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Issue 273 • February 3 2011 Price £1.00

Councils await £740m BSF High Court ruling

With Red Nose Day approaching, we look at how schools can engage students in the fundraising celebrations, link the event to lessons, and the support that is available Pages 8 and 9

Pension options: Tax-free cash

Our regular financial page considers when taking tax-free cash from your pension might be a good idea for teachers Page 13

The future of specialist schools

We hear from the chief executive of the Specialist Schools and Academies Trust about the future of specialism Page 7


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Red Nose Day Local authorities face compensation bills of millions if they lose hearing by Daniel White

Local authorities could face compensation bills of at least £10 million if they lose their high court battle over the axing of Building Schools for Future (BSF), a legal expert has claimed. As SecEd went to press this

week, the result of a judicial review of the government’s decision to axe BSF in six local authorities was due. The hearing began last Monday

(January 24) and saw six local authorities take on the government in a bid to save their BSF funding. The coalition government axed

the scheme in July last year when education secretary Michael Gove claimed it was overly expensive and bureaucratic. The six authorities – Waltham

Forest, Luton, Nottingham, Sandwell, Kent, and Newham – have mounted the joint challenge. The authorities have lost out on

more than £740 million in funding. Waltham Forest has lost out on more than £275 million alone and has also lost £17 million of devel- opment costs. Nottingham has lost £33 million for two BSF rebuilds, Luton £45 million for two schools, and Sandwell is fighting to save £138 million for nine schemes. Tiffany Cloynes, a partner and

head of public sector at law firm Cobbett’s, said the authorities could be forced to pay millions of pounds of compensation to contractors because of work they had already organised. She told SecEd that the authorities had progressed their BSF schemes in the belief that “funding and construction would commence”. She explained: “Contractors would commit (and) payment

would be expected to be forthcom- ing, and some councils are claiming they will be charged with having to pay at least £10 million.” The councils’ case is based on

Mr Gove’s decision to scrap fund- ing for all BSF schemes that had not been signed off by January 1 last year. They claim the date was arbitrary, with one council saying it had been “plucked out of the air”. Ms Cloynes continued:

“Waltham Forest is claiming £17 million, they say they were days away from building work starting. It depends on the facts, (but) if contractors’ funding has been made then the primary obliga- tion and payments could be into the millions. “Local authorities could be left

with a lot of money having to be paid out if a decision goes against them. It would be dependent on what steps have been made, but third parties could pursue for pay- ments still to be made.” Three ways in which the coun-

cils can win the review would be on the grounds of illegality, irrational- ity or unreasonable and procedural impropriety. Each case is being investigat-

ed individually and Ms Cloynes believes it could depend on how many stages had been completed. In BSF, there are nine separate stag- es, and Waltham Forest say they had completed six of these. The council wrote an open letter

to Mr Gove at the time of the deci- sion claiming that £13 million in abortive costs will have to be made if there is no capital funding for the schools programme. Council leader Chris Robbins

said they are now at “risk of litiga- tion” as well. He pointed to the fact

that Leytonstone School was due to move from its existing site to allow building works to commence only five days after the abolition was announced. The decision to abolish BSF

funding is not under dispute, accord- ing to Luton Borough Council. However, they believe the deci-

sion reached was irrational and individual circumstances were not taken into account. Councillor Tahir Khan, execu-

tive member for children’s services, said: “This late cancellation has left the council with liabilities total- ling £3.6 million for the abortive work already done and therefore having to find further savings from an already scarce budget, which

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ultimately will mean cuts to more services and jobs.” Sandwell Council leader Darren

Cooper added: “As our barrister said in court, the January 1 cut-off was irrational, unfair, decided upon after the event in the summer and taken without consultation. We did what we were told to do and spent money on preparatory work in good faith.” Ms Cloynes said that if the gov-

ernment loses the review then the “floodgates could open for future cases”. She added: “If it is against the government, they will no doubt appeal. It could cause political fire- works.” Laura Hughes, associate solici- tor at Browne Jacobson, said that if

the local authorities lose then legal costs for each individual case in the judicial review could be up to £100,000. She added that it could be “embarrassing” for the govern- ment to have to foot this bill if they lost. However, speaking to SecEd,

Ms Hughes warned that if the gov- ernment were deemed to be wrong in these cases, then they could just go back and reverse the relevant aspects of the decision and still push for the funding to be axed. She explained: “If the court

were to quash the decision, the abolishment will more than likely carry on – all it means is the govern- ment was wrong and would then go back and make changes to the bits that were deemed wrong. “It could be embarrassing for the

government regarding costs (and) wasted legal proceedings, but they could get it right next time mak- ing the changes from the original decision.” It is thought that the Department

for Education is in talks with the six authorities about separate fund- ing via the capital programme and might elevate the authorities to the top of the list. Ms Hughes said she would be

“very surprised” if significant com- pensation had to be made to the local authorities from the government. A Department for Education

spokesperson said: “We are robust- ly defending the claims made by the local authorities and believe we have a strong case. “The government has been clear

that the end of BSF is not the end of school rebuilding. We have launched a comprehensive review of all capital spending so that school building can be done more efficiently and quickly.”


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