In the recent judicial review case of R (Birmingham City Council) v Secretary of State for Transport [2024] EWHC 1487 (Admin), the High Court found in favour of Birmingham City Council (the Council) regarding the Government’s decision to withdraw support from the Council in respect of its highways PFI scheme.

Background

The case concerns a PFI project agreement entered into in 2010 between the Council and Amey Birmingham Highways Limited (Amey), in respect of the maintenance and management of Birmingham’s road network. Contractual disputes between the Council and Amey gave rise to litigation. A settlement was reached in 2019 and Amey exited the Project Agreement. 

The Council sought Government approval to revised terms for the PFI arrangements. Following a period of extensive discussion and collaboration, the Government rejected the Council’s proposals.

Judicial review

The Council issued a judicial review of the Government’s decision, arguing that the decision was unlawful on six grounds. Only two of those grounds were substantively considered by the judge; that:

• the decision breached a substantive legitimate expectation based on previous commitments; and
• the decision was procedurally unfair.

In respect of Ground (1) the Council argued that the Government could only withdraw its support to the Council in “exceptional circumstances” based on a PFI Credit Letter issued in 2010, and general associated PFI guidance. The Council contended that this had created a legitimate expectation that support would continue. The Court disagreed, finding that a legitimate expectation of continued support did not exist.

In respect of Ground (2) the Court held that the Government had significantly changed its position without giving the Council the opportunity to respond to new concerns. Whilst there had been ongoing and extensive consultation from 2019, issues that were ultimately determinative were not communicated to the Council before the decision was made in late 2023. 

This was found to be unfair and in breach of the Council’s procedural legitimate expectation that it would be given the opportunity to engage and respond on key matters of concern. As the concerns proved to play a significant role in the decision making process, the Court held in favour of the Council: the Government’s lack of engagement had resulted in procedural unfairness. The judge was not confident that the decision would have been the same had the Government provided the opportunity for the Council to consider and respond to its concerns.

Key takeaways

The judgment highlights how judicial review can be utilised as an effective mechanism to protect parties from unfair process. It serves as a reminder for public bodies as to the importance of procedural fairness and open and transparent communication in their decision-making.

The judgment also sets out a helpful examination of the circumstances in which PFI credit funding may be reassessed and potentially terminated - this will be of interest to authorities with PFI arrangements.

How Capsticks can help 

Our specialist local government advice is cost-effective and strategic, complemented by practical knowledge of your daily challenges. We are experts on all aspects of compliance with PFIs and can advise on the broader aspects of Judicial Reviews.

If you have any queries around what is discussed in this article and the impact on your organisation, about PFI relating matters please speak to Vicki Moore and about Judicial Reviews please contact Peter Edwards to find out more about how Capsticks can help.