Last month, Eric Pickles, the communities secretary, agreed to intervene in the case of Nottinghamshire County Council, which has cut its voluntary sector grants budget by 34 per cent after having its own government grant cut by 8 per cent.
Pickles will intervene because the decision appears to contravene the Best Value Statutory Guidance, a one-page document published by the Communities and Local Government department last September. It says local authorities should "seek to avoid passing on disproportionate reductions by not passing on larger reductions to the voluntary and community sector and small businesses as a whole, than they take on themselves". In his foreword to the guidance, Pickles says all central government departments have signed up to the standards it sets out.
When the document was published, Kevin Curley, then chief executive of the umbrella body Navca, said it could form the basis for a legal challenge to Nottinghamshire County Council if the cuts were not addressed through other means.
But the document, dubbed the 'Pickles pledge' by some, is a piece of guidance, rather than law. How much legal force does it have, and could it be an effective form of legal recourse for charities whose funding is cut?
The guidance has already been used to challenge Derby City Council in a move by Community Action Derby that resulted in 16 local charities having their grants extended. CAD warned the local authority that it might have contravened a section of the guidance that says councils should consult organisations when planning to decommission services.
But lawyers are divided about its value in other situations. Alex Rook, an associate solicitor at the law firm Irwin Mitchell, says it is crucial. "A local authority can deviate from the best value guidance only if it can show there is a good reason to do so," he says. "It is hard to think of a scenario where there would be a good reason, and I'd imagine the courts would take an unsympathetic approach to anything a council tried to come up with to show that there was."
Rook says he has won previous legal cases in which he has accused authorities of breaching statutory guidance, and is confident that the document could be effective. "You would apply for a judicial review of the council's decision to cut the funding, arguing that it had not given appropriate consideration to the guidance," he says.
Rook acknowledges that a council could argue, as Nottinghamshire's did, that it had cut its voluntary sector budget disproportionately because it had to prioritise its statutory obligations. "That may seem like a powerful argument," he says. "But you could challenge the council over whether it has met its statutory obligations in the most cost-efficient way."
Ravi Low-Beer, a solicitor at the Public Law Project, is more cautious about the guidance. "I think you'd need a bit of creative lawyering to use it effectively," he says.
Low-Beer says the best value guidance is particularly useful outside the context of legal action. "It is potentially a tool to negotiate for better decision-making by authorities," he says. "If a charity was confident that disproportionate cuts were being made without good reason, they could use it for pre-decision lobbying and post-decision challenge - and the challenge wouldn't need to be in the courts. For most voluntary sector groups, going to court risks being too expensive."