The Queen (on the application of and Others v The Secretary of State for Business, Innovation and Skills
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stewart |
| Judgment Date | 07 February 2014 |
| Neutral Citation | [2014] EWHC 232 (Admin),[2014] EWHC 812 (Admin) |
| Docket Number | CO/1407/2013,Case No: CO/14079/2013 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 07 February 2014 |
[2014] EWHC 232 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Leeds Combine Court
The Court House, 1 Oxford Row,
Leeds LS1 3BG
Mr Justice Stewart
Case No: CO/14079/2013
Mr Jason Coppel QC and Miss Joanne Clement (instructed by Director of Legal and Democratic Services) for the Claimants
Mr Jonathan Swift QC and Mr James Cornwell (instructed by Treasury Solicitor) for the Defendant
The Claimants
The Claimants are those South Yorkshire Local Authorities within the Sheffield City Region Local Enterprise Partnership and those Local Authorities within the Liverpool City Region Local Enterprise Partnership. 1 The South Yorkshire Local Authorities within the Sheffield City Region are:
•Barnsley Metropolitan Borough Council
•Doncaster Borough Council
•Rotherham Metropolitan Borough Council
•Sheffield City Council
The Merseyside Local Authorities within the Liverpool City Region are:
•Knowsley Metropolitan Borough Council
•Liverpool City Council
•Sefton Metropolitan Borough Council
•St Helens Metropolitan Borough Council
•Wirral Metropolitan Borough Council
Glossary
In this judgment the following abbreviations will be used:
LEP — Local Enterprise Partnership
SCR — Sheffield City Region
LCR — Liverpool City Region
The Cohesion Policy — The EU Economic, Social and Territorial Cohesion Policy
ERDF — European Regional Development Fund
ESF — European Social Fund
NUTS — The EU Nomenclature of Territorial Units for Statistics
TFEU — Treaty on the Functioning of the European Union
The 2006 Regulation — Council Regulation (EC) 1083/2006
The 2013 Regulation — Regulation (EU) 1303/2013
CFR — The Charter of Fundamental Rights
PSED — Public Sector Equality Duty
The Issue for Determination
The Claimants challenge decisions of the Defendant in relation to the regional allocation of EU Structural Funds for the period 2014–2020. Two decisions of the Defendant are challenged:
(i) The Defendant's allocation of the EU Structural Funds for the period 2014–2020 as between the four countries of the United Kingdom. This decision was announced on 26 March 2013.
(ii) The Defendant's allocation of EU Structural Funds for the period 2014–2020 as between the English regions. This decision was announced on 27 June 2013.
The relief which the Claimants seek is that the court quashes both decisions so that they may be reconsidered by the Defendant.
The witness evidence in the case is from:
(i) Martin Eyres. Mr Eyres' statements are dated 15 October 2013 and 15 January 2014. He is the head of European Affairs based in the office of the Chief Executive of Liverpool City Council. His evidence is filed on behalf of the Claimants.
(ii) Doctor Susan Chui Chi Baxter. Her statements are dated 18 December 2013 and 22 January 2014. Dr. Baxter is Deputy Director EU Funding and Industrial Policy and is a senior civil servant within the Defendant's Ministry. Her statements are filed on behalf of the Defendant.
Legal Materials
Extracts from the core legal materials are set out in the Appendix to this judgment. They are:
(i) TFEU Articles 162–164, 174–178
(ii) The 2006 Regulation Recital (17), Articles 3, 5, 6, 8(1), 8(2), 8(3) and 8(4), Annex II paragraphs 4, 6, 13 and 17.
(iii) The 2013 Regulation Recital (1), (3), (13), (14), (28) and (77); Articles 7, 9, 89, 90(1) and (2), 93 and Annex VII paragraph 2, para 15.
(iv) CFR Articles 21, 51(1).
(v) Equality Act 2010, section 149.
Broad EU Framework
Articles 174–178 TFEU require the EU to promote its overall harmonious development and strengthen its economic, social and territorial cohesion by reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions. The achievement of these objectives is via the Structural Funds (Article 175). The largest Structural Fund is the ERDF (Article 176). Its purpose is "to help redress the main regional imbalances in the Union through participation in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions." The ESF (TFEU Articles 162–164) aims to facilitate the employment, and adaptation to industrial changes, etc., of workers.
Via these means the Cohesion Policy is sought to be implemented. The practical implementation has, since 2000, been effected through a seven year funding programme.
The European Parliament and the Council define the tasks, priority objectives and organisation of the Structural Funds by EU regulation. Prior to legislating, they consult with the Economic and Social Committee and the Committee of the Regions (TFEU Article 177).
The Structural Funds are part of the EU budget. How they are spent depends on a system of shared responsibility between the EU and the authorities of the Member States. The EU budget determines the amount of structural funding for each Member State. The Commission's calculations refer to the regions of each Member State. Those regions are to be found in NUTS 2006/EU–27. The NUTS 2 regions are second tier regions which broadly correspond to large counties in the UK. The UK has 37 NUTS 2 regions. Of these, four are in Scotland, two in Wales, and Northern Ireland is a single NUTS 2 region.
Regulations provide for the classification by the EU Commission of the regions of each Member State by reference to their development needs. Both the form and the basis of the classification have changed in the three 7 year periods commencing in the year 2000.
–2006 Programme
In this funding period three categories of priority region were identified. These were: Objective 1, Objective 2 and Objective 3 regions. The Objective 1 programme operated within areas of most need, determined according to whether GDP per capita was less than 75% of the community average. Merseyside and South Yorkshire were Objective 1 regions.
–2013 Programme
The 2006 regulation introduced a new categorisation of regions. Allocations in this period were to:
(i) Convergence regions. These were the most deprived/poorest regions. They had a GDP of less than 75% of the EU average (Article 5(1) of the 2006 Regulation). In the UK, Cornwall and West Wales were Convergence regions.
(ii) Phasing-in regions. These were regions that had been Objective 1 regions, but whose GDP was no longer below 75% of the average of the 15 Member States comprising the EU in the year 2000. They were regions who were Phasing-in to Competitiveness and Employment. Merseyside and South Yorkshire were the only two UK Phasing-in regions. Under Article 8(2) of the Regulation they were "…eligible, on a transitional and specific basis, for financing by the Structural Funds under the Regional Competitiveness and Employment Objective." The allocation of funds to the Phasing-in regions was governed by paragraph 6(b) of Annex II to the 2006 Regulation.
(iii) Phasing-out regions. These were also regions that had been Objective 1 regions. The difference between them and Phasing-in regions was that their GDP only exceeded the threshold for Convergence by reference to average GDP because of the statistical effects of the enlargement of the EU, by reason of admission of poorer central and Eastern European States as Member States. By reference to the average GDP of the 15 Member States as at 2000, Phasing-out regions would still have qualified as Convergence regions. In the UK, the Highlands and Islands was the only Phasing-out region. Article 8(1) of the 2006 Regulation provided for their (different) transitional and specific financing by the Structural Funds. Their allocation under the transitional support referred to in Article 8 was governed by paragraph 6(a) of Annex II to the 2006 Regulation.
(iv) Competitiveness regions. These comprised all other regions in the UK. They were relatively wealthy compared to regions in the other categories and had GDP levels around or above EU average.
For Convergence, Phasing-in and Phasing-out regions, the European Commission determined the level of funding for each individual region using the 2006 Regulation methodology. The allocation for each NUTS 2 region was communicated to Member States by the Commission. A Member State had no material flexibility to further determine the allocation between the regions. However, in relation to Competitiveness regions each Member State was free to determine how the funds could be allocated among those regions, though this was subject to approval by the Commission.
–2020 Programme
The 2013 Regulation was in draft form when the decisions challenged were taken. It was subsequently adopted.
Yet again, the Regulation introduced three new categories of NUTS 2 to regions. These were:
"(a) Less Developed regions, whose GDP per capita is less than 75% of the average GDP of the EU–27;
(b) Transition regions, whose GDP per capita is between 75% and 90% of the average GDP of the EU–27;
(c) More Developed regions, whose GDP per capita is above 90% of the average GDP of the EU–27."
(Article 90)
The methodology of categorising a region was thus altered such that it is now based on the "average GDP of the EU–27."
By reference to this classification the UK has:
(a) Two Less Developed regions (Cornwall and the Isles of Scilly, and West Wales and the Valleys).
(b) 11 Transition regions. These are Northern...
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