Luton Borough Council & Nottingham City Council & Ors, R (on the application of) v Secretary of State for Education

In reviewing a politically-driven, macro-economic decision, the court must exercise particular restraint and should not substitute its assessment for that of the minister where the decision is not legally irrational. A public authority may adopt general rules for applying a statutory discretion, but it must not apply them so rigidly that individual cases receive no consideration where the duty against fettering discretion is engaged.

A substantive legitimate expectation requires a clear, unambiguous and unqualified commitment, assessed in its public and political context. A separate procedural expectation may arise where the authority’s past conduct has created a pressing and focussed impact, making abrupt change without consultation so unfair as to constitute an abuse of power. Equality duties requiring due regard must be discharged before and during decision-making, with rigour and an open mind.

The Secretary of State for Education decided in July 2010 to end the Building Schools for the Future programme and stopped or cancelled projects which had not reached specified stages of approval. Six local authorities challenged the decision and process by judicial review.

The claims alleged irrationality, unlawful fettering of the statutory funding discretion, breach of substantive and procedural legitimate expectations, failure to consult, and failure to comply with statutory sex, race and disability equality duties. The central issues were whether the Secretary of State could apply national cut-off rules without individual consultation and whether the decision-making process adequately addressed equality impacts.

1. Outcome. The claims succeeded to the extent that the decision-making process was unlawful. The Secretary of State was required to reconsider the decision as it affected each claimant and each project, after giving a reasonable opportunity for representations, with an open mind and due regard to the statutory equality duties.
2. Rationality. The court declined to examine further the broad rationality of a major political and macro-economic decision. The cut-off dates and categories were not inherently irrational, and the court should not usurp the minister’s political role in allocating public expenditure.
3. Fettering discretion. The power under section 14 of the Education Act 2002 was broad. Although general principles could be used to secure consistency, the Secretary of State had applied rigid rules which determined the outcome of individual projects without residual case-specific discretion. The rules therefore engaged the principle against fettering statutory discretion.
4. Substantive legitimate expectation. Outline Business Case approval, whether actual or indicative, did not amount to a clear and unqualified promise that projects would proceed. The long-term programme was subject to future spending decisions and changes of government policy.
5. Procedural legitimate expectation. The department and its delivery agency had maintained sustained and focussed dialogue with the affected authorities, which had continued to act and incur expenditure in reliance on recent approvals. The abrupt stopping of projects without prior consultation was so unfair as to amount to an abuse of power. This applied also to Sandwell, whose particular circumstances warranted consultation.
6. Equality duties. The duties under the Sex Discrimination Act 1975, Race Relations Act 1976 and Disability Discrimination Act 1995 required advance, substantive and rigorous consideration. The Secretary of State’s generalised approach and an equality impact assessment prepared after the decision did not discharge those duties.
7. The court granted Sandwell permission despite delay. The final decision on each project remained with the Secretary of State, who might save all, some or none after lawful reconsideration.

This was a first-instance judicial review decision. No earlier decision in the same proceedings is stated.