Case No: CO/3623/2011
Neutral Citation Number: [2012] EWHC 2055 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 25/07/2012

Before:

MR JUSTICE EDWARDS-STUART
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Between:

	THE QUEEN On the application of TT 	Claimant	
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	LONDON BOROUGH OF MERTON	Defendant	

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Miss Scolding (instructed by Ridley & Hall Solicitors) for the Claimant
Miss Savage (instructed by Legal Department of London Borough of Merton) for the Defendant

Hearing dates: 19 June 2012
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Judgment
Mr Justice Edwards-Stuart: 

Introduction
1.	This is an application for judicial review.  It involves the allowance paid to the Claimant, as the special guardian of a child to whom I will refer as C.  The Claimant alleges that the policy of the Defendant (“Merton”) in relation to the financial assistance to be given to special guardians, made pursuant to the Special Guardianship Regulations 2005, is fundamentally flawed.  She asserts that when formulating its policy in relation to the allowance to be paid to special guardians Merton was required to have proper regard for the amount of fostering allowance which would have been payable if C were fostered, but that this was not done.
2.	The Claimant claims also that Merton adopted a flawed method of assessing her means for the purpose of arriving at any deductions that, under Merton’s policy, fell to be made from the allowance that Merton considered should be paid to her for caring for C.
3.	There was a further complaint which arose out of Merton’s admitted failure to pay the Claimant the proper allowance for the first 10½ months of the period during which she was caring for C.  It is not in dispute that, owing to a mistake, Merton underpaid the Claimant a little under £250 per month during that period.  It subsequently repaid that shortfall, together with interest at the court rate, but not before the Claimant had incurred various debts and found herself unable to repay the instalments on a loan that she had taken out in order to buy a car.  Subsequently she had to sell the car.  However, by the time of the hearing the Claimant was no longer seeking any relief in relation to that error.
4.	Merton has recently revised very significantly its assessment of the allowances to be paid to the Claimant, not only in respect of C but also in respect of the Claimant’s granddaughter, J, who also lives with her and is C’s half sister.  However, it is still asserted that Merton’s policy in relation to the assessment of the allowance to be paid for special guardians is flawed and that the Claimant’s means have been wrongly assessed for the purpose of making any deductions from the allowance.
The facts
5.	The Claimant, who is sometimes referred to as TT and, by my order, is not to be referred to by her real name in case this might also reveal the identity of C, is in effect the mother in law of C’s mother, G.  The Claimant’s son had a relationship with G and a daughter, J, was the result.  J, who is now 10, lives with the Claimant.  G then had a relationship with C’s father.  Therefore C is half brother to J.  The Claimant also has an older natural daughter, S.  She is also part of the household.
6.	C was born on 3 May 2008, so he is now 4.  He is hyperactive and is currently being investigated for attention deficit hyperactive disorder (“ADHD”).  He has frequent aggressive outbursts and can be very challenging.  His father, who is said to have dissocial personality disorder, is now serving a 30 year sentence for murder.  His mother, G, is serving a 10 year sentence for drug offences.  G was pregnant with C when she was arrested for drug trafficking and C was born whilst his mother was awaiting trial.   Following his mother’s conviction, he then went to live with members of his maternal family.  He was removed from the family after his father, whilst intoxicated, came to visit him and made threats.  An emergency protection order was made on 14 November 2008 and he went to live with foster carers.  Unsurprisingly, perhaps, C appears to have been affected by the disturbing environment in his birth family.  
7.	The Claimant was approached by Merton’s social services in 2009 to care for C because neither his maternal nor his paternal family would care for him in the light of the threats from his father.   The Claimant originally refused to do so - not only because she had health problems, but also because of the behaviour of C’s father.   In August 2009, Merton’s social services team again approached the Claimant, as no other member of his family was willing or able to care for C on a long term basis.  By that time, C’s father was safely behind bars and so the Claimant agreed to become his special guardian.     
8.	She says she was told at that time that she would receive an allowance to care for C in line with foster care allowances within the borough and that, in effect, she was C’s last chance because otherwise he would probably be offered for adoption.   However, the Claimant was aware that, C being a young Afro-Caribbean boy, it was quite likely that he would not be adopted and would therefore remain in permanent foster care.   She knew it would not be easy, but she wanted to offer C love and stability and for him to grow up knowing that he was wanted.  She is likely to find herself caring for C on a long term basis.   Leaving aside what the Claimant may have been told about the level of financial support, which I will mention briefly later, I accept what is said in the Claimant’s witness statements about all this.  Indeed, I understood that it was not in dispute.
9.	Before J and C came to live with her, the Claimant was employed as a career civil servant with the Home Office.  She has given up that career, and consequent financial security, in order to care for J and now C.  The Claimant has back and neck problems (cervical spondylosis) which add to the strain of caring for a small child.  She now lives on Income Support, Child Benefit and Child Tax credits, together with the sums paid to her as a special guardian.  She has incurred significant debts as a result of the drop in income and the costs of caring for J and C.  
10.	In addition, the Claimant does not have the financial or emotional support of a wider kinship network.  C’s extended family play no effective role in his life or upbringing.  
11.	C came to live with the Claimant in March 2010, since when she has received a special guardianship allowance.  Initially, and until January 2011, this was set at £27.88 per week.  The Claimant expressed unhappiness about this amount at the time of making of the order, but says that her priority was for C to become settled in the home.  In January 2011, following a pre-action protocol letter, the Claimant’s allowance was increased to £84 per week.  By a letter dated 27 January 2011, the Defendant accepted that it had wrongly made certain deductions when assessing the allowance to be paid to the Claimant amounting in total to some £2,597.  This represented an underpayment of just under £250 per month.  The Defendant undertook to repay that amount, with interest, which it subsequently did.
12.	Unfortunately, by this time the Claimant had fallen into substantial arrears on the loan that she had taken out in order to buy the car and had to sell it.  Her credit rating was also adversely affected so that she could no longer make certain purchases over the internet.
13.	In December 2011 Merton carried out a reassessment of the Claimant’s position and in January 2012 it advised her that on the basis of C's behaviour, which it considered it might warrant a diagnosis of ADHD, the Claimant would be given "a 0.5 uplift on the maximum allowance, making a total maximum allowance for [C] of £661.96 per month".  In addition, Merton considered the position of J, in respect of whom the Claimant had never asked for financial support.  In the light of J's significant special needs Merton decided that she would also be given a 50% uplift on the maximum allowance, making a total maximum allowance for J of £754.59 per month.
14.	The effect of this is that the Claimant is now receiving in respect of C the National Fostering Network’s recommended minimum core allowance for foster carers without any enhancement.
The National Fostering Network’s Minimum Allowance
15.	The National Fostering Network publishes recommended allowances for foster carers.  The minimum recommended allowance (the core allowance) is made up of the direct costs of caring for a child and a further amount to take account of the additional costs that arise on account of the characteristics of fostered children and the characteristics of fostering. 
16.	These allowances are based on research originally carried out by Ms Nina Oldfield on families around York (“The Adequacy of Foster Care Allowances”, 1992).   She concluded that the cost of looking after a child in foster care was on average 50% higher than the costs of looking after a natural child born into the family.  The Fostering Network has adopted this research in formulating its recommended allowances.
17.	In her skeleton argument Miss Mai Ling Savage, who appeared for Merton, referred to the information provided with the Fostering Network Recommended Minimum Allowances for 2011-12, dated 23 December 2010, which says: 
“In 1997 and 2001 Nina Oldfield’s research found that it costs foster carers 50 per cent more to care for a fostered child than it did parents to care for their own child.  This evidence has been widely accepted and was included by the Department for Education (DfE) in their calculation of national minimum allowances in England.  Costs are assumed to cover not just the cost of food and clothing, but to include the cost of transport, maintaining a larger car, a share of household costs, including wear and tear and the cost of having and maintaining an additional bedroom.”
18.	I was told that the Fostering Network minimum allowance weekly rates for London  from April 2012 (the 2011 rates in brackets) are as follows:
•	Age 0-4: 	£157.85 (£154.30)
•	Age 5-10: 	£179.95 (£175.90)
•	Age 11-15: 	£224.09 (£219.05)
•	Age 16+: 	£272.13 (£266.01) 
Nina Oldfield’s research and its implications for special guardians
19.	In the introduction to Chapter 3 of her paper, Ms Oldfield wrote:
“The previous chapter explored the costs of child rearing for a "normal" child in a household of two adults and two children.  This chapter explores the differences in cost between a foster child and a "normal" child.  It suggests that the foster child incurs costs which are common to all children at a modest-but-adequate standard of living and a range of costs which are specific to the child's fostering circumstances.  The direct extra costs of a foster child are the subject of this chapter . . .”
20.	The results were based on interviews with over 30 foster families.  These showed that the foster families incurred additional direct costs as a result of having a foster child in a number of different ways.  For example: young foster children of school age were said to bathe more often than the natural children in the same family and bathing was seen as a means of building relationships; there was a tendency with foster children towards a higher consumption of health and hygiene items; foster children were said to use more electricity (for example, by leaving lights on) and to require additional heating; foster children often had eating habits (sometimes abnormalities) that were different from those of the rest of the family; patterns of replacing the clothing of foster children were different from those of replacing the clothing of natural children, with the clothing of foster children being replaced more often for a variety of reasons (including destructive behaviour) and often by new clothes, rather than second-hand clothes, because of the need to build the foster child's self-esteem; foster children tended to cause wear and tear to furniture and household goods (including toys) by thoughtless or wilful behaviour; there was a tendency towards additional spending on gifts at the foster child's birthday and Christmas (partly because of the want of other close relatives who might give presents to natural children).
21.	On the other hand, Ms Oldfield noted that there were a number of heads of expenditure, such as the cost of travel, that were attributable to (or at least increased by) the nature of the role of the foster parent rather than the needs of the child.  One example would be the cost of attending meetings with the social services department and other professional advisers.
22.	Ms Oldfield concluded that the weekly extra costs (at 1991 prices) of a foster child varied between about £26 and £32, depending on the age bracket.  These figures exclude initial costs, such as clothing and so on, and represented an increase by comparison with a child born into a family of between 50-60%.
23.	It would not be easy to separate out the proportion of the costs which could be said to be directly attributable to the activities and needs of the foster child and those that are primarily attributable to the obligations imposed on the foster parents.  However, it is self evident from reading Chapter 3 of Ms Oldfield's study that any child brought into a family into which he or she has not lived since birth is likely to be a source of additional expenditure for many of the reasons found by Ms Oldfield, particularly in circumstances where the child has had a troubled background.
24.	The similarity of the likely attributes of a child who is the subject of a special guardianship arrangement and a child who is placed in foster care appears to be widely recognised.  For example, the Department of Education’s publication "Family and Friends Care: Statutory Guidance for Local Authorities” (April 2011) says, at paragraph 2.5:
“The most common reasons for family members and friends taking on the care of children are those related to parental factors such as domestic violence, alcohol or substance misuse, mental or physical illness or incapacity, separation or divorce, imprisonment, or death of a parent.  Child related factors such as disability or challenging behaviour may also be reasons.  In many instances the characteristics and needs of children living with family and friends carers in informal arrangements are very similar to, or the same as, those of children who have become looked after.  It may be the particular circumstances giving rise to an emergency, the willingness of family members to intervene at a particular stage, or the response of the local authority which determines whether the child goes to live with family and friends carers on an informal basis or is placed by the local authority as a looked after child."
I should explain that a “looked after” child in this context means a child who is fostered.  At paragraph 3.24 the document also said this:
"In its calculation of any ongoing special guardianship financial support, the local authority should have regard to the fostering allowance that would have been paid if the child was fostered."
25.	In the case of R (on the application of B) v Lewisham London Borough Council [2008] EWHC 738 (Admin), Black J said, at paragraph 53:
“As to the local authority's argument that fostering rates are an inappropriate reference tool because fostered children are more expensive to bring up than those who are not in local authority care, firstly I do not consider that the terms of para 65 entitle them simply to disregard fostering rates on this basis although they could, of course, take into account differential expenses as a justification for making appropriate adjustments when fixing the precise rate payable to special guardians.  Secondly, I am not sure whether it is wholly accurate to say as a generality that fostered children are more expensive although I have not got sufficient information to form a concluded view about this.  I do accept that, as the local authority argue, there are specific aspects of caring for a fostered child which complicate the arrangement and which are not present with an adopted child or one who is with a special guardian, notably the requirement to participate with the local authority in its supervisory role over the placement.  That apart, however, some children who are placed with special guardians are in situations which have derived from former fostering arrangements or other situations which have child protection aspects and the cost of bringing up these children may not be significantly less than the cost of bringing up fostered children."
Black J, as she then was, is a judge of considerable experience in this field and it seems to me that these observations are ones of which a local authority might have been expected to take appropriate notice when considering the level of the basic allowance to be paid to special guardians.  In the context of this case, it is relevant that this judgment was given on 17 April 2008, nearly 2½ years before the issue of the policy document that is under challenge in this case.
The relevant legal framework
26.	The statutory framework for the assessment and provision of support services is provided by s 14F of the Children Act 1989 and the Special Guardianship Regulations 2005.  Guidance on the Regulations is provided by a document called “Special Guardianship Guidance”, which was issued under s 7 of the Local Authority Social Services Act 1970.
27.	S 14F (1) of the Children Act 1989 provides:
“Special guardianship support services

(1)	Each local authority must make arrangements for the provision within their area of special guardianship support services, which means—

(a)	counselling, advice and information; and

(b)	such other services as are prescribed, in relation to special guardianship.”

28.	Regulation 3 of the Special Guardianship Regulations 2005, which came into force on 30 December 2005, provides that prescribed services consist of :
“3.—(1) For the purposes of section 14F(1)(b) of the Act the following services are prescribed as special guardianship support services (in addition to counselling, advice and information)—

(a)	financial support payable under Chapter 2;

(b)	services to enable groups of—
(i)	relevant children;
(ii)	special guardians;
(iii)	prospective special guardians; and
(iv)	parents of relevant children, to discuss matters relating to special guardianship;

(c)	assistance, including mediation services, in relation to arrangements for contact between a relevant child and—
(i)	his parent or a relative of his; or
(ii)	any other person with whom such a child has a relationship which appears to the local authority to be beneficial to the welfare of the child having regard to the factors specified in section 1(3) of the Act;

(d)	services in relation to the therapeutic needs of a relevant child;

(e)	assistance for the purpose of ensuring the continuance of the relationship between a relevant child and a special guardian or prospective special guardian, including—

(i)	training for that person to meet any special needs of that child;
(ii)	subject to paragraph (3), respite care;
(iii)	mediation in relation to matters relating to special guardianship orders.

(2) The services prescribed in paragraph (1)(b) to (e) may include giving assistance in cash.

(3) For the purposes of paragraph (1)(e)(ii) respite care that consists of the provision of accommodation must be accommodation provided by or on behalf of a local authority under section 23 of the Act (accommodation of looked after children) or by a voluntary organisation under section 59 of the Act.”
29.	The purpose of providing financial support to special guardians, and the circumstances in which it may be paid, are set out at paragraphs 37-39 of the Special Guardianship Guidance:
“PROVISION OF FINANCIAL SUPPORT

37.	Financial issues should not be the sole reason for a special guardianship arrangement failing to survive. The central principle is that financial support should be payable in accordance with the Regulations to help secure a suitable special guardianship arrangement where such an arrangement cannot be readily made because of a financial obstacle. Regulation 6 provides that financial support is payable to facilitate arrangements for a person to become the child’s special guardian, where this is considered to be beneficial to the child’s welfare, and to support the continuation of these arrangements after the order has been made.

38.  	Regulation 6 sets out the circumstances in which financial support may be paid to a special guardian or prospective special guardian.  These are:

a)	where it is necessary to ensure that the special guardian or prospective special guardian can look after the child

b)	where the child needs special care which requires a greater expenditure of resources than would otherwise be the case because of illness, disability, emotional or behavioural difficulties all the consequences of past abuse or neglect

c)	. . .

d)	where the local authority consider it appropriate to make a contribution to the expenditure necessary for the purpose of accommodating and maintaining the child, including the provision of furniture and domestic equipment, alterations to and adaptations of the home, provision means of transport, and provision of clothing, toys and other items necessary for the purpose of looking after the child

39.	Payment of financial support under (b) is intended where the child's condition is serious and long-term.  For example, where a child needs a special diet or where items such as shoes, clothing or bedding need to be replaced at a higher rate than would normally be the case with a child of similar age who was unaffected by the particular condition.”
30.	Paragraph 65 of the Guidance is of particular importance.  It provides:
“In determining the amount of any ongoing financial support, the local authority should have regard to the amount of fostering allowance which would have been payable if the child were fostered. The local authority’s core allowance plus any enhancement that would be payable in respect of the particular child, will make up the maximum payment the local authority could consider paying the family. Any means test carried out as appropriate to the circumstances would use this maximum payment as a basis.”
31.	The status of such guidance was considered by the court in B v Lewisham London Borough Council [2008] EWHC 738.  Black J said, at paragraph 20:
“Whilst the document does not have the full weight of statute, it should be complied with unless local circumstances indicate exceptional reasons which justify variation.”
32.	It is not in issue that this reflects the approach to similar guidance documents adopted by the court in R v Islington LBC, ex p Rixon [1996] 32 BMLR and in Munjaz v Ashworth Hospital [2005] UKHL 58, where Lord Bingham said of similar guidance, at paragraph 21:
“It is in my view plain that the Code does not have the binding effect which a statutory provision or a statutory instrument would have. It is what it purports to be, guidance and not instruction. But the matters relied on by Mr Munjaz show that the guidance should be given great weight. It is not instruction, but it is much more than mere advice which an addressee is free to follow or not as it chooses. It is guidance which any hospital should consider with great care, and from which it should depart only if it has cogent reasons for doing so.  Where, which is not this case, the guidance addresses a matter covered by section 118(2), any departure would call for even stronger reasons.  In reviewing any challenge to a departure from the Code, the court should scrutinise the reasons given by the hospital for departure with the intensity which the importance and sensitivity of the subject matter requires.”
33.	In the Lewisham case, Black J said, in relation to paragraph 65 of the Guidance, at paragraph 47:
“It seems to me that it is much more likely that those giving the Guidance intended that the local authority’s fostering allowances would serve as a ranging shot for the local authority’s consideration of what their special guardianship provision should be or at least be held firmly in mind when fixing that provision. That is the natural import of the first sentence of para 65 and it is an interpretation which allows the paragraph as a whole to have an integrity which is completely missing on the local authority’s interpretation. One must be careful not to construe the Guidance as if it were a statute but it should, in my judgment, be viewed as if the first sentence of para 65 were the introduction, making it clear that fostering allowances were relevant, which the second sentence refines by reference to the fostering core allowance.”
Merton’s policy
34.	The documents show that throughout 2009 there were meetings and discussions about Merton’s prospective policy in relation to special guardians following which Merton produced a document entitled "Special Guardianship: Assessments and Support".  It is not clear from the evidence whether this document was the first version of the published policy, or was just a draft.  The former seems more likely since there is a note of a discussion that took place on 2 August 2010 about special guardianship "regarding amendments to policy".  Very shortly after that, on 6 August 2010, a new policy was produced, which was the one in force for most of the period that is material to this claim.
35.	Merton has put in evidence various notes that were made by a service manager for looked after children who attended some of these meetings.  The notes made of a meeting held on 16 December 2009 contain the following “Actions”:
“5)	Look at Fostering Network research ie. expenses to look after child in care.
  6)	AH to check wi Maureen re fostering rates policy - remunerative element is ⅓”
36.	There is no document that records the outcome of either of these two actions.  Merton served a witness statement by a Mr Tim Wells, who is its Service Manager for Looked After Children, Permanency and Placements.  He joined Merton on 2 August 2010, at almost exactly the same time as the introduction of the policy that is the subject of this action.  He is therefore not in a position to give any direct evidence in relation to the formulation of the policy, apart from producing the notes to which I have already referred.
37.	The relevant parts of section 8 of the August 2010 version of the Policy are as follows:
“8.3.1   	The Model further suggests that local authorities link maximum payments for special guardians with fostering allowances.  The Court has also stated that local Guardianship Allowances should be linked with their fostering allowance schemes.  

 8.3.3  	The Local Authority sets core allowances for foster carers in line with the amounts recommended by the Fostering Network.  These are above the National Minimum Fostering Allowances set by Government.  Additional payments above the recommended Fostering Network minimum levels reflect the remunerative element of a foster carer’s allowance.  The core element reflects the costs to the carer of looking after that child on behalf of the Local Authority.  

 8.3.4  	The Fostering Network sets their recommended rates taking into account the Expenditure and Food Survey, and then adjusts the Figures using the McClements Equivalence Income Scales to ascertain what percentage of costs are spent on children.  The figures are then adapted to correspond to the cost of looking after children in care, following research by Nina Oldfield, which indicated that the costs of looking after a child in foster care is 50% higher than the costs of looking after a birth child.  Oldfield’s research identified a number of factors which accounted for the increased expense involved in caring for a Looked After child.  For example these included costs associated with bringing the child to/from contact arrangements, additional costs in decoration of the family home on change of placements or replacement of items damaged by fostered children.				
[Text in italics added in 2010]

 8.3.4(sic)  	Children who are the subject of Special Guardianship Orders are not looked after children, they have become part of the family unit.  The additional costs for a looked after child are therefore not applicable to a child in a Special Guardianship arrangement.  The Local Authority therefore adjusts the figures given by the Fostering Network and takes 2/3 of this as the figure which will be required to look after a child of that age.  This deducts the additional 50% which is allowed for by the Fostering Network.  

	. . .

 8.3.8  	Children with disabilities may incur additional expenditure to ensure that their needs as met.  . . . Research by Barnado’s has indicated that the cost of looking after a child with a disability can be up to three times greater than the cost of looking after a non disabled child.  

 8.3.9.   	Where the child has a disability, the assessing Social Worker should consider with the Prospective Special Guardian the projected additional expenses.  Where a child has a disability, the Local Authority may decide to enhance the maximum allowance payable, as calculated above, to a maximum of three times the standard Maximum Allowance. . . . The decision whether to award an enhanced maximum allowance will be made by the Children’s Resource Panel.  
	
	Other additional needs of the child

 8.3.10  	Children who do not have disabilities may still have additional needs as a result of their previous experiences.  If the child has additional needs which require additional expenditure above and beyond that for a child who does not have the same needs, e.g. due to social needs there will be a need for respite provision, or social activities for the child, then an additional allowance may be payable.  This will be added as an additional allowance after the means testing exercise has been undertaken and the core allowance calculated.  
[Text in italics added in 2010]

	. . .

 8.3.13  	Any ongoing financial assistance is made on the basis that the Special Guardians will inform the Local Authority immediately on any change in their financial circumstances.  Ongoing allowances will be reviewed on an annual basis.   

 8.3.14   	The Maximum Allowance set by the local authority therefore reflects the amount of money the Local Authority considers that the Special Guardian will need to care for the child.  If the family’s disposable income is less than 0, then they will require the entire Maximum Allowance to enable them to care for the child.  If their disposable income is greater than 0, they will require the Maximum Allowance less the amount by which their income exceeds 0.  Ongoing financial support will be calculated on this basis.”  
38.	It is relevant to compare this with the relevant paragraphs of the original policy, which were as follows:
8.3.3  	The Local Authority sets core allowances for foster carers in line with the amounts recommended by the Fostering Network.  These are above the National Minimum Fostering Allowances set by the Department for Children, Schools and Families.  Additional payments above the recommended Fostering Network minimum levels reflect the remunerative element of a foster carer’s allowance.  The core element reflects the costs to the carer of looking after that child on behalf of the Local Authority.  

 8.3.4  	The Fostering Network sets their recommended rates taking into account the Expenditure and Food Survey, and then adjusts the Figures using the McClements Equivalence Income Scales to ascertain what percentage of costs are spent on children.  The figures are then adapted to correspond to the cost of looking after children in care, following research by Nina Oldfield, which indicated that the costs of looking after a child in foster care is 50% higher than the costs of looking after a birth child.	

 8.3.4(sic)  	Children who are the subject of Special Guardianship Orders are not looked after children, they have become part of the family unit.  The additional costs for a looked after child are therefore not applicable to a child in a Special Guardianship arrangement.  The Local Authority therefore adjusts the figures given by 
 8.3.5	the Fostering Network and takes 2/3 of this as the figure which will be required to look after a child of that age.  This deducts the additional 50% which is allowed for by the Fostering Network.  
				[Paragraph numbering and layout as in original]

	. . .

 8.3.7  	If the child has additional needs which require additional expenditure above and beyond that for a child who does not have the same needs, eg. due to social needs there will be a need for respite provision, or social activities for the child, then an additional allowance may be payable.  This will be added as an additional allowance after the means testing exercise has been undertaken and the core allowance calculated. 

 8.3.8.   	The Means Testing scheme adopted by the Local Authority ensures that the financial cost of caring for the child are fully considered

i)	the consideration of the family’s core expenditure includes provision for the application of the Income Support rate in respect of the child as a dependant on the family;

ii)	the consideration of the maximum local allowance includes the figure which takes into account expenditure on the child, as set by the Fostering Network on the basis set out above.”

39.	I have to confess that it is not clear to me why this policy document says that the allowance “includes the figure which takes into account expenditure on the child, as set by the Fostering Network on the basis set out above”.  The only figure set by the Fostering Network is the assessed cost of caring for a foster child.
40.	Paragraph 8.5.2 of the current policy document notes that foster carers receive a remunerative element as part of their allowances to reflect the level of skill and expertise they are required to offer to a child who they are looking after on behalf of the local authority.  
41.	In practice, the allowance paid to a foster carer has three components: the core allowance, any enhanced allowance necessary to meet the needs of the particular child and a remunerative element (to reflect the skill and expertise).  The core allowance is based on the National Fostering Network’s recommended minimum allowance, although many local authorities pay rather more.
42.	It is not in dispute that the National Fostering Network’s recommended minimum allowances, and any enhanced allowance, include no element of remuneration.  
The means test 
43.	The Department for Education and Skills has developed a Standardised Means Test Model (“the Model”) for use in assessing the financial support for carers in adoption and special guardianship cases.  At paragraph 2 of the introduction to the Model it states:
“Please note that this test is a suggested model only.  It is not a statutory requirement for local authorities to use this model in place of their existing system.  However, we do recommend its use by local authorities, as we believe that the model developed is fair and that adoptive or special guardian families would benefit from a consistent approach by local authorities.”
44.	It is accepted by Miss Fiona Scolding, who appeared for the Claimant, correctly in my view, that the Model does not carry the same weight as the Special Guardianship Guidance.  It is, as it says, a suggested model only.
45.	In paragraph 8.2.2 of the August 2010 policy document it is explained that Merton had considered the Model and had concluded that it did not take into account the actual needs of the individual family concerned.  It identified four aspects with which it disagreed:
(1)	The government’s recommendation was that where the special guardian was in receipt of Income Support, he/she should be paid the maximum locally set allowance.  Merton rejected this on the basis that it suggested that Income Support was not enough to meet the needs of any family, regardless of their individual circumstances.
(2)	Whilst the Model provided that the first 20% of a prospective special guardian’s income should be disregarded, Merton rejected this on the basis that actual needs must be considered. 
(3)	The Model provided that in order to determine a family’s core expenditure on household items, Income Support rates should be used with an uplift of 25%.  Merton rejected this on the ground that the assessment should be of essential need and that the Income Support rates should be used without any uplift.  The policy states that this “ensures that all families are treated fairly and equally”.   I find this last comment hard to follow - I am at a loss to see how any family that included a special guardian would be treated less fairly than any other such family by the adoption of Income Support rates plus 25% when calculating predicted expenditure or, alternatively, why families with a special guardian should be treated on exactly the same basis as families with natural children.
(4)	The Model suggested that where a family has a disposable income, only 50% of that disposable income should be taken into account.  Merton rejected this.  The effect of this is that Merton appropriates any assessed disposable income in diminution of the allowance it pays to the special guardian.  
46.	In relation to the last point, in fairness to Merton it should be made clear that the method adopted in Merton’s means test is to take the cared for child’s tax credit into account when assessing the special guardian’s family income but to ignore the cost of caring for the child when assessing the expenditure.   Thus the inclusion of the child tax credit without deducting the corresponding expenditure might well result in a surplus.  However, this has given rise to a further point.
The Claimant’s supplementary argument 
47.	The Claimant submits that the current means test is distinctly less favourable to those on benefits than the Model because the tax credits are included as income, but the expenditure that the Claimant incurs on her other children is not included, so that there is a mismatch between income and expenditure.  It is submitted that this is unlawful.   
The submissions of the parties 
48.	Miss Scolding made submissions which I hope I can summarise as follows.
(1)	C was in no different position to a great many of the children who are fostered and so the rationale of Merton's policy had no application to his situation.
(2)	The policy failed to recognise that C, along with most of those placed with kinship carers, has the same difficulties which Nina Oldfield identified in her research concerning the cost of fostering children.
(3)	The policy failed to set a level of allowance for special guardians that was comparable to the minimum core rate for foster carers recommended by the National Fostering Network, as paragraph 65 of the Guidance required.
(4)	The rationale behind Merton’s policy is flawed in that it seeks to indicate that the burdens on those who are special guardians are less than those of foster carers.
(5)	There is no element of remuneration in the minimum levels recommended by the National fostering Network, so that having the rate for special guardians at a level comparable with that of foster carers would not create a system of remuneration.
(6)	The notes made at the internal discussions within Merton do not demonstrate that there was any detailed discussion about the justification for the policy in relation to the level of allowance for special guardians.
(7)	A comparison with the allowances for special guardians set by other nearby local authorities showed that the latter were more generous than those set by Merton (although in respect of this, Miss Scolding accepted that this was not of itself evidence that Merton's policy was irrational: she relied on it as support for the other grounds).
(8)	The form of means test adopted by Merton was so heavily slanted against the special guardian by comparison with the Model suggested by the Department of Education that it would act as a deterrent to prospective special guardians and therefore was contrary to the statutory purpose of the allowance.
49.	Miss Scolding also relied on Articles 8 and 14 of the European Convention for Human Rights.  She referred me to the decision of Munby J in R (on the application of L) v Manchester City Council [2001] EWHC (Admin) 707, and in which he said, at paragraph 94, that "if fundamental human rights are engaged the decision must be subjected to "the most anxious scrutiny"".  In such cases the policy must meet the key Convention tests of "necessity" and, in particular, "proportionality" (paragraph 98).
50.	Miss Scolding did not pursue any claim based on legitimate expectation following what the Claimant says she was told about the likely level of her allowance.  She was right not to do so.
51.	Miss Savage made the following submissions in response:
(1)	Paragraph 65 of the Guidance did not require a local authority to adopt the National Network’s minimum allowances for special guardians, it only required the local authority to have regard to those allowances.
(2)	Merton complied with the Guidance because it referred expressly to the Fostering Network’s minimum allowances and noted that the costs of looking after a child in foster care was said to be 50% higher than the costs of looking after a birth child and stated that these additional costs were not applicable to a child in a special guardianship arrangement.
(3)	In fact, Merton's policy did allow the authority to make adjustments to reflect the particular needs of a particular child in a special guardianship arrangement.  This was provided for in paragraph 8.3.10 of the policy which said that an additional allowance "may be payable" if a child had additional needs which required additional expenditure above and beyond that for a child who does not have the same needs.
(4)	Miss Savage submitted that this was a much more rational approach, because it enabled Merton to deal with each case individually.  There was no way, she submitted, that any precise adjustment could be made to the Fostering Network’s minimum allowances to reflect the difference in the costs of caring for a foster child and a child who is the subject of a special guardianship arrangement, with the result that any adjustment to those minimum allowances would be arbitrary.
(5)	The reasons given by Merton for departing from the Model were clearly set out in the policy document and were entirely rational.
(6)	Miss Savage referred me to Merton's initial assessment of C’s needs, which showed him to be a happy and seemingly well adjusted child with no special needs.
(7)	She identified a number of features of a foster care arrangement which resulted in extra cost to the foster carers that were absent from a special guardianship arrangement.  For example, special guardians were paid an initial lump sum grant that was not paid to foster carers; foster carers frequently had several children in sequence and therefore incurred additional costs, such as the redecoration of bedrooms for each new child, but were not incurred by kinship carers; foster carers incurred significant costs in dealing with additional visitors and complying with their statutory obligations, and so on.
52.	Miss Savage accepted that Articles 8 and 14 were engaged, with the result that the onus was on Merton to show that its policy was lawful.
Discussion and conclusions 
53.	To some extent both counsel relied on the particular circumstances of C in support of submissions attacking or justifying Merton's policy.  In my judgment, that is the wrong approach in the circumstances of this case.  Paragraph 19 of the Regulations provides that local authorities are required to make arrangements for the provision of special guardian support services, and these include financial support.  I can find nothing in either the Act or the Regulations that requires these arrangements to take the form of a general policy as to the level of core allowance that will be paid to special guardians, as opposed to setting the allowance on a case by case basis.  It seems that it is open to the local authority to do either.  However, if the local authority chooses to do the former, as Merton has done, then I do not see how the level of core financial support that it thinks appropriate for special guardians as a class can subsequently be supported or challenged by reference to an individual case.
54.	If the local authority decides to determine the amount of the core allowance to be paid to special guardians, then in my view it must consider the circumstances of the hypothetical typical case and, in doing this, must follow the Guidance unless there are cogent reasons for departing from it that are appropriate to its particular area or situation.
55.	I reject Miss Scolding’s submission that paragraph 65 of the Guidance required a local authority to adopt the minimum allowances recommended by the National Fostering Network as the level of allowance to be paid to a special guardian.  In making this submission I think that she may have misunderstood Black J’s reference to "a ranging shot" in the Lewisham case.  A ranging shot is, by definition, a shot that is not expected to hit the target (it is intended to land somewhere near the target and thereby enable the gunner, by observing the fall of the shot, to estimate the true range to the target).  I am sure that this is what Black J meant by her reference to it, as her observations at paragraph 53 (which I have quoted above) confirm.
56.	My understanding of the Guidance, which I think is the same as that of Black J, is that a local authority is expected to consider the Fostering Network’s minimum allowances and to use them as a starting point when determining the allowance for a special guardian.  That is to say, the local authority can make any adjustments that the level of allowance that it considers appropriate in order to reflect the differences in the cost to a foster carer and the cost to a special guardian of caring for a child who is not a child born into the household.
57.	However, like Black J, I consider that the local authority is not free simply to depart wholly from the Fostering Network’s minimum allowances and to set an allowance that makes no adjustment whatever for any additional costs that a typical special guardian might be expected to incur.
58.	There are two reasons why I consider that Miss Savage's submissions about the application of paragraph 8.3.10 of the policy cannot save Merton’s approach.  First, as the Oldfield study demonstrates, the increased costs to a foster carer of looking after a child represent the aggregate of a number of small items of additional expenditure, many of which are trivial if taken in isolation but when added together can amount to a significant outlay.  In my judgment, these are not expenses of a type contemplated by paragraph 8.3.10 of the policy.  They are better assessed on a broad brush basis by making an appropriate adjustment to the Fostering network’s recommended minimum allowance.
59.	Second, it seems to me that paragraphs 8.3.8 and 8.3.10 of Merton’s policy are directed to meeting the obligation identified in paragraph 6(2)(b) of the Regulations - the case where a child needs special care as a result of disability, behavioural difficulties and so on - and not to the ordinary incidents of bringing up a child who was not born into the family.  This conclusion is supported by paragraph 39 of the Guidance, which provides that payment of support under Regulation 6(2)(b) is intended where the child’s condition is serious and long-term: it gives the example of where shoes, clothing or bedding need to be replaced at a higher rate than would normally be the case.  
60.	The evidence does not disclose what consideration Merton gave to the Fostering Network’s minimum allowances.  The list of actions made at the meeting on 16 December 2009 suggest that the writer recognised the need to look at the research that gave rise to the Fostering Network’s allowances and appears to suggest that the writer may have thought at the time that those allowances included a one third element in respect of remuneration.
61.	Miss Savage assured me that Merton was never under the impression that the Fostering Network’s allowances included such an element in respect of remuneration, and this I am prepared to accept.  Nevertheless, in the light of the notes made at the meeting of 16 December 2009 it would be strange if it were pure coincidence that the reduction that Merton applied to the Fostering Network’s allowances was one third.
62.	In my view the real difficulty facing Merton’s case is, as I indicated to Miss Savage in argument, that in order to justify the logic of a reduction of one third from the Fostering Network’s allowances, the words in paragraph 8.3.4, namely
“Children who are the subject of Special Guardianship Orders are not looked after children, they have become part of the family unit.  The additional costs for a looked after child are therefore not applicable to a child in a Special Guardianship arrangement.  The Local Authority therefore adjusts the figures given by the Fostering Network and takes 2/3 of this as the figure which will be required to look after a child of that age.  This deducts the additional 50% which is allowed for by the Fostering Network.”
would have to be re-written so as to read:
“Children who are the subject of Special Guardianship Orders are not looked after children, they have become part of the family unit.  None of the additional costs for a looked after child are therefore not applicable to a child in a Special Guardianship arrangement.  The Local Authority therefore adjusts the figures given by the Fostering Network and takes 2/3 of this as the figure which will be required to look after a child of that age.  This deducts the additional 50% which is allowed for by the Fostering Network.”
						(My emphasis and deletions)

63.	What Merton has done in paragraph 8.3.4 is to use the Fostering Network’s allowances as a ready means of arriving at the average cost of caring for a natural child born into the family.   In theory, it did not need to use the Fostering Network’s allowances in order to do this, it could have taken the figures underlying the Fostering Network’s assessment that the costs of caring for a foster child are 50% more than the costs of caring for the typical natural child.
64.	But, leaving this point aside, on a broader approach I cannot see how deducting in their entirety the additional costs identified by the Fostering Network as representing the costs of caring for a foster child can be said to be having “regard to the amount of the allowance that would have been payable if the child were fostered”.  It seems to me to be doing the exact opposite: it is ignoring those additional costs.
65.	In my view, the extracts from the earlier policy document that I have set out above show this even more starkly.  There is no discernable difference in the approach revealed by the two documents, although the two additional sentences that appear in (the first) paragraph 8.3.4 of the August 2010 policy are of interest.  They suggest, to my mind, that the author of this document was concerned to justify the one third deduction from the Fostering Network’s minimum allowance and to go further than the bald statement contained in (the second) paragraph 8.3.4 of both documents.
66.	As a matter of fact, it seems to me to be obvious that some of the costs identified by Ms Oldfield are likely to be additional costs attributable to having to care for a child who was not born into the family whether or not the carers are special guardians or foster parents.  I readily accept that the Ms Oldfield has identified some costs that would be solely attributable to the fact that a placement is by way of fostering and not special guardianship, but that is quite different.  
67.	In my judgment, where a local authority proposes to have a policy in which the allowance to be paid to special guardians is set, it must, in order to comply with the Guidance, consider the Fostering Network’s minimum recommended allowances and make such adjustments to those allowances to reflect the (lower) costs to a special guardian as it considers appropriate.  I accept Miss Savage’s point that any such adjustment will inevitably be somewhat arbitrary, but nevertheless that is what I consider the Guidance requires.  Compliance is not achieved by ignoring the additional costs of caring for a child not born into the family or assessing them at nil.
68.	For these reasons it is my view that Merton did not comply with paragraph 65 of the Guidance and have produced no reasons, cogent or otherwise, for not doing so.  In these circumstances the decision to adopt a level of allowance for special guardians of two thirds of the Fostering Network’s minimum allowances was unlawful and must be quashed.
69.	I can deal fairly shortly with the challenge to the form of means test adopted by Merton. It is quite true that Merton has, at various points, departed from the means test suggested and adopted an approach less favourable to special guardians.  However, in the case of each departure it has given reasons for adopting a different approach that I have already summarised.  Whilst many people might regard Merton’s approach to some of the points as mean, the question is whether it was unlawful.
70.	It is common ground that the model means test suggested by the Department for Education and Skills does not carry the same weight as the Guidance.  The Department says that its adoption is recommended in order to achieve fairness and consistency between special guardians in different local authorities.
71.	Although it is essentially a matter of impression, I am unable to conclude that the differences adopted by Merton, even when taken cumulatively, are ones that no reasonable local authority could have taken.  If put on a Wednesbury basis, therefore, this ground of challenge therefore fails.
72.	However, as I have already mentioned, Miss Scolding submits that an issue involving fundamental human rights involves a more sophisticated level of scrutiny than for mere Wednesbury unreasonableness: there has to be both a rational connection and a fair balance between ends and means.  The reasons given by Merton for departing from the Model are, in my judgment, perfectly rational.   As to the fair balance, I do not think that it can be said that the balance struck by Merton, whilst capable of being described as somewhat mean, is unfair.
73.	But there is a further ground for rejecting this part of the claim.  It is well accepted that local authorities have a wide margin of appreciation in matters such as the allocation of resources, which is effectively to what this amounts.  The fact that Merton may adopt a more stringent approach to means testing than, say, Westminster does not begin to found the basis for an allegation that the balance struck by Merton is unfair.  Merton’s resources may be more limited than those of Westminster but the demands on those resources just as great.  Merton has to determine its priorities and allocate its resources accordingly.   In these circumstances I do not see how the court can intervene on an application for judicial review save in the clearest of cases.
74.	As to the supplementary argument, as I have already pointed out, it is factually correct that the means test takes into account the income attributable to C (the child tax credit) but not the cost of his care: however, the submission misunderstands the object of the exercise.  Regulation 13(3)(b) of the 2005 regulations, which is part of the regulation that  deals with the assessment of need for financial support, provides that the local authority must take into account “the amount required by the person in respect of his reasonable outgoings and commitments (excluding outgoings in respect of the child)”.  This is what Merton has done.
75.	The purpose of the means test is to see whether or not the special guardian needs financial assistance to look after the child.  It therefore looks at the special guardian’s total income (including the child tax credit for the child) and deducts the expenditure on all items apart from the care of the child.  If there is a surplus, then that is money that can be applied for the child.  As I have already explained, that surplus will probably be there only because the child tax credit has been included as part of the total income.
76.	The apparent difficulty with the means test that was actually carried out by Merton in December 2011 is that not only is the cost of caring for C excluded, but also so is the cost of caring for J.  If the purpose of the assessment concerned the care of C alone, then this would be wrong.
77.	However, as Miss Savage pointed out, this assessment was carried out for the purpose of assessing an allowance in respect of J as well as C.  Accordingly, the same methodology demanded that the cost of caring for both children should be excluded.
78.	The means test form shows that the maximum allowance has been added for both C and J, giving the Claimant an overall monthly income of £1,151.20.  I can find no error in this.
Afternote 
79.	I cannot leave this case without paying tribute to the sacrifices made by the Claimant in order to care for C and J.  One is left with the feeling that her generosity of spirit has not been fully acknowledged, even now.  I hope that this will change.
80.	The decision that I have quashed relates only to the level of allowance arrived at in (the second) paragraph 8.3.4 of the August 2010 policy and, of course, any other provisions in the policy that are consequent upon it.  Merton must now reconsider the position and set a fresh allowance in accordance with the Guidance, in particular paragraph 65.  It is perhaps worth pointing out that, since there are relatively few special guardianship arrangements within Merton, the likely consequences of this judgment will be modest in terms of its effect on Merton’s overall budget.
81.	I will hear counsel on any questions of costs or other relief.

IN THE HIGH COURT OF JUSTICE 			           CASE NO: C0/3623/2011 
QUEEN’S BENCH DIVISION 
ADMINISTRATIVE COURT 

BETWEEN: 

THE QUEEN 
ON THE APPLICATION OF 
TT 
Claimant 

And 

LONDON BOROUGH OF MERTON 

Defendant

ORDER 

BEFORE MR. JUSTICE EDWARDS-STUART sitting at the Royal Courts of Justice , Strand, London WC2 
IT IS HEREBY ORDERED OR DECLARED THAT:
1.	The application for judicial review is allowed.   

2.	 The policy set out in paragraphs 8.3.4 and 8.3.4 (2) of the Defendant’s Special Guardianship policy of August 2012 is unlawful and the Court so declares. 

3.	The Defendant is to reconsider paragraphs 8.3.4 and 8.3.4(2) and any other provisions of the policy consequent upon them in the light of the Department of Education Guidance on Special Guardianship issued in 2004 , in particular paragraph 65 of that Guidance. 

4.	The Defendant is to produce a fresh policy on or before 1st December 2012.

5.	The Defendant shall pay the Claimant’s costs of the application for judicial review, to be subject to detailed assessment, if not agreed, save that the costs of the application to amend the judicial review shall be borne by the Claimant.   

6.	The Claimant’s costs shall be subject to detailed assessment under the relevant Public Funding Regulations and Orders in any event.  

Dated 25 July 2012