The Administrative Court (Holman J) has allowed a judicial review claim by a number of local authorities whose Building Schools for the Future (BSF) programmes were halted by the government in July last year. It was held that the government had acted unfairly in that it breached the claimants' procedural legitimate expectation of consultation, and erred in law by failing in its duty to have regard to anti-discrimination legislation. The government must now undertake the decision-making process again, following full consultation with the affected local authorities.

Key points

  • The case shows that even in the context of political, large scale macro-economic decisions the court will intervene where a public body has acted so unfairly that its actions amount to an abuse of power.
  • Mr Justice Holman gave very short shrift to the irrationality-based ground of challenge, observing that there was nothing inherently irrational about the decision and therefore to examine further its rationality would be a "grave and exorbitant usurpation by the court of the minister's political role."
  • The challenge was not to the policy decision to make savings by cutting some schemes within the programme – it concerned the Secretary of State's decisions regarding which schemes should be scrapped and which should be saved. Although the practical impact of the decision remains to be seen, it should serve as a warning to public authorities making difficult decisions on how to allocate limited resources, to ensure that their decision-making processes are fair.

Building Schools for the Future –new government, new policy

Building Schools for the Future was a national programme introduced by the previous government aimed at the rebuilding or refurbishment of every secondary school in England over a 15 year period from 2005 to 2020. A few months after the general election in May 2010, the new Secretary of State for Education announced that the programme would effectively be brought to an end. At that stage, there were 735 schools at various stages in the pipeline.

The process for applying for funding under the scheme was complex and had a number of stages. An applicant had to prepare an Outline Business Case (OBC), which if approved was given OBC approval, triggering the next stage of the process which culminated in Final Business Case (FBC) approval. Funding was only guaranteed once a scheme had been granted FBC approval.

In the first few days after the new government was formed, all departments were instructed to review spending commitments entered into since 1 January 2010. This was the cut-off date used by the Secretary of State for drawing the line between BSF schemes to be saved and those to be scrapped. All those schemes which had received FBC approval when the policy change was announced on 5 July 2010 were saved. The Secretary of State also saved schemes which had received OBC approval before 1 January 2010 but had not yet achieved FBC approval. However, (subject to a few exceptions) schemes which obtained their OBC approval after 1 January 2010 were cancelled. The claimants had schemes which fell into this category.

The grounds of challenge

There were several grounds of challenge which, as is commonly the case in judicial review, overlapped to some degree. However, the essence of the challenge was that in deciding which schemes to cancel, the Secretary of State had failed to consider the claimants' cases in a sufficiently case-specific way. It was argued that he had applied an approach which was too rigid and "rules based" and that if he had consulted them, the claimants could have made representations which could have led to at least some of their projects being saved.

Irrationality

The claimants attempted to attack the decision on the ground of irrationality. However, this argument was robustly dismissed by Holman J, who emphasised the particularly high threshold of establishing irrationality in this context, namely "a very major decision with a patently political and heavy macro economic content, made at the highest level in the immediate aftermath of a general election…and patently intended to help achieve economic demands from the Treasury." He found that there was no inherent irrationality in where the Secretary of State had decided to draw the line. The decision was based on whether contractual commitments had been entered into by a cut-off date effectively set by the Treasury.

Substantive legitimate expectation

The claimants also argued that the decision breached their substantive legitimate expectation that the schemes in question would be funded. It was alleged that this expectation stemmed from the OBC approval letters and that FBC approval was effectively just a formality. The court considered in some detail the wording of the OBC approval letters and concluded that these did not give rise to any legitimate expectation. It was held that BSF was a very long term programme and it must have been clear to all local authorities involved that the programme would potentially be subject to changing government priorities and future spending decisions, particularly following a general election.

Procedural legitimate expectation and the duty to consult

The issue here was whether, absent an express statutory duty to consult, a promise of consultation or an established practice of consultation on the policy decision of whether BSF should be scrapped, there had nonetheless been a duty to consult the claimants before deciding that their schemes should not continue further. Looking at the specific circumstances of the case, Holman J noted that there had been continuous and intense dialogue with the claimants over many years in relation to the policy of driving BSF forward. This dialogue continued after OBC approval had been given and the claimants were spending very substantial sums of money. Notably, Holman J found that the duty to consult was fortified by the fact that the sums involved were so large. He found that, however pressing the economic problems, there was no overriding public interest which justified the lack of consultation. The failure to consult had been so unfair as to amount to an abuse of power.

The equality duties challenge

Finally, Holman J found that the Secretary of State had acted unlawfully by failing to comply with his statutory duty under the Sex Discrimination, Race Relations and Disability Discrimination Acts to have due regard to the need to eliminate discrimination when carrying out his functions. The evidence did not show that these factors had been taken into account at all when the decision to scrap BSF was made. The lack of consultation had compounded the problem, as if the claimants had been consulted they could have drawn to the Secretary of State's attention the relevant equality considerations.

Comment

Whilst there can be no guarantee that a different decision will be reached following the consultation process, the case is a reminder to public authorities of the importance of complying with the duty to act fairly. Despite the fact that Mr Justice Holman repeatedly emphasised that this was not a detailed public inquiry into the demise of BSF and that the courts should in general be slow to interfere with decisions of this nature, the extent of the unfairness in this case justified intervention.

R (Luton Borough Council & others) v Secretary of State for Education [2011] EWHC 217 (Admin)