R (Cornwall Council) v Secretary of State for Housing, Communities and Local Government: £2.1m ERDF clawback upheld

Cornwall Council has failed in its challenge to a decision clawing back £2,121,431.66 in European Regional Development Funding, with the Administrative Court holding that a conceded error of law about procurement thresholds made no difference to the outcome.

In R (Cornwall Council) v Secretary of State for Housing, Communities and Local Government [2026] EWHC 1805 (Admin), handed down on 16 July 2026, Mrs Justice Steyn dismissed the claim on all grounds and refused permission to amend.

The larger sum concerned a direct award to Costain Jacobs Partnership to build a walking, cycling and horse-riding bridge over the A30 at Chiverton Cross. CJP was already National Highways' contractor for the adjacent £330 million dualling scheme. The Council awarded the bridge contract without advertising, relying on the technical reasons derogation, having been advised internally that it would need to show near technical impossibility of another contractor performing the works, and that clawback risk should be provided for by a risk pot. A Government Internal Audit Agency article 127 audit concluded the justification amounted to the funding deadline and CJP's involvement in the A30 scheme, neither being a valid basis.

The decision letter asserted the procurement was above the Directive threshold. It was not: the value was £2,638,602.27 against a threshold of £5,336,937, the decision-maker having wrongly treated the whole trail project's value as relevant. Steyn J called this a paradigm example of an immaterial error, since the letter expressly addressed the below threshold position in the alternative, and the obligation to advertise absent a derogation applied either way through the Treaty Principles.

Challenges alleging failure to have regard to the Council's representations, or inadequate reasons, also failed. Steyn J accepted the unchallenged evidence of the official who took the decision, noting the letter itself quoted from the Council's technical case and referred to its own Tender Evaluation and Whole Scheme Analysis, a document recording that there were no specific restrictions on using CJP and that it was the preferred supplier given its involvement in the dualling project.

On the deadline, she rejected the premise that 31 December 2023 arose from Brexit, it having been fixed a decade in advance for all member states. If approaching funding windows could ground the derogation, the extreme urgency exception for unforeseeable events would be wholly undermined. Reliance on an internal technical document containing assertions unsupported by evidence, where the Council's own legal adviser had recommended an independent expert report that was never obtained, was insufficient.

The cross-border interest ground failed because the Council had never raised the point, at procurement, at audit, or in its audit response, and had not submitted the Annex 3 form required of grant recipients wishing to make that argument. The COCOF Guidelines placing the burden on the European Commission had no application to a domestic audit.

A ground raised for the first time in the skeleton, contending EU law had been disapplied by the 2019 exit regulations, was refused on both procedure and merits. No application notice was filed, no evidence explained the delay, and the draft ground was produced over lunch on the hearing day, more than ten months after the three-month long-stop. The provisions relied on concerned retained EU law, not relevant separation agreement law: article 138 of the Withdrawal Agreement, given effect by section 7A of the 2018 Act, kept EU procurement law applicable until the programme closed.

The smaller sum concerned a requirement that tenderers identify a Cornish SME among sub-consultants. Following Commission v Italy (C-360/89), the test is whether a criterion essentially favours domestic operators, not whether actual detriment is shown. The Public Services (Social Value) Act 2012 required no such term.

Philip Coppel KC and Natasha Peter appeared for the Council; Joanne Clement KC and Gethin Thomas for the Secretary of State.