Factual and Procedural Background
In 2003, the Department for Education ("the department") under the then Labour government launched the Building Schools for the Future (BSF) programme, aimed at rebuilding or refurbishing every secondary school in England over a 15-year period (2005-2020). By 2010, 181 schools had benefited, with a further 735 projects in the pipeline.
Following the May 2010 general election and formation of a coalition government, the newly appointed Secretary of State for Education announced on 5 July 2010 that certain BSF projects would proceed while others would be stopped, effectively ending the BSF programme. Six local authorities ("the claimants")—Luton, Nottingham, Waltham Forest, Newham, Kent, and Sandwell—had projects halted or cancelled and challenged the lawfulness of the decision and its process, seeking quashing of the decision and reconsideration of their projects. Newham additionally sought reimbursement for wasted expenditure.
The cancelled projects affected about 79 local authorities and 735 schools, with capital grant "savings" estimated around £7.5 billion. The claimants' projects involved 58 schools (66 including Nottingham's indicative approved schools) with potential reinstatement costs nearing £1 billion.
The claimants accepted the political decision to make cuts but contended that their projects should have been saved. The case involved extensive documentation and judicial review principles, focusing on whether the Secretary of State acted unlawfully or irrationally in his decision and process, including alleged breaches of equality duties.
The BSF programme operated through the department's agency, Partnership for Schools (PfS), involving stages of project approval: Strategic Business Case (SBC), Outline Business Case (OBC), and Final Business Case (FBC). OBC approval triggered the establishment of Local Education Partnerships (LEPs) which had exclusivity for delivery. Projects with FBC approval received funding commitments ("promissory notes"). The claimants had varying approval statuses at the time of the decision, with most having OBC but not FBC approval for certain projects.
The Secretary of State’s decision drew a line at projects with OBC approval after 1 January 2010 but without FBC approval by 5 July 2010, which were stopped. Sandwell’s case was distinct as their wave 5 projects lacked OBC approval, though they argued for equitable treatment based on prior approvals and funding reallocations.
The decision followed government-wide spending control measures initiated by the Treasury, emphasizing savings and re-examination of new spending commitments since 1 January 2010. The Secretary of State’s July 2010 statement and letter clarified that projects with financial close (contractual commitments) would proceed, while others would be stopped, with some exceptions.
The claimants challenged the decision on grounds including irrationality, unlawful fettering of discretion, breach of substantive and procedural legitimate expectations (especially regarding consultation), and failure to discharge statutory equality duties.
Legal Issues Presented
- Whether the Secretary of State’s decision to stop certain BSF projects was irrational or unlawful.
- Whether the Secretary of State unlawfully fettered his discretion by adopting a rigid, rules-based approach under section 14 of the Education Act 2002.
- Whether the claimants had substantive legitimate expectations that their projects would proceed based on OBC approval.
- Whether there was a procedural legitimate expectation requiring consultation before stopping the projects.
- Whether the Secretary of State failed to discharge statutory duties under equality legislation in making the decision.
Arguments of the Parties
Claimants' Arguments
- Accepted the political need for cuts but argued their projects should have been saved or treated more favourably.
- Contended the cut-off date of 1 January 2010 was arbitrary and not related to BSF milestones.
- Asserted that OBC approval created a legitimate expectation that projects would proceed to FBC approval and funding.
- Argued the Secretary of State unlawfully fettered discretion by applying rigid rules without individual consideration.
- Claimed a procedural legitimate expectation to consultation was breached by the abrupt stopping of projects.
- Alleged failure to comply with statutory equality duties, particularly given the large sums invested and the impact on special needs, racial, and single-sex schools.
- Sandwell argued unique linkages between waves justified their inclusion despite lacking formal OBC approval.
Secretary of State's Arguments
- Submitted the decision was a broad political and economic judgment, not subject to challenge on irrationality grounds.
- Contended that the Secretary of State was exercising broad discretion under section 14 of the Education Act 2002 and was entitled to adopt a consistent, rules-based approach.
- Denied that OBC approval created any clear and unambiguous promise amounting to a substantive legitimate expectation; only FBC approval triggered funding commitments.
- Argued that governments may change at elections and no legitimate expectation can bind a successor government absent a contract or binding commitment.
- Maintained no established practice or promise of consultation existed, and any duty to consult did not arise.
- Asserted the Secretary of State was aware of equality duties and had discharged them, relying on a post-decision Equality Impact Assessment.
- Contended Sandwell’s claim was out of time and should be refused.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| R on the application of Cordant Group PLC v Secretary of State for Business, Innovation and Skills [2010] EWHC 3442 (Admin) |
Court’s caution in interfering with broad discretionary powers in social, economic, and political contexts. |
Adopted to affirm the non-justiciability of the Secretary of State's macro-economic decisions as not irrational. |
| British Oxygen Co. Ltd. v Minister of Technology [1971] AC 610 |
Principles on fettering discretion by rigid policies or rules. |
Considered in relation to whether the Secretary of State unlawfully fettered discretion by applying rules without individual consideration. |
| R v Hampshire CC ex parte W [1994] ELR 460 |
Policies must allow for individual consideration; inflexible rules negate discretion. |
Referenced in assessing the rigid application of rules by the Secretary of State to claimants' projects. |
| R v Home Secretary ex p Venables [1998] AC 407 |
Fettering discretion in the context of discretionary powers exercisable over time. |
Distinguished as inapplicable to one-off, immediate decisions by the Secretary of State. |
| R v Secretary of State for Education and Employment ex p. Begbie [2000] 1 WLR 1115 |
Limits on substantive legitimate expectation in macro-political decisions. |
Applied to emphasize the lower likelihood of abuse of power in political decisions and the need for clear, unambiguous promises. |
| R (Bibi) v Newham London Borough Council [2002] 1 WLR 237 |
Test for legitimate expectation: clear, unambiguous promises and fairness in breach. |
Used to analyze whether OBC approvals created legitimate expectations and the duty to consider breach. |
| R (Bancoult) v Foreign Secretary (no 2) [2009] 1 AC 453 |
Requirement that promises be clear and unambiguous for legitimate expectation. |
Supported the standard for assessing legitimate expectation claims in this case. |
| Paponette v The AG of Trinidad and Tobago [2010] UKPC 32 |
Fairness requires authorities to consider breach of legitimate expectation before acting inconsistently. |
Referenced to highlight the obligation on the Secretary of State to consider legitimate expectations. |
| R v Secretary of State for Education ex parte London Borough of Southwark [1995] ELR 308 |
Legal certainty in consultation obligations and limits on procedural legitimate expectation. |
Guided the court’s analysis on whether consultation was required before the decision. |
| The Queen on the application of Bhatt Murphy and others v The Independent Assessor [2008] EWCA Civ 755 |
Conditions for procedural legitimate expectation and consultation before policy changes. |
Applied to determine that the claimants had a procedural legitimate expectation to consultation. |
| R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293 |
Public bodies’ duty to have due regard to equality considerations before policy decisions. |
Used to assess the Secretary of State’s compliance with equality duties. |
| R (Brown) v Secretary of State for Work and Pensions [2008] EWHC 3158 (Admin) |
Principles ("Brown principles") governing the duty to have due regard to disability equality in decision making. |
Applied to evaluate whether the Secretary of State properly discharged equality duties. |
| Hughes v Department of Health and Social Security [1985] AC 776 |
Recognition of government’s discretion to change policies over time. |
Supported the argument that legitimate expectations cannot bind successor governments absent binding commitments. |
Court's Reasoning and Analysis
The court recognized the political and macro-economic nature of the Secretary of State’s decision, emphasizing judicial restraint in reviewing such broad discretionary powers. It found no inherent irrationality in the decision or the cut-off date of 1 January 2010, which aligned with government-wide Treasury policy.
Regarding fettering discretion, the court accepted that the Secretary of State adopted a rules-based approach to ensure consistency and efficiency across numerous projects. However, it held that the rigid application of these rules without any residual discretion or individual consideration amounted to unlawful fettering, as the decision-making process did not allow for case-specific assessment of the claimants’ projects.
On substantive legitimate expectation, the court concluded that OBC approval letters did not constitute clear, unambiguous promises that projects would proceed to funding and completion. The critical funding commitment was the FBC approval stage, and no legitimate expectation arose that a successor government would continue prior commitments absent contracts or promissory notes.
Conversely, the court found that the claimants had a procedural legitimate expectation to consultation before the abrupt stopping of their projects. The department had engaged in continuous and intense dialogue with the claimants, who had invested substantial sums and incurred liabilities in reliance on OBC approvals. The failure to consult was so unfair as to amount to an abuse of power, rendering the decision-making process unlawful.
The court also held that the Secretary of State failed to discharge statutory equality duties rigorously and substantively. There was no evidence of adequate consideration of equality impacts before the decision, no proper records of such consideration, and the post-decision Equality Impact Assessment was too late to cure this failure. The absence of consultation further exacerbated this breach, as claimants could have highlighted specific equality concerns.
Sandwell’s position was more marginal but, given their unique circumstances and lack of consultation, the court extended the duty to consult to them as well and granted permission for their claim despite delay.
The court declined to examine in detail the claimants’ individual projects or the rationality of the rules, focusing instead on the legality of the decision-making process and the failure to consult and consider equality duties.
Holding and Implications
The court held that the Secretary of State’s decision was not irrational and did not breach any substantive legitimate expectation of the claimants. However, it found the decision-making process unlawful due to failure to consult the claimants and failure to discharge statutory equality duties.
DISPOSED OF: The Secretary of State is ordered to reconsider his decision with an open mind, after giving the claimants a reasonable opportunity to make representations, and to rigorously discharge his equality duties. This reconsideration must be case-specific and allow for proper consultation.
The direct effect is that the claimants’ projects must be reconsidered for possible reinstatement or funding, but the Secretary of State retains ultimate discretion to save all, some, or none of the projects. No new legal precedent was set regarding substantive legitimate expectation or rationality, but the judgment clarifies the procedural legitimate expectation to consultation and the rigorous application of equality duties in large-scale public spending decisions.
The court also clarified that other local authorities not involved in these proceedings are likely out of time to bring similar claims, emphasizing the importance of timely judicial review applications.