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Council wins legal fight against Government over IT funding gap
5:51pm Wednesday 4th July 2012 in Local
DUDLEY council has won a legal battle with the Government over an alleged funding gap of more than £9 million in a school IT contract.
The council took Secretary of State for Communities and Local Government, Eric Pickles, to the High Court over the Private Finance Initiative (PFI) used to pay for the £50m Dudley Grid Learning Scheme in 1999.
The PFI intiative, the likes of which have which have been criticised for saddling the public purse with heavy debts, meant the schools' IT contract would be paid off over many decades.
But government officials wrote to the council last year telling them it was changing the way grants would be provided to pay off the contract, resulting in what the council says is a shortfall of more than £9m.
However top judge Mr Justice Singh ruled the government's decision was "unlawful" because the council were not properly consulted before the changes were made.
The court heard the £51.5m contract was made to provide IT facilities in schools throughout the borough, with the money due to be paid off long after the ten-year agreement had run its course.
Until last year, the Government's grant to the council to pay off the contract was paid on a "declining balance" basis.
However, following the election of the coalition Government, the council was informed this would be changed to an "annuity" basis.
The Government expressed concern that grants would have to be paid "in theory ad infinitum due to the reducing nature of the annual declining balance payments".
And the council was told it was "not sustainable to continue with such never-ending financial commitments, especially in the current fiscal climate."
But that decision brought about a rapid response from then-council leader, Anne Millward, who said the proposed change in the way the grant was paid would leave the council with a huge funding gap.
The council brought a claim for a judicial review earlier this year, arguing the Government's decision was unfair and "unlawful", having been reached without adequate consultation with the local authority.
Mr Justice Singh ruled in Dudley's favour on that issue, finding: "It is clear from the evidence before the court that the Secretary of State did not consult the council at a formative stage of the decision-making process."
The judge ordered a fresh consultation be carried out, and suggested the Government and the council get around the table in a bid to resolve the dispute.
Councillor Gaye Partridge, Dudley’s cabinet member for human resources, law and governance, said afterwards she was “pleased the High Court has ruled in our favour and quashed the government's original decision over PFI funding”.
She added: “The ruling means we will now enter into proper consultation with the government over future funding for Dudley Grid for Learning."
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