The High Court has ruled that education secretary Michael Gove acted hastily in axing Building Schools for the Future projects. Ben Willis explains what civil servants implementing spending cuts should learn from the case

Earlier this month a High Court judge ordered education secretary Michael Gove to reconsider his decision to withdraw funding from six school rebuilding programmes. Mr Justice Holman said that in cancelling the funding, which had been promised under the Building Schools for the Future (BSF) programme scrapped by Gove last summer, the secretary of state had failed to follow the correct legal procedures for making such decisions.

The judge said the final decision on the projects still rests with Gove, and legal experts contacted by CSW say the ruling is unlikely to affect the ultimate fate of the schools in question. However, the judgment has a broader significance for the government’s wider cuts agenda, because it raises the possibility of legal challenges to other spending decisions.

“This is being seen as the most significant challenge to the implementation of the comprehensive spending review (CSR), and is being watched very closely,” says Nicola Williams, a partner in the litigation and dispute management group at law firm Eversheds. “It’s going to put all the implementation of the CSR under the microscope to a much greater extent.”

The judicial review that led to the recent ruling was brought by Sandwell, Waltham Forest, Newham, Luton, Kent and Nottingham councils – six of the authorities that lost out when, last July, Gove announced plans to scrap the former Labour government’s BSF initiative halfway through its 15-year, £55bn lifespan.

In the hearing, the councils put forward a number of separate challenges to Gove’s decision: that the whole basis for his scrapping of the BSF was unreasonable or wrong – “irrational”, in legal speak; that the authorities had legitimate expectations that they would receive the BSF money promised to them; that he had not properly consulted with them before making his decision; and that he had not discharged his statutory equalities obligations to consider the impact of his actions on vulnerable and minority groups.

In his final judgment, Mr Justice Holman threw out all but the latter two of these challenges. But he upheld the claim that the government had unlawfully failed to consult properly with the councils concerned over his decision, and said there was no evidence that the secretary of state had – as required – given due regard to the consequences of his decision for vulnerable or minority groups by carrying out a full ‘equalities impact assessment’ before announcing the cutbacks.

This latter point will prove embarrassing for the government. The court heard that only a month before Gove’s BSF announcement, Theresa May, in her capacity as minister for equalities and women, had written to all cabinet ministers reminding them of their legal obligations to consider how spending cuts would impact on groups such as disabled people and ethnic minorities. She warned: “If there are no processes in place to show that equality issues have been taken into account… there is a real risk of successful legal challenges… This does not stop us taking the tough decisions necessary but we will need to show that we have considered the equality impacts”.

In view of this correspondence, it seems unlikely that Gove and his senior advisers were unaware of their obligations in this area. Indeed, during the hearing the government’s counsel said the secretary of state was “well aware of his duties”, but concluded that discharging them did not require consideration of the equalities impact of every case.

However, this argument was insufficient to persuade the judge, who said that there had been no evidence of “good practice” shown – either in the discharge of equalities duties, or in the keeping of adequate records demonstrating that these duties had been discharged. “I am simply not satisfied that any regard was had to the relevant duties at all, let alone rigorous regard,” he said.

According to Emily Heard, a partner at law firm Bevan Brittan who represented Sandwell Council in the case, redacted ministerial submissions to the court do not reveal the extent to which senior civil servants were advising Gove on his equalities obligations or his duties to consult. But, she adds: “I have no doubt at all that the senior civil servants and ministers would have been aware of the equalities impact legislation and…the duty to consult. As to why they failed to observe them in this case, one can only assume that they felt the economic imperative [to make cuts] overrode those considerations.”

In response to the judicial review outcome, the shadow education secretary Andy Burnham wrote to the prime minister and to cabinet secretary Sir Gus O’Donnell, calling for an independent inquiry into the matter. Burnham said the inquiry should disclose all paperwork relating to the BSF decision so the affected communities could see what advice civil servants were giving to Gove. Sir Gus has yet to respond to the letter, a Cabinet Office spokeswoman says.

Meanwhile, the Department for Education maintains that it “takes seriously” the secretary of state’s equalities duties, and respects the judge’s view that in this instance those duties were not adequately discharged. “We will carefully study the judge’s conclusions to ensure the department has rigorous regard to equalities considerations in reaching future policy decisions,” a spokesman says.

According to Eversheds’ Nicola Williams, the case reveals the tensions between the government’s drive to cut spending fast across Whitehall and the need to ensure those cuts are done with due regard to the law. Equally, she says, it highlights how civil servants need to be forthright in their advice to ministers on the legal implications of proposed departmental savings.

“It’s a difficult role for a civil servant, given the pressures from different angles,” she says. “Clearly, if we’re going to avoid having future decisions like this, civil servants need to be quite robust in their advice to ministers.”

Nick Iliff, a partner at the legal firm Pinsent Masons – which has worked extensively on the BSF programme – says the ruling shows how important it is for civil servants to be able to present records demonstrating how processes have been followed and documenting the advice given to ministers on spending cut decisions. “You need to have a good audit trail to show you’ve considered all the impacts and haven’t just brushed people aside,” he says.

Ultimately, says Jon Hart, another partner at Pinsent Masons, this ruling is unlikely to lead to Gove rethinking his decisions on the councils and schools concerned. Nonetheless, he says, ministers and civil servants must realise that decisions on spending cuts are not immune from the imperatives of due process. “Every civil servant should have, printed out in large letters and stuck above their desk, something saying: ‘Economic conditions, no matter how serious, are no excuse for not following proper processes’,” Hart says. “That’s a really important message to come out of this judgment.”