In a recent judicial review of the decision by the Leaders' Committee of London Councils to cut £10m from their £26.4m Grants Scheme, it was held that decisions taken were unlawful because of failure to meet Public Sector Equality Duties.

In particular, the judge held that there had been a failure to comply with London Councils' legal requirements to pay due regard to Public Sector Equality Duties in the performance of functions, as required by Section 71 of the Race Relations Act 1976, Section 76A of the Sex Discrimination Act 1976 and Section 49A of the Disability Discrimination Act 1995 in relation to the decision taken to cut funds.

The judge ordered the London Councils to undertake a lawful process of reconsideration in accordance with the public sector equality duties and stipulated that no funding was to be terminated until three months after conclusion of the "lawful consideration process".

The cuts, if upheld, would have affected over 200 voluntary and community projects, with a range of expected impacts including: reductions to service levels, possible wind-up of provider organisations and/or the need to implement re-structuring measures, including implementing redundancies. Interestingly, the judicial review action was raised by users of services provided.

However, while this judgement may be heralded as a victory for the third sector, it may be a short lived one. The London Councils may still proceed, following an appropriate consultation process, to implement cuts on the same scale. It is worth noting that the judge did not accept arguments, put to the court, that he should quash the budget set by London Councils.

The impact of this decision could have implications for charities and local authorities across the UK. Third Sector and public bodies alike will be interested in this case as it highlights that if public sector bodies do not follow the correct processes, their decisions may be subject to judicial review by interested parties - in this case, service users of one of the charities concerned. So, local authorities should take good care to ensure that all decisions are taken only after due process has been followed and Public Sector Equality Duties have been complied with, to prevent challenges being brought in the future.