National programme – Funding for rebuilding or refurbishment of secondary schools – Multi-stage application process – Claimant local authorities proceeding through several stages but not obtaining final approval – Defendant ending scheme and implementing rules as to which projects could proceed – Whether decision irrational – Whether rules an unlawful fetter on discretion – Whether legitimate expectation breached – Whether compliance with statutory duties under equality legislation– Claim allowed
In 2003, the Department for Education launched the Building Schools for the Future (BSF) national programme, which aimed to rebuild or refurbish every secondary school in England between 2005-20. The programme was to be delivered through the wholly owned agency Partnership for Schools (PfS) in a series of “waves” over the 15-year period. The six claimants were among the local authorities that had applied to participate in the scheme. The numerous stages of the application process included the submission of an outline business case (OBC) for approval by PfS, the establishment of a local education partnership (LEP) between the local authority and the private sector contractor that would build or refurbish the schools and the submission of a final business case (FBC) to PfS for approval; if approved, PfS, in conjunction with the Treasury, would issue a promissory note to fund the project.
Following his appointment after the May 2010 general election, the defendant secretary of state announced that the BSF programme was would no longer go ahead. In July 2010, he issued a document listing those projects that were already completed and those that were “unaffected” by his decision, “for discussion” or “stopped”; the document explained those terms by reference to the stage that the projects had reached. With regard to repeat-wave projects, where an LEP was in existence, the defendant saved all projects that had already received FBC approval by 5 July 2010 together with those repeat-wave projects that had received OBC approval before 1 January 2010.
The claimants’ projects were stopped as a result of the defendant’s decision. The first to fifth claimants had obtained OBC approval after 1 January 2010 but before 5 July 2010 and had established an LEP, but had not obtained FBC approval. The sixth claimants were working on fifth-wave projects, for which they had not received OBC approval, although they had already obtained FBC approval for third-wave projects.
The claimants applied for judicial review of the defendant’s decision. They contended that he had: (i) acted irrationally, in that the selection of 1 January 2010 as the cut-off date for projects on which OBC but not FBC approval had been given was arbitrary and bore no relationship to any date in the BSF programme or process; (ii) unlawfully fettered his discretion, under section 14 of the Education Act 2002, to provide financial assistance towards the provision of education, by adopting rigid “rules” as to which projects to allow; (iii) breached their substantive legitimate expectation; (iv) alternatively, breached a procedural legitimate expectation of consultation; and (v) failed to discharge his statutory duties, under the equality legislation, to have due regard when carrying out his functions to the need to eliminate unlawful discrimination; various of the claimants referenced schools of particular disability, race or gender relevance in their areas.
Held: The claim was allowed.
(1) The defendant’s decision was not open to challenge on a discrete ground of irrationality. The case concerned a major decision, with a patently political and macro-economic content, made at the highest level in the immediate aftermath of a general election and change of government and had intended to achieve economic demands made by the Treasury. The defendant and his officials had not misunderstood the action they were taking. The rules they applied were not inherently irrational. The defendant had drawn a clear distinction between situations that carried obligations under contract and those that did not. Although a cut-off date of 1 January 2010 bore no specific relationship to any milestones in the BSF scheme, its relationship to Treasury or government policy was not arbitrary. The defendant and the government were politically answerable for their decisions in that regard but, in the absence of any inherent rationality, it would be a grave usurpation of the minister’s political role for the court to examine rationality further: R (on the application of Cordant Group plc) v Secretary of State for Business, Innovation and Skills [2010] EWHC 3442 (Admin).
(2) The defendant’s powers under section 14 of the 2002 Act were wide and general. Although it was important to achieve consistency, and it was necessary to apply general principles when deciding which projects could proceed, the defendant was under a duty not to fetter his discretion so as to preclude individual consideration of each cases He had unlawfully fettered that discretion by applying rules that determined, without more, the outcome in all the claimants’ categories of projects and left no room for any consideration of individual cases; the rules had been applied in a hard-edged way, with no residual individual discretion: British Oxygen Co Ltd v Minister of Technology [1971] AC 610 and R v Hampshire County Council, ex parte W [1994] ELR 460 applied.
(3) To establish a substantive legitimate expectation that their projects would proceed, the claimants had to show that the defendant had made a commitment that could be characterised as a “promise” in terms that were clear and devoid of relevant qualification. If an authority decided to adopt a course that was at variance with such a promise, without considering the fact that it breached a promise that had given rise to a legitimate expectation, they would be abusing their powers: R v Secretary of State for Education and Employment, ex parte Begbie [2000] 1 WLR 1115 and R (on the application of Bibi) v Newham London Borough Council [2001] EWCA Civ 607; [2002] 1 WLR 237 applied. In the instant case, there had been no relevant promise to which the defendant had been obliged to give consideration and no substantive legitimate expectation had arisen.
(4) However, the claimants had a procedural legitimate expectation of being consulted before their projects were terminated. There were many situations in which a person or body could not legitimately expect a particular outcome but could none the less have entitlement to be consulted before the outcome was determined. In the light of the continuous and intense dialogue between PfS and the first to fifth claimants regarding the implementation of the BSF scheme, and the fact that the claimants had received OBC approval in reliance on which they had continued to act and spend large sums, the effect on the claimants of the Department for Education’s past conduct had been pressing and focused such that an abrupt change could not lawfully be made without prior consultation: R (on the application of Bhatt Murphy (a firm)) v Independent Assessor [2008] EWCA Civ 775 applied. Although the position of the sixth claimants was more marginal, the circumstances surrounding the link, and transferral of funds, between the third-wave and fifth-wave projects meant that the sixth claimants also had a particular claim to be consulted. The defendant’s application of his rules to repeat-wave projects without any case-specific consultation, together with a refusal to engage in any subsequent reconsideration, had unlawfully breached the claimants’ legitimate expectation to be consulted.
(5) None of the relevant documents relating to the defendant’s decision contained a reference to issues of disability, race or gender. They focused entirely on different stages in the procurement process and the savings that might be made. Although the absence of such references was not determinative, in the instant case it was glaring and telling. The court could not be satisfied that any regard was had to the relevant statutory duties nor the rigorous regard that was required: R (on the application of Brown) v Secretary of State for Work and Pensions [2008] EWHC 3158 (Admin); [2009] PTSR 1506 applied. Accordingly, the defendant’s decision was unlawful for the additional reason that he had failed to discharge the relevant statutory duties relating to equality.
Richard Drabble QC and Daniel Kolinsky (instructed by Addleshaw Goddard LLP, of Leeds) appeared for the first claimants and (instructed by Ward Hadaway, of Newcastle) for the second claimants; Jemima Stratford QC and Oliver Jones (instructed by the legal department of Waltham Forest London Borough Council) appeared for the third claimants; Peter Oldham QC and Thomas Cross (instructed by Dickinson Dees LLP, of Newcastle) appeared for the fourth claimants; Harold Matovu QC and Tony Singla (instructed by the legal department of Kent County Council) appeared for the fifth claimants; Nigel Giffin QC and Rachel Kamm (instructed by Bevan Brittan LLP, of Bristol) appeared for the sixth claimants; James Goudie QC, Clive Sheldon and Robin Hopkins (instructed by the Treasury Solicitor) appeared for the defendant.
Sally Dobson, barrister
