Rotherham Metropolitan Borough Council & Ors, R (on the application of) v Secretary of State for Business, Innovation and Skills

The claimants sought judicial review of two decisions by the Secretary of State allocating the United Kingdom's share of EU Structural Funds (ERDF and ESF) for 2014–2020: (i) the allocation between the four UK nations announced 26 March 2013 and (ii) the detailed allocation between English regions and Local Enterprise Partnerships announced 27 June 2013. The claim challenged the Secretary of State’s methodology and contended that he had treated like cases differently, applied an irrational methodology, failed to take into account relevant considerations and breached the public sector equality duty (PSED) in section 149 Equality Act 2010.

The court accepted that the Secretary of State had a wide margin of discretion when allocating fixed Structural Fund envelopes between regions and that EU law did not impose a specific legal standard requiring him to allocate within categories (eg transition regions) on the basis of the EU average GDP measure. The judge held that the Secretary of State’s two-stage approach (first equalising change between the four UK nations; second using a 2013 baseline for English transition regions rather than a 2007–2013 average or the Commission's notional formula) was rational and within the executive’s broad discretion. The allocations therefore survived challenges based on irrationality, proportionality and failure to take relevant considerations into account.

However, the court found that the Secretary of State had not given any prior consideration to the PSED (section 149) before making the decisions; an equality impact assessment completed after the event could not cure that omission. The claim therefore succeeded on the PSED ground only.

The claimants were Local Authorities in the Sheffield and Liverpool City Region Local Enterprise Partnerships (approximately South Yorkshire and Merseyside). They sought quashing of two ministerial decisions allocating the UK’s Structural Funds for 2014–2020: the distribution between the four UK nations (26 March 2013) and the distribution among English regions/LEPs (27 June 2013). The material legal framework included TFEU Articles 174–178 (cohesion), Council Regulation (EC) 1083/2006 (notably Article 8 and Annex II paragraph 6(b)), Regulation (EU) 1303/2013 (notably Article 90 and Article 93 and Annex VII), the Charter (Article 21) and the Public Sector Equality Duty (Equality Act 2010 s149).

Procedural posture: first instance Administrative Court (Stewart J). Witness evidence came from the claimants’ EU funding head and the defendant’s senior civil servant responsible for EU funding.

Issues framed:

• whether the Secretary of State’s allocation methodology was irrational or unlawful for failing to treat like cases alike or for treating different cases in the same way;
• whether EU law or the 2013 Regulation imposed an obligation to follow the Commission's notional formula or to adopt GDP‑per‑capita (EU average) based allocations within categories;
• whether relevant considerations were omitted; and
• whether the PSED required prior equality analysis before fixing the regional allocations.

Court’s reasoning (concise): the court mapped the background: Merseyside and South Yorkshire had been "phasing‑in" regions in 2007–2013, subject to a tapering transitional allocation under Annex II paragraph 6(b) of the 2006 Regulation. For 2014–2020 the 2013 Regulation introduced three categories (less developed, transition, more developed) and permitted limited transfers (Article 93). Ministers considered four main allocation options and adopted a two‑stage approach: first equal percentage change across the four UK nations (minimising sudden cuts to the devolved administrations), then for English transition regions using the 2013 allocation as a baseline (Option B) rather than the 2007–2013 average or the Commission methodology. The judge emphasised the wide margin of discretion in macroeconomic and political allocation decisions, found no obligation under EU law for the Secretary of State to adopt an EU average GDP criterion or the Commission’s notional regional allocations, and concluded the Secretary of State's selection of Option B was rational and not unlawful on irrationality, proportionality or failure‑to‑have‑regard grounds. However, because no evidence showed any prior PSED consideration, and the PSED requires "due regard" when exercising public functions, the court found a breach of the PSED. The judge indicated remedial relief (if any) would be addressed after further submissions.

At first instance the court dismissed the claim on all substantive grounds of irrationality, proportionality and failure to take relevant considerations into account, but found that the Secretary of State had breached the public sector equality duty (Equality Act 2010, section 149) by failing to give prior "due regard" to equality objectives. The court concluded the ministerial allocation decisions were within a wide executive margin of appreciation and rational, but that lack of pre‑decision equality consideration required further remedial submissions.