In R (Rotherham Borough Council et al) v Secretary of State v Business and Skills [2014] EWCA 1080 it has been very recently reported that the Councils in the appeal, had disappointingly suffered a defeat in the Court of Appeal (on 28 July) in their claim for judicial review. That much is true.

However on 30 July (yesterday), the combined Councils’ expedited appeal, including the assertion that the Government owed a public sector equality duty pursuant to section 149 of the Equality Act 2010 has won favour in the UK Supreme Court and is due to be heard on 22 October.

The combined appeals included breaches of UK and EC law directed at the Government’s failure in duty by producing discriminatory and disproportionate cuts in ERDF funding cuts for their regions – as found at first instance by Stewart J.
This appeal will be of great interest and importance to Universities for a host of reasons, not the least of which being:

1. Novel arguments related to the macroeconomic funding including ERDF will be passed through the prism of high level EU principles of equal treatment and proportionality in the Department of Business Innovation and Skills failure to treat the Regions in the same way as other regions – the Court of Appeal indicated that the Commission had not imposed a legal standard as to how to allocate funds to transition or any other regions, and even if one were found a very high threshold of unreasonableness would need to be reached.

2. The public sector equality duty (the PSED) pursuant to section 149 of the Equality Act 2010 will also be relied upon in a very novel way to assert equal treatment, and to uphold the decision at first instance that the PSED was breached by the Government – Stewart J paragraph 93.

3. The wide margins of discretion and the broad discretionary brush wielded by Government in making political economic and social choice in allocation of funding had to involve exercise of broad discretion; pursuing objectives including ‘a target for improving conditions for research and development’ and a target for reducing greenhouse gases and emissions and increasing energy efficiency, was described as ‘classic territory for affording the decision maker a wide margin of discretion’ (at paragraph 57 of the Court of Appeal decision – Dyson MR)

4. The equal treatment principle, which requires that ‘comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified’. The principle was put more shortly: ‘Has there been a failure to treat like cases alike (and unlike cases differently)?’ The entire appeal was summarised to be about how the equal treatment principle should be applied; and what margin of discretion should be afforded to the Secretary of State when deciding whether different categories are alike or unalike – whether Liverpool could be compared with Highlands and Islands, or Northern Ireland in a meaningful sense (the ‘comparability question’). There is (apparently) no authority as to the issue as to the exercise of margin of discretion of the decision maker (in this case of the Secretary of State for Business Innovation and Skills) on the question of ‘comparability’ – and there lies the rub.

5. The Court of Appeal set out the comparators of the economic performance of the different regions, and they are the list that would be familiar to Universities in ERDF funding: general economic performance of different regions, respective employment rates for aged based groups, and significantly ‘conditions for research and development’ and respective greenhouse gas emissions (cf. the Energy Efficiency funding stream etc). The Court of Appeal perhaps rightly emphasised that the comparison exercise between regions was ‘multi-factorial’ – and then decided that the ‘decision maker is entitled to a wide margin of discretion in making such a decision’ – which should only be interfered with if a high standard of unreasonableness was met. It is difficult in my view to take sides on such an argument, but the University sector (indeed any party receiving ERDF funding) ought to be watching the progress of the appeal closely.

6. There was concern expressed in the appeal that the Councils’ domestic appeals (to be heard in October this year) would prejudice recipients in Funds in other regions, if not derail the entire ERDF funding stream itself. It was evident that the Commission’s position regarding the lawfulness of the Government’s policy was not formally known, and the parties were advised to obtain information and advise on further appeal as to the Commission’s position vis a vis the parties – central and local government. However, an expedited appeal, resulting from a permission hurried into the Supreme Court on the last day of term, is at least a first brisk step towards clarity. The issue as to whether following the forthcoming appeal there could be a reference to the European Court also remains open, and much would depend on the general position the Commission takes, which is currently unknown.

The decision of Justice Stewart:

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Admin/2014/232.html&query=rotherham&method=boolean

the decision of the Court of Appeal on 28 July 2014:

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2014/1080.html&query=rotherham&method=boolean

Useful Local Government Article by Mark Smulian on the Court of Appeal defeat:

http://localgovernmentlawyer.co.uk/index.php?option=com_content&view=article&id=19461%3Agroup-of-councils-loses-court-of-appeal-battle-over-eu-structural-funds&catid=56&Itemid=24