Centro, R (on the application of) v Secretary of State for Transport & Anor

Judicial review is not an appeal on the merits. Where a statutory decision-maker evaluates complex economic evidence within an area entrusted to it by Parliament, the court’s supervisory role is particularly restrained. A challenge based on irrationality requires a high threshold. A challenge based on disregard of mandatory considerations may involve a lower threshold, but institutional competence and the imprecision of the relevant criterion remain important. A decision is adequately reasoned if it addresses the principal controversial issues and enables the reader to understand the result; it need not address every submission. An oral hearing is not required where written evidence and submissions provide a fair opportunity to answer the opposing case and the decision-maker considers the material necessary for an informed decision.

Centro, the West Midlands Passenger Transport Executive, challenged decisions by the Secretary of State modifying its proposed reimbursement arrangements for free concessionary bus travel provided by West Midlands Travel and Go West Midlands.

The Secretary of State accepted that Centro’s SCEPTRE methodology applied excessive fare elasticities, producing reimbursement rates that could leave operators worse off. He directed that the reimbursement rate be increased to 62.5 per cent. Centro alleged irrationality, disregard of relevant factors, inadequate reasons, internal inconsistency and procedural unfairness, including the absence of an oral hearing and non-disclosure of professional advice and rates from other cases.

1. Outcome. The renewed applications for permission were refused. None of Centro’s grounds was arguable.
2. Intensity of review. The challenge concerned complex economic concepts, including fare elasticities and reimbursement calculations. The court was particularly cautious about intervention where Parliament had entrusted the primary decision-making function to the Secretary of State. The challenge could not be used to reargue the merits of the rejected methodology.
3. Relevant considerations and irrationality. The Secretary of State was entitled to prefer SCEPTRE while rejecting the operators’ proposed use of the toolkit. The guidance did not make the toolkit mandatory. The decisions showed that the toolkit, the parties’ submissions and comparable cases had been considered. The conclusion that Centro’s elasticity assumptions were too high was within the range of reasonable judgment.
4. Internal consistency. The alleged inconsistency depended on the validity of the toolkit inputs which the Secretary of State had rejected. The observation that £0.89 was more likely to be an accurate average fare was no more than an obiter dictum and did not establish a binding determination of the correct toolkit fare or elasticity.
5. Reasons. The decision letters identified the central issue: whether SCEPTRE produced excessive elasticities and an unfairly low reimbursement rate. They explained why a higher rate was selected and why it was applied within the methodology preferred by Centro. Reasons need address the principal important controversial issues, not every material consideration.
6. Fair procedure. The Travel Concessions Schemes Regulations 1986 permitted, but did not require, an oral hearing. The parties exchanged statements and had an opportunity to comment on the opposing material. The decision-maker was entitled to conclude that written submissions were sufficient and that a hearing would cause delay without adding value. There was no arguable unfairness in relying on internal professional advice or comparable decisions where the relevant issues had been raised and considered.