Rotherham Borough Council & Ors, R (On the Application Of) v Secretary of State for Business, Innovation And Skills

EU equal treatment requires comparable situations to be treated alike and different situations differently, unless objectively justified. In complex funding allocations involving economic, social and political judgments, the decision-maker may have a wide margin of discretion; intervention requires a decision that is manifestly inappropriate, manifestly wrong or similarly unreasonable.

A free-standing proportionality challenge adds little to rationality review where the decision involves no derogation from a specific legal standard providing a reference point. The duty of equal treatment still applies alongside the objectives of Council Regulation EU 1303/2013. Historical funding categories and transitional arrangements may justify different treatment, while a common baseline for a newly defined category may be lawful. A relevant-consideration challenge fails where relative economic need has been taken into account.

Four South Yorkshire local authorities and five Merseyside local authorities challenged two decisions allocating EU Structural Funds for 2014–2020. They alleged breaches of EU principles of equal treatment and proportionality, and failure to consider the economic needs of the English Transition regions.

Stewart J held that the Secretary of State had failed to comply with section 149 of the Equality Act 2010, but dismissed the other grounds: [2014] EWHC 232 (Admin). Permission to appeal was granted. The central issues before the Court of Appeal were the applicable intensity of review, the comparability of the regions, and whether the Secretary of State had ignored a mandatory relevant consideration.

The Court of Appeal dismissed the appeal. The judgment was given jointly, with each member of the court contributing.

1. Proportionality. The four-stage formula summarised in Bank Mellat v HM Treasury (No 2) [2013] 3 WLR 179 was not capable of meaningful application without a legal reference point. Where a decision does not derogate from a specific legal standard, proportionality adds nothing material to rationality review. The authorities concerning derogations from Article 34, including R v Secretary of State for Health ex p Eastside Cheese [1999] 3 CMLR 123 and R (Sinclair Collis Ltd) v Secretary of State for Health [2012] QB 394, did not establish a wider standard applicable to the funding decisions.
2. Margin of discretion. The decisions involved high-level political, economic and social choices concerning funding allocations. The Secretary of State therefore had a wide margin of discretion. The court should intervene only if the decisions were manifestly inappropriate, manifestly wrong or otherwise crossed a high threshold of unreasonableness.
3. Equal treatment. The principle requires comparable situations not to be treated differently and different situations not to be treated alike unless objectively justified. It is not reduced to a requirement merely to pursue the objectives of the applicable EU legislation. The margin on comparability is context-specific: complex, multifactorial assessments involving economic and social judgments attract a wide margin.
4. Application. The Secretary of State was entitled to treat Highlands & Islands and Northern Ireland differently because their previous funding classifications were materially different. He was also entitled to use the 2013 baseline for all English Transition regions. Any inconsistencies in treating former Phasing-in regions alike were not sufficiently serious to justify intervention.
5. Relevant consideration. The court assumed that reducing economic disparities and considering relative economic need were mandatory considerations. The evidence showed that those needs had been considered. The complaint concerned the weight and manner of consideration, which did not establish a separate domestic-law failure.

The judge had reached the correct conclusions for essentially the correct reasons. The appeal was dismissed.

• Court of Appeal (Civil Division) — Permission to appeal was granted and the appeal was dismissed on 28 July 2014.
• High Court, Queen’s Bench Division, Administrative Court — Stewart J held that the public sector equality duty had been breached, but dismissed the remaining grounds of challenge: [2014] EWHC 232 (Admin).