Government incentive scheme – Local authorities to receive grants rewarding increased receipts of business rates – Claimants’ grant determined at nil – Whether defendant entitled to calculate increases by method under which some types of growth disregarded – Whether entitled to rely upon growth data provided by Valuation Office Agency – Claim allowed
The defendant secretary of state devised the Local Authority Business Growth Incentives scheme (LABGI), under which local authorities were to receive grants as a reward for increasing receipts of business rates in their area. Grants were to be payable where the annual growth in business rates receipts exceeded a given target that was fixed for each local authority. The defendant announced that a single payment would be made to each local authority, in the final quarter of each financial year, to reflect the increase in that authority’s rateable value during the previous calendar year. The increase in rateable value would be assessed by reference to actual changes to rateable values as provided by the Valuation Office Agency (VOA). The defendant stated that the distribution of benefits must be fair, reflecting relative performance not relative circumstances, and that the scheme should be as intelligible and transparent as possible.
In determining the grants for 2005, the defendant fixed the entitlement of the claimant local authorities at nil, despite their claims to have secured significant growth in business rates in that year. The reason given for the nil payment was that the data provided by the VOA covered only those properties that had undergone a change in rateable value by one of four means, or “change codes”, and that a decision had been made to exclude those attributable to expansions or contractions of existing hereditaments, since the change code under which such alterations fell – change code 20 – did not distinguish changes that result from recent successful rating appeals.
The claimants challenged the defendant’s determination by way of judicial review. The defendant submitted, in his defence, that it had been made clear that the scheme would rely upon the rateable values provided by the VOA, and that there was an overriding public interest in him not being bound to calculate increases of the type in question, since to do so would have imposed too great an administrative burden.
Held: The claim was allowed.
The nil determinations challenged by the claimants were a result of the method used to calculate growth. At no time prior to the respective determinations had the defendant stated that growth in rates arising from part-occupied hereditaments becoming fully occupied, or from expansions and redevelopments, would be ignored under the LABGI scheme. The scheme had been promulgated in terms that extended to the actual growth achieved by the claimants. It had been for the defendant to implement the scheme in accordance with the policy that he had promulgated. By limiting the calculation to four change codes that did not include change code 20, he had failed to instruct the VOA to calculate growth that qualified under the scheme. Although the defendant had made it clear that the scheme would rely upon the rateable values provided by the VOA, that did not answer the claimants’ contentions. The defendant had not stated that he was delegating the assessment to the VOA, and he was not free to rely upon the VOA’s calculations as the actual determination, which was for him to make. To suggest otherwise would be contrary to the principle that the scheme was to be intelligible and transparent. The scheme as promulgated gave rise to a substantive legitimate expectation on the part of the claimants that their actual recorded rateable growth would be rewarded. That expectation had not been met owing to the defendant’s failure to adhere to the stated policy.
Although considerations that an amended scheme would be more complex and costly to administer were not irrelevant, the onus was on the defendant to adduce evidence of the administrative burden required to untangle the data recorded by change code 20. It had adduced none, and there was evidence that the scale of the task would not, in fact, be disproportionate to the amount of money being administered through the scheme. Consequently, the defendant’s contentions were not founded in fact and were legally ineffective to excuse the departure from the published scheme or to neutralise the need for fairness and transparency.
James Goudie QC and Philip Coppel (instructed by the legal departments of Corby Borough Council and Slough Borough Council) appeared for the claimants; Clive Sheldon (instructed by the Treasury Solicitor) appeared for the defendant.
Sally Dobson, barrister
