area within which the Claimant could reasonably be expected to live having regard to the factors contained in paragraph 4(6)(b) of the Order relating to the facilities and services and distance of travel by public and private transport to those facilities and services including those within Sheffield itself. Consequently I felt that the locality I used provided both the variety of property types and tenures and the other requirements indicated by the definition in the Order.”

“I applied the requirements of paragraph 4(6) of Schedule 1 to the Order and I took account of the internal guidance in my consideration.”

“facilities and services of the same type and similar standard”

“However, in the case of the ‘Sheffield locality’ used for the Claimant’s rent determinations, evidence shows that the area used is so large as to include many areas which, in comparison with the central area, are in fact qualitatively quite different, and in which the type and standard of amenities available are strikingly different from, and indeed inferior to, those available in the area of the Claimant’s home.”

“All of the heads in the Order are represented within the locality and all services and facilities are accessible from the locality and from all the neighbourhoods making up the locality with similar degrees of ease.”

“I determined the locality on the basis that it was objectively reasonable for a notional tenant of the subject dwelling to consider the whole of Sheffield having regard to those factors. The whole area has the twin attributes of good access to similar facilities and services over a broad area.”