Judgment in Building Schools for the Future

February 11th, 2011

The High Court has today handed down its decision in the Building Schools for the Future judicial review – R(Luton and others) v Secretary of State for Education [2011] EWHC 217 (Admin) – in which the Claimants were partially successful. A copy of the judgment is available on Bailii here.

The case of course concerned the coalition government’s well publicised cancellation of the BSF programme and the effect this had on a number of local authorities whose school building projects were cancelled at a preliminary stage.

BSF was a complex and, in the eyes of the Secretary of State, unduly ‘bureaucratic’ and expensive process. Essentially it consisted of a number of steps. The first was an expression of interest from a local authority. Then followed the development of a ‘strategic business case’ (SBC), then an ‘outline business case’ (OBC). That, in most instances, triggered the formation of a ‘Local Education Partnership’ (LEP) which was a joint venture for the delivery of the projects. After OBC approval had been given, an authority would do further preparatory work and move to a ‘Final Business Case’ (FBC). FBC approval would lead to  the swinging open of the door to the Treasury vault with the issue of a promissory note.

The claims arose because the Secretary of State took a decision on 5th July 2010 to cancel all BSF projects which had received OBC approval after 1st January 2010 but which had not reached FBC approval by the date of his decision. Five of the Claimants had school building projects which fell into this group of unfortunates. The sixth Claimant, Sandwell MBC, was in a slightly different position having attained OBC and FBC approval for an earlier ‘wave’ of projects, but having not yet reached even OBC for the most recent wave.

Mr Justice Holman noted that “the claimants invoke several of the well established and well-known grounds of judicial review challenge” although “the case does not involve any new principle of law” (para 7). He also observed that the case was one of considerable dimensions – 13 counsel (inlcuding 6 QCs), 7500 pages of documents, a bundle of 70 authorities, and around £1 billion potentially at stake. The judge however preferred to consider the case “in a relatively impressionistic way, focussing on the wood rather than the trees, and without over-immersion in, or reference to, the mass of detail in both the facts and the arguments which have been advanced” (para 8).

At paragraph 44 the judge identified five broad heads of challenge to the Secretary of State’s decision: (i) that it was irrational, (ii) that by adopting a ‘rules based’ approach he had fettered his discretion, (iii) that it breached substantive legitimate expectations of the Claimants, (iv) that the Claimants had a legitimate procedural expectation that they would be consulted prior to it being taken, and (v) that the Secretary of State had failed to discharge his statutory equality duties.

In short, the judge’s conclusions on each head were as follows:

(i) Irrationality: Holman J gave short shrift to the Claimants’ irrationality argument saying that he was “absolutely clear that the decision is not open to challenge on a discrete ground of irrationality, however that argument is developed or put.” The Secretary of State and his officials had understood what they were doing, had drawn clear lines between those situations in which funding would continue and those in which it would be stopped, and had made certain rational exceptions to the general rule. These decisions were political decisions, not for further examination by the court as that, in the judge’s view, “would be a grave and exorbitant usurpation by the court of the minister’s political role” (para 48)

(ii) Fettering: The judge accepted the Claimants’ argument that by adopting a too-rigid set of rules for determining which projects would go forward and which would not the Secretary of State had unlawfully fettered the very broad discretion he had under section 14 Education Act 2002. The Secretary of State’s rules, the judge held, “were indeed applied, and continued to be applied, in a hard edged way, with no residual discretion.” (para 61)

(iii) Substantive legitimate expectation: As for the Claimants’ argument (put slightly differently in respect of each of the different Claimant authorities) that the “content and effect of their OBC approval letters” (para 67) grounded a substantive legitimate expectation that funding for the schools in question would be granted, the judge preferred the submissions made on behalf of the Secretary of State. The law accepts that “public bodies, and especially central government, must enjoy a wide discretion to change policies from time to time to reflect their conception of the public interest.” (para 79) Given that the authorities must have known that there was bound to be a general election not later than June 2010, “no authority with anything less than FBC approval and a promissory note can have had any legitimate expectation that any project would still go ahead after that general election.” (para 80)

(iv) Consultation: In respect of the procedural legitimate expectation of consultation, the judge held, following the analysis of Laws LJ in the Bhatt Murphy case ([2008] EWCA Civ 775), that the fact that the DfE and the local authorities “had been in continuous and intense dialogue with each of the claimants over many years…often on relatively informal first name terms” (para 93) meant that the Secretary of State’s conduct in relation to the Claimants (save for Sandwell BC) “was indeed “pressing and focussed” and change could not lawfully be made abruptly without some prior consultation.” (para 94). That ‘prior consultation’ had not taken place. Holman J trenchantly concluded (with respect to all of the Claimants except Sandwell): “In my view, the way in which the Secretary of State abruptly stopped the projects in relation to which OBC approval had already been given, without any prior consultation with the five Claimants, must be characterised as being so unfair as to amount to an abuse of power. However pressing the economic problems, there was no “overriding public interest” which precluded any consultation or justifies the lack of any consultation…” (para 96) The judge also accepted that even in respect of Sandwell, whose position was rather different, the failure to consult had been unlawful (para 97)

(v) Equality duties: As far as the Secretary of State’s compliance with the statutory equality duties in the Sex Discrimination Act 1975, Race Discrimination Act 1976 and Disability Discrimination Act 1995 goes, Holman J was not at all convinced that these duties had been discharged “in substance and with rigour” as required. Indeed there was almost no material whatsoever which demonstrated that the Secretary of State had had any regard to adverse impact on any of the relevant protected characteristics. The judge held that the absence of a single reference in option papers placed before Ministers to disability, race or gender impact was “glaring and very telling“. He was “simply not satisfied that any regard was had to the relevant duties at all, let alone rigorous regard.” (para 114)

The outcome of the case is therefore that the Secretary of State must allow the local authorities to make representations to him and then “reconsider his decision insofar as it affects the claimants and each of the projects in relation to which they have claimed, with an open mind, paying due regard to any representations they may make, and rigorously discharging his equality duties.” (para 122).

The judge made two matters abundantly clear at the close of his judgment however. First that the ‘bandwagon’ has now stopped, and any further claims by other local authorities are now well out of time (para 125). Second, that the mandatory effect of his decision extended only to making the Secretary of State reconsider his decision – “the final decision on any given school or project still rests with him” (para 126). I said at the outset of this post that the Claimants were only partially successful.

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