The Secretary of State made a Local Authority Business Growth Incentives Scheme whereby local authorities retained a share of the growth in business rates generated in their area. Under the new arrangement, if the local authority increased its total rateable value between 1 January 2005 and 31 December 2005 by more than an assumed or expected amount, the defendant was to pay it in a grant. That was to continue in future years. In respect of the first year’s grant determination (the 2006 determination), a dispute arose between the claimant local authorities and the defendant. The claimants challenged the 2006 determination, alleging that in calculating the amount of the grant, the defendant had unlawfully failed to take account of actual growth in the rateable value where than growth had been recorded by the Valuation Office Agency (the agency) under its ‘code 20’. Code 20 concerned increases and decreases in business rates as a result of changes during the year. Its omission, among other things, effectively excluded in-year business expansion from the calculation of business growth. In July 2007, the High Court held that the defendant had acted so as to defeat the claimant’s substantive legitimate expectation regarding how growth during the first calendar year was to be calculated and rewarded. The claimants had legitimately expected that code 20 growth would be included. The failure to include it was unlawful (see  LGR 109). The second year’s determination (the 2007 determination) was made in February 2007. Prior to that determination, two documents published by the Secretary of State addressed the scheme. Both claimants subsequent applied for judicial review, submitting that in calculating the 2007 determination, the defendant had again failed to take account of code 20 growth as was required by the published scheme and in accordance with the High Court judgment.
Held: Application dismissed. The claimants could no longer legitimately expect code 20 growth to be included in the 2007 determination. In neither the technical paper of July 2006 nor the review of September 2006 had it been said that the scheme was to change so far as code 20 growth. What was said reflected, until the High Court judgment of July 2007, what was thought by the defendant to be an acceptable approach to code 20 growth. However, what was important was whether in the face of both of those documents, any council could legitimately have expected that code 20 growth would be included in the Secretary of State’s calculations for year two. The Secretary of State had a wide discretion as to the amount of grant she might pay.