Ensuring Procedural Fairness and Rational Decision-Making in Public Funding: Analysis of SCHOOL AND NURSERY MILK ALLIANCE LTD v Scottish Ministers [2022] ScotCS CSOH_11

Introduction

The case of SCHOOL AND NURSERY MILK ALLIANCE LTD v Scottish Ministers [2022] ScotCS CSOH_11, adjudicated by the Scottish Court of Session's Outer House, centers on a judicial review petition concerning the funding rates set under the Milk and Healthy Snack Scheme (Scotland) Regulations 2021. The petitioner, representing dairy, health, and education sectors, challenged the Scottish Ministers' replacement of the longstanding Nursery Milk Scheme with a new funding model. The key issues revolved around alleged funding cuts, insufficient consultation processes, and irrational determination of Local Serving Rates (LSRs) affecting milk suppliers and childcare settings across Scotland.

Summary of the Judgment

The Scottish Court of Session ruled in favor of the petitioner, finding the new Milk and Healthy Snack Scheme unlawful. The court identified two primary reasons for this decision:

Failure to Conduct Proper Consultation: The Scottish Ministers did not adequately consult with all relevant stakeholders, particularly those not directly benefiting from the scheme, such as milk suppliers and private childcare settings.
Irrational Setting of Local Serving Rates (LSRs): The methodology used to determine LSRs was found irrational, as it failed to account for essential factors like the cost of non-dairy alternatives and relied solely on data from the Scotland Excel framework, excluding costs incurred by private settings.

Additionally, the court held that the respondent's refusal to amend the scheme despite evident issues further compounded its irrationality, leading to the scheme's overall unlawfulness.

Analysis

Precedents Cited

The judgment referenced several key cases to underpin its reasoning, including:

Regina v North and East Devon Health Authority, ex parte Coughlan [2001] QB 213
R (Law Society) v Lord Chancellor [2019] 1 WLR 1649
R (Eisai) v National Institute for Health and Clinical Excellence [2008] EWCA Civ 438
R (Milton Keynes Council) v Secretary of State [2011] EWCA Civ 1575
R (Help Refugees Ltd) v Secretary of State for the Home Department [2018] 4 WLR 168

These cases collectively emphasize the necessity of procedural fairness, the duty to consult comprehensively, and the standards for assessing irrationality in public decision-making.

Legal Reasoning

The court delved into the principles of judicial review, particularly focusing on:

Duty to Consult: Derived from cases like Coughlan and Law Society, the court underscored that consultation must be timely, comprehensive, and consider all relevant stakeholders, especially those significantly impacted by the decision.
Irrationality (Wednesbury Unreasonableness): As outlined in Law Society and Balajigari, the court assessed whether the decision to set LSRs lacked reasonableness by disregarding essential factors and relying on flawed methodologies.

Applying these principles, the court found that the lack of adequate consultation and the flawed basis for setting LSRs constituted both procedural unfairness and irrationality, rendering the scheme unlawful.

Impact

This judgment serves as a critical reminder to governmental bodies on the importance of:

Ensuring inclusive and transparent consultation processes when formulating public policies.
Employing rational, evidence-based methodologies in determining funding mechanisms to avoid detrimental impacts on stakeholders.

Future cases involving public funding schemes will be closely examined against these standards, promoting greater accountability and fairness in public administration.

Complex Concepts Simplified

Local Serving Rate (LSR)

The Local Serving Rate (LSR) refers to the predetermined funding amount allocated to childcare settings per serving of milk or healthy snack provided to eligible children. These rates are calculated based on data and adjusted for factors like local costs and rurality.

Wednesbury Unreasonableness

A legal standard used in judicial review to assess whether a decision is so unreasonable that no sensible authority could have made it. Originating from the case Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223, it serves as a benchmark for evaluating governmental decisions.

Judicial Review

A process by which courts examine the legality and rationality of decisions or actions taken by public bodies. It ensures that such bodies act within their legal powers and follow fair procedures.

Conclusion

The SCHOOL AND NURSERY MILK ALLIANCE LTD v Scottish Ministers judgment underscores the paramount importance of procedural fairness and rationality in public funding decisions. By invalidating the Milk and Healthy Snack Scheme due to inadequate consultation and irrational setting of LSRs, the court reaffirms that governmental bodies must engage comprehensively with all affected stakeholders and base funding mechanisms on robust, evidence-based methodologies.

This case sets a precedent that will guide future regulatory actions, ensuring that public schemes are both fair in process and sound in rationale. It serves as a crucial checkpoint for public authorities to uphold principles of transparency, inclusivity, and reasonableness in their decision-making processes.