Local authorities lose Supreme Court battle over EU structural funds

A group of nine local authorities in Merseyside and South Yorkshire have narrowly lost their Supreme Court appeal over the Government’s allocation of EU structural funds.

The case of R (on the application of Rotherham Metropolitan Borough Council and others) v Secretary of State for Business, Innovation and Skills [2015] UKSC 6 concerned the allocation for 2014-2020. The UK received 5% less money for the period than it had for 2007-2013.

The Secretary of State decided that each of the four countries in the UK would have its overall funding reduced by 5% compared to the previous period.

Vince Cable also decided that each English 'transition region' would receive an allocation per year for 2014-2020 representing an increase of 15.7% on its allocation for 2013 (the last year of the previous period).

This affected Merseyside and South Yorkshire significantly as they were the only two UK regions to receive tapering funding during 2007-2013. The decision meant they suffered a 61% cut in funding altogether compared to the 2007-2013 period.

The nine authorities brought legal proceedings over the Business Secretary’s decision making.

In February 2014 Mr Justice Stewart ruled that the minister had failed to comply with the public sector equality duty. However, he dismissed the authorities’ other grounds of challenge.

The Court of Appeal rejected the councils’ appeal in July 2014. It considered that Mr Justice Stewart had been right to hold that the margin of discretion was a wide one in the circumstances of the case.

Before the Supreme Court the appellants argued that Merseyside and South Yorkshire had unfairly been treated differently from:

1. the non-English transition regions of Northern Ireland and Highland & Islands (whose funding was only cut by 5% by the Secretary of State following consultation with Scottish Ministers); and
2. other English transition regions.

The Supreme Court today (25 February) dismissed the appeal by a 4-3 majority.

Lord Sumption and Lord Neuberger both gave reasoned judgments for the majority. Lord Hodge agreed with Lord Sumption and Lord Clarke agreed with both Lord Sumption and Lord Neuberger.

Lord Mance and Lord Carnwath gave dissenting judgments. Lady Hale agreed with Lord Mance and Lord Carnwath.