Solar Century Holdings Ltd & Ors v Secretary of State for Energy & Climate Change

The statutory purpose of a power must be identified from the enactment read in its historical and legislative context. Pre-legislative materials may assist, but policy statements do not ordinarily become statutory limits or binding assurances. A representation that a policy will continue until a specified date remains subject to material changes in circumstances unless expressed with exceptional clarity. A substantive legitimate expectation may be defeated where the public authority has rationally balanced the expectation against a powerful public interest. The fairness of transitional measures involving past investments depends on the degree of retrospectivity. It is permissible to draw a reasonable dividing line between investments qualifying for protection and those that do not.

The claimants, companies involved in large-scale solar photovoltaic generation, sought judicial review of the Government’s decision to close the Renewables Obligation scheme early for new solar PV capacity above 5 MW. The scheme had been expected to remain open until 31 March 2017. The claim challenged the statutory vires of the closure, alleged binding pre-legislative assurances and a substantive legitimate expectation, and contended that the transitional grace periods were retrospectively unfair.

The central questions were whether the statutory powers authorised early closure, whether the Government’s previous statements created an assurance or legitimate expectation that the scheme would continue until 2017, and whether the grace-period arrangements were unlawful.

1. Statutory purpose. The statutory language in sections 32LA and 32LB of the Electricity Act 1989 was broad enough to permit early closure. The relevant legislative history showed that the provisions were introduced to resolve technical uncertainty about the power to close Renewables Obligation schemes and its geographical reach. It did not establish a statutory purpose of preserving the scheme until 2017. The Levy Control Framework was relevant historical context and operated as an important qualification on the policy statements.
2. Pre-legislative assurances. The principles in R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38 permitted pre-legislative material to assist construction, but did not treat executive policy as the will of Parliament. The Explanatory Notes, ministerial statements, White Papers and consultation documents did not amount to an assurance capable of binding the Secretary of State.
3. Legitimate expectation. The repeated statements that the scheme would remain open until 2017 were subject to the systemic risk, apparent from the Levy Control Framework, that unexpectedly high uptake might require expenditure to be curtailed. No unqualified substantive legitimate expectation therefore arose. In any event, applying R (Bibi) v Newham London Borough Council principles as reflected in R (Bhatt Murphy) v Independent Assessor [2008] EWCA Civ 755 and R v North and East Devon Health Authority, ex p Coughlan [2001] QB 213, the Secretary of State had sufficient public-interest justification to frustrate any expectation.
4. The justification included compliance with Treasury spending limits, the need to balance competing renewable-energy priorities, protection of consumers and businesses from increased costs, and the consideration given to affected investors through the consultation and grace periods.
5. Retrospectivity and fairness. The grace periods had some retrospective effect, but less than in Secretary of State for Energy and Climate Change v Friends of the Earth [2012] EWCA Civ 28, because the claimants had not yet obtained accreditation or accrued a fixed entitlement. Applying a sliding-scale fairness assessment, the Secretary of State had considered the position of pipeline investors, consulted on the conditions, and had rational grounds for using 13 May 2014 as the cut-off date and requiring a significant rather than merely more-than-de minimis investment.

Permission to apply for judicial review was granted, but the substantive application was dismissed.