Nine councils to take EU structural funding battle to Supreme Court next week

Nine local authorities will take their challenge over the Government’s allocation of EU structural funding to the Supreme Court next week.

The councils – which are all located in Merseyside and South Yorkshire – brought legal proceedings over the Department for Business, Innovation and Skills’ allocation decisions for the 2014-2020 funding period.

The total allocation of EU structural funds to the UK for this period was cut by around 5%. On 26 March 2013 the Secretary of State announced a funding allocation that cushioned the effect of the cut on Northern Ireland, Scotland and Wales.

On 27 June 2013 Vince Cable announced the sub-allocation of funds as between the English regions, under which the appellants’ allocation was reduced by approximately 65% by comparison with the previous 2007-2013 funding period.

Merseyside and South Yorkshire were the only two UK regions that received tapering funding during 2007-2013. This meant they were particularly affected by the Secretary of State taking the distribution of funds in the year 2013 as the basis for the 2014-2020 allocation.

The Merseyside authorities have claimed that the European Commission had calculated their share at €350m, but the Government only allocated them €202m. The shortfall for South Yorkshire was estimated at €90m.

At issue before the Supreme Court in R (on the application of Rotherham Borough Council and others) v Secretary of State for Business, Innovation and Skills is the scope of the margin of discretion to be accorded to the Secretary of State in allocating EU structural funding.

The seven justices – Lord Neuberger, Lady Hale, Lord Mance, Lord Clarke, Lord Sumption, Lord Carnwath, and Lord Hodge – will also consider whether DBIS’ allocation decisions in this case breached the EU principles of proportionality and equal treatment.

In February 2014 Mr Justice Stewart ruled in the High Court that the Secretary of State had failed to comply with the public sector equality duty under s. 149 of the Equality Act 2010.

However, the judge dismissed the other grounds of challenge put forward by the claimant authorities, including that EU law principles of equal treatment and proportionality had been breached.

The councils appealed but the Court of Appeal dismissed their claim in July. The Master of the Rolls, Lord Dyson, said the judge had been right to hold that the margin of discretion was a wide one in the circumstances of the case.

Lord Dyson added that the Court of Appeal should only interfere if satisfied that the decisions were manifestly inappropriate or manifestly wrong. The councils’ submissions had not demonstrated this to be the case.

The MR said: “The Secretary of State was required to have regard to a number of different overlapping considerations, and the regulation does not prescribe the weight to be given to each of them.”

He added: “Overall, the exercise of comparing one region with another is or ought to be multi-factorial. It involves making a substantial number of value judgments of an economic and social nature. In our view, the decision-maker is entitled to a wide margin of discretion in making such a decision.”

The Supreme Court hearing is scheduled to last two days.