Slough Borough Council & Anor v Secretary of State for Communities and Local Government

A published discretionary grant scheme may generate a substantive legitimate expectation that the authority will apply it according to its stated terms. That expectation may nevertheless be displaced for a later period by clear and unequivocal notice of a policy change. The notice must be assessed by reading the relevant documents sensibly and as a whole. Where an expectation remains, the decision-maker may depart from it only for compelling and proportionate reasons. Relevant considerations include administrative complexity, cost, fairness between recipients, the effect on future funding, and the need to preserve the scheme’s wider operation.

The claimants, Slough Borough Council and Corby Borough Council, sought judicial review of the Secretary of State’s decision concerning grant calculations under the Local Authority Business Growth Incentives Scheme. The dispute concerned whether increases in rateable value recorded under VOA code 20, including expansions and redevelopments, had to be included in calculating the second year’s grant and the starting value for later years.

In an earlier judgment, Newman J held that the published scheme created a substantive legitimate expectation that qualifying code 20 growth would be rewarded. Following that judgment, the Secretary of State made corrective payments but did not apply the cumulative method sought by the claimants. The central issues were whether later publications displaced any legitimate expectation for year two and, alternatively, whether the Secretary of State had compelling and proportionate grounds for departing from it.

1. Application dismissed. The decision challenged was not unlawful.
2. The Secretary of State possessed a very wide statutory discretion concerning whether to pay a grant and the calculation of its amount under Local Government Act 2003, section 31.
3. The original LABGI publications created a substantive legitimate expectation that actual qualifying rateable-value growth, including code 20 growth, would be rewarded. That reasoning applied not only to the first calendar year but also to the published method for rebasing the starting value for subsequent years, absent sufficient notice of change.
4. That expectation no longer applied to the second year. The July 2006 technical frequently asked questions and, particularly, the September 2006 review made clear, when read sensibly as a whole, that code 20 growth would not be included in the year-two calculation. It was immaterial that the documents did not describe this as a change of policy.
5. Alternatively, the Secretary of State had compelling and proportionate reasons for departing from any continuing expectation. She considered whether to include positive and negative code 20 data, whether the benefit should extend to all authorities, the substantial financial effect, the impact on year-three funding, the risk of distorting the scheme, and the need to avoid reducing payments already announced or made. Her conclusion that the cumulative method proposed by Corby would disproportionately skew the scheme was rational and proportionate.
6. Administrative complexity and cost can be relevant to whether a departure from a legitimate expectation is justified, as recognised in Esfandiari v Secretary of State for Work and Pensions [2006] EWCA Civ 282. On the facts, the wider policy and financial considerations provided sufficient justification.
7. The claimants were entitled to await the outcome of the earlier code 20 litigation before bringing this challenge. The application for judicial review was nevertheless refused.

The judgment itself records an earlier judicial review decision by Newman J concerning the first year’s LABGI determination. The present court treated that reasoning as relevant to subsequent years, subject to later notice and policy considerations. No citation for the earlier decision is stated in the judgment.