Cheshire East Borough Council Cheshire West & Anor, R (on the application of) v Secretary of State for Environment Food and Rural Affairs & Anor

In judicial review of a national funding decision, the court should assess whether the decision-maker asked the legally relevant question and reached a conclusion within the range of rational policy choices. A project intended to divert waste from landfill may properly be assessed by reference to its additional contribution to national capacity, rather than the capacity of one facility viewed in isolation.

Substantive legitimate expectation requires a clear and unqualified promise or representation. A conditional funding process does not ordinarily create an expectation that funding, or even continuation of the process, will follow. Procedural legitimate expectation is exceptional. Central government generally has no duty to consult before changing funding policy absent a promise, established practice or conspicuous unfairness amounting to abuse of power.

The claimant local authorities challenged the Secretary of State’s decision, made during the 2010 Comprehensive Spending Review, to withdraw prospective PFI credits for a waste-diversion project. The project involved mechanical biological treatment producing solid recovered fuel for combustion at an existing facility in Runcorn.

The claim alleged irrationality, substantive and procedural legitimate expectation, failure to take account of the BMW content of the project’s outputs, and irrational assessment of future merchant waste-treatment capacity. Permission had been granted on some grounds and was sought on others. The central issues were whether the national funding methodology lawfully assessed the project’s additional contribution and whether the authorities were entitled to funding or consultation before the policy was changed.

1. The claim was dismissed. Permission was refused on the merchant-capacity ground. All other grounds failed on their merits. No relief would have been granted on the residue aspect of the BMW ground in any event because it could not have affected the ranking.
2. The Secretary of State was entitled to assess the project by asking what additional national capacity to divert waste from landfill it would provide. The Runcorn combustion capacity was already being delivered through another PFI-funded project and was expected to be available whether or not Cheshire supplied it with solid recovered fuel. Counting it again would risk double counting. The decision was rational even though the mechanical biological treatment plant formed part of the process leading to combustion.
3. There was no substantive legitimate expectation. The communications made clear that credits depended on approval of a satisfactory final business case, further reviews, departmental policies and priorities, and the availability of funding. They did not amount to a clear, unqualified promise that funding would be granted or that the process would inevitably continue.
4. There was no procedural legitimate expectation of consultation. No promise, established practice or statutory duty required consultation. The decision formed part of a macro-economic spending review. The time constraints, the need to devise criteria applicable across all projects, and the risk that consultation would be counter-productive provided rational reasons for proceeding without it. The altered treatment of the Runcorn capacity was not, viewed overall, conspicuously unfair or an abuse of power.
5. The use of a 68 per cent adjustment factor for BMW content was a permissible technical and policy judgment. The evidence did not establish irrationality, a material mistake of established fact, or a failure to consider relevant matters. Similarly, the estimate of merchant capacity involved predictive judgment and had taken relevant considerations into account. Courts should not substitute their view for the decision-maker’s assessment of relative weight in a competitive allocation of public resources.
6. Even if a legitimate expectation had arisen, the withdrawal of support was justified by the overriding public interest in rapid and substantial expenditure reduction. The relevant expectations and reliance interests had been considered in substance, and the resulting decision was proportionate.

This was a first-instance judicial review in the Administrative Court. Permission was refused on the merchant-capacity ground; the remaining grounds were dismissed on their merits.