Can councils stop Gove scrapping BSF?

The decision of Hon Mr Justice Langstaff will come as an early Christmas present for six local authorities, who earlier this week were given the legislative foothold they had sought to challenge the government’s decision to scrap their access to BSF funding.

In January 2011, the Secretary of State’s decision to pull the BSF funding promised to Luton and Nottingham City Councils, the London Boroughs of Newham and Waltham Forest, Sandwell Metropolitan Borough Council and Kent County Council (as the schemes had not been signed off by 1 January) will be subject to Judicial Review.

Judicial Review is a mechanism whereby the court supervises how public power is exercised and is empowered with discretion to set decisions aside if it thinks it would be appropriate to do so. To be successful, the local authorities will need to establish that the decision was illegal or irrational, unreasonable or otherwise that it was arrived at as a result of procedural impropriety.

Cllr Tahir Khan of Luton Borough Council said “We are not disputing the Secretary of State’s right to make a decision to withdraw funding for the BSF programme but we believe the decision reached was irrational and that our individual circumstances were not taken into account”.

One ground for judicial review is called ’legitimate expectation’ - in non-legal terms the idea that it can be improper to go back on a firm promise.

Building contractors who stood to be appointed by these local authorities for their BSF projects will be encouraged by Langstaff J’s comments that the claims raise “arguable issues, which merit a full hearing”. Whilst few local authorities decided they had the stomach or indeed the deep pockets to challenge the government’s decision, contractors would have faced near insurmountable hurdles to establish their right to bring JR proceedings since they are one step removed from the process.

One ground for judicial review is called ’legitimate expectation’ - in non-legal terms the idea that it can be improper to go back on a firm promise. A statement from Nottingham City Council said: “The council claims that Michael Gove’s decision was contrary to the council’s legitimate expectation that the funding would be forthcoming, given that the Outline Business Case for the schemes had been approved in February 2010.

“The council also claims that the decision was irrational, in arbitrarily using January 1 as a cut-off date for stopping funding of BSF projects…We are requesting that Michael Gove’s decision to stop the funding for Top Valley School, Top Valley Learning Centre and Trinity School is quashed and that the funding previously agreed continues. I am pleased that the judge supports our application for a JR and remain confident that we have a strong case.”

If the Secretary of State’s decision were to be declared unlawful and quashed, the government would have to think again and might have to provide the local authorities with the funding for the BSF projects they were promised and, in turn, the contractors would be appointed to carry out the construction work. However, despite Langstaff J’s positive comments, the reality is that the courts do recognise that public bodies must be allowed to change their policies.

The courts will generally defer to Government on decisions on social and economic policy, with the Government likely to plead a public interest defence and argue that the economic downturn has meant it has been unable to keep its promises.

Their response that ’the Secretary of State will continue to defend vigorously the cases brought against him’, rings of “Bah Humbug!” to the local authorities; only time will tell if it will be a Happy New Year or not.

Rachel Cousins is a solicitor in the construction team at law firm Weightmans LLP