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One of the major criticisms of numerous Labour governments, although the current government in particular, is that they are ‘anti-business’. This is, of course, a matter of opinion – although statistically speaking, the Conservative Party have tended to offer lower taxes to businesses historically. In response, Starmer has recently had to make numerous public statements fighting back against such criticism.
Much of the backlash Starmer currently faces in this area is in response to Chancellor Rachel Reeves’ recent budget from late 2024. While the party did stay true to their pre-election promises not to directly increase taxes on working people (or, perhaps more accurately, ‘work’ itself, since taxes like inheritance tax were raised by limiting some reliefs), such as income tax, the budget did see a significant rise in National Insurance. This is a tax which falls on employers to pay.
The overall rate increased to 15%, and the starting threshold for employers to pay was moved down from £9.1k to £5k. The latter means that many small businesses that were previously exempt will now be caught by the scheme, though it is arguably even larger businesses who will notice the impact on their bottom line even more. One analysis predicted that Tesco will lose an estimated £1 billion over the next four years as a direct result of this change.
Numerous business leaders have, in the aftermath of the budget, spoken directly to Starmer and Reeves about their perceived harshness on businesses, with the ultimate fear being the looming threat of some major organisations abandoning the UK in favour of investing elsewhere instead. Astra-Zeneca, for example, the major vaccine producer and heavy investor in the UK economy so far, have recently decided to change course and limit their UK investments – with many citing the government’s recent policy decisions as a leading factor in that decision.
In light of all the above, Labour need to be shown to take active steps to get businesses (and investment) back on-side.
Judicial review is a legal process in the UK via which anyone from members of the public to interested businesses and pressure groups can challenge government decisions. This is usually on grounds such as the decision-making process being unlawful in some way. Law students on courses like the LLB or PGDL often cover this process in depth via their studies of Public Law – or, more specifically, Administrative Law.
One of the major areas in which judicial review cases are commonly brought is where public infrastructure schemes are seen to infringe on the interests of individuals or pressure groups. For example, where a major transport company working with the government plan to build new train lines through rural land, both local landowners and environmental pressure groups are likely to try to argue in court that the decision to grant permission for such a project was unlawfully reached. This would perhaps, for instance, be by suggesting that the government failed to properly take environmental factors into account.
By making judicial review claims harder to establish, the government are trying to signal to businesses that they are supporting investment in the economy.
Currently, there are a few procedural steps to bringing a judicial review claim. First, applicants should follow the pre-action protocol (there are many types, as SQE students studying dispute resolution will be aware) for judicial review, which broadly involves sending a letter to the party who are supposedly in breach, and waiting 14 days for a response. If the response is not satisfactory, the applicant typically moves turns to court.
Proceedings are first issued in the Administrative Court (itself part of the High Court), where applicants write to ask for permission. If rejected, they can then ask for an oral hearing. If this second attempt fails, they have a third route to take – asking the Court of Appeal (a more senior court than the High Court) for permission in one last attempt.
The new system Labour are suggesting is one whereby the first of the three stages outlined above would be scrapped, meaning you start on what is currently the second step (with an oral appeal). The third step would also be tightened – you would no longer be able to move to the Court of Appeal if the High Court judge at stage two labels your case ‘totally without merit’. In short, the appeals process for seeking permission will become much more limited.
These proposals are, understandably, controversial. Judicial review is often regarded as a key cornerstone of the public’s ability to challenge questionable behaviour by public bodies. In that regard, this is a constitutional issue.
Of course, from the opposite perspective, these cases are seen as creating unnecessary bureaucracy, stifling the ability to ensure an efficient investment process. Striking the correct balance between the two is crucial, and it is likely that some legal and political commentators will suggest Starmer, himself a qualified lawyer who has worked within numerous judicial review contexts on some of the most high-profile cases in UK history, may be close to tipping the scales too far here.
Within both law firms and chambers (employing solicitors and barristers, respectively), public law tends to be a very significant practice area. Judicial review is arguably the most common type of work within this area, too. Understanding the procedure for judicial review, and how it might change as a result of these reforms, will be absolutely crucial for any legal professionals involved in such work.
Other practice areas are also likely to be affected. For example, those working in areas like infrastructure (or ‘projects’, a similar title given to the area in some firms) or real estate law are likely to have the interests of their clients significantly impacted by these reforms (most are likely to take a positive outlook, as it stands). Understanding the client’s commercial perspectives on these matters is a crucial skill for any lawyer, demonstrating a high level of commercial awareness.
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