Peers have inflicted another defeat on the Government as they stood firm in their battle with the House of Commons over judicial review.

The House of Lords voted by 274 votes to 205, majority 69, to insist on maintaining judicial discretion in the process.

Lord Pannick, a QC, who led the opposition to the Government plans, said Lord Chancellor Chris Grayling had misled the Commons when MPs overturned the original Lords defeat.

Justice Minister Lord Faulks accepted that Mr Grayling had made an error in his speech in support of the Government’s position in the Commons, but had written to Tory MP Geoffrey Cox to set the record straight.

The defeat was the second of the day for the Government on the Criminal Justice and Courts Bill after peers had earlier voted to insist on an amendment preventing girls and boys under the age of 15 being housed in secure colleges for young offenders.

Urging peers to support the judicial review amendment, Lord Pannick said: “The Lord Chancellor inadvertently misled the House of Commons when it considered the amendment approved by this House.

“The Lord Chancellor misled the Commons on the very issue that is at the heart of this amendment.

“He wrongly suggested there is an ‘exceptionally circumstances’ provision in this clause, which confers discretion on the judge. That alone is reason alone for this House to invite the Commons to think again.”

The Government argues that judicial review has been “misused” and wants the system to be reformed to force judges to throw out at an early stage cases with little prospect of success.

But they have been met with strong resistance from Labour, crossbenchers and many Liberal Democrat and Tory peers.

The judicial review discretion amendment had been carried when it was first before the Lords by a majority of 66, before it was overturned in the Commons last week.

Lord Faulks said the Government had listened but was not prepared to change its stance on the issue.

He said judicial review had been ”misused with claims brought with no real prospect of success” and the aim of delaying and adding expense to ”perfectly lawful acts”.

Such challenges placed ”significant burdens on the public purse and strike at the economic development the country badly needs”.

He said the Government wanted to restrict judicial review, not abolish it, to cases which have ”real merit”.

Judicial review should not be used as a ”campaign tool” but reserved for unlawful activity that was likely to have a real effect on an outcome, he said.

He added: “What the Government is inviting the House to approve is a minor change to judicial review. We are not inviting the Government, local government, ministers, public authorities, to ride roughshod through the law.”

But Lord Pannick, an independent crossbencher, urged peers to stand firm in maintaining a degree of judicial discretion, which was central to the rule of law.

Requiring a fair procedure and ministers and officials to comply with the law of the land was not a technicality, he said.

”There needs to be an element of judicial discretion,” Lord Pannick said. ”The absence of judicial discretion isn’t a fair balance.”

Under the Bill, the High Court would have to block a judicial review application proceeding to a full hearing if it appeared ”highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred”.

Shadow justice minister Lord Beecham said Russian President Vladimir Putin would be ”lost in admiration” for the Government’s move.

He said the Government was seeking to restrict the use of judicial discretion ”in its own interests” and ”on the flimsiest evidence”.

Independent crossbencher Baroness Campbell of Surbiton warned that judicial review was even more important in tough times to ensure the Government did not ”ride roughshod” over its citizens.

Former lord chief justice and independent crossbencher Lord Woolf said the Government’s move would be ”bad for justice” and ”bad for the reputation of this country as a leading adherent to the rule of law”.

Lord Woolf said he had heard that the Lord Chancellor greatly respected the independence of the judiciary.
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Lord Deben, the former Cabinet minister John Gummer, said there was something “deeply wrong” with what the Government was proposing.

On the issue of Mr Grayling’s comments in the Commons, Lord Deben said: “I don’t think I have ever heard so damaging an apology as the one that was revealed to us.”

He said Mr Grayling “got wrong the only argument he presented of any importance at all”.

Lord Deben said ministers should be “embarrassed” if they broke the law and therefore should face judicial review.

He added: “If we are not here to uphold principles of this kind then we should not be here at all.”

Tory former Lord Chancellor Lord Mackay of Clashfern said the “mistake” made by Mr Grayling was “fairly fundamental to the consideration of this amendment”.

He added: “I would like to see this going back to the House of Commons, in order that the debate can proceed on a basis that is 110% correct.”

Liberal Democrat Lord Marks of Henley-on-Thames, a leading QC, opposed the Government plans.

“I regard this as an attack on the rule of law,” he said.

Earlier, peers voted by 304 to 240, majority 64, to insist that secure colleges should not house girls at all or boys under 15.

The vote represented a significant hardening of opposition in the Lords, which had voted down the plan by just one vote in October – a defeat overturned in the Commons last week.

Lord Ramsbotham, the former chief inspector of prisons, led the opposition to the plan for secure colleges and said for the first time in his life he was ”ashamed to be British” because he opposed the Government’s plans so strongly.

Lord Faulks said the pilot secure college, which is due to open in Leicestershire in 2017 and house 320 young offenders, would not initially house under-15s or girls and promised a report on the issue before there was a change in policy.

In the secure colleges vote there were 27 Lib Dem rebels and five Tory rebels, including former foreign secretaries Lord Howe of Aberavon and Lord Hurd of Westwell.

Shadow justice secretary Sadiq Khan MP, commenting on the judicial review defeat, said: “This was a massive unconstitutional grab for power by the Tory-led Government.

“Judicial review isn’t some silly inconvenience, it’s crucial in holding to account governments who break the law. Watering it down would have insulated this Tory-led Government’s bad decision-making from challenge, and it’s only right Chris Grayling has been stopped in his tracks.”

On the judicial review defeat there were 24 Lib Dem rebels and nine Tory rebels including Lord Howe, Lord Deben and fellow former Cabinet ministers Lord Forsyth of Drumlean and Lord Patten of Barnes.

Later, the Government crashed to a third defeat as peers attacked the “chilling effect” of a requirement to identify sources of financial support for a judicial review application.

Lord Faulks offered a concession that small contributors would be excluded and insisted that those seeking the remedy of judicial review shouldn’t be able to hide behind “shell companies”.

But peers again insisted on judicial discretion over the financing of applications voting by 210 to 192, majority 18.

Lord Faulks told peers: “This is not about taking away discretion from judges but about giving them the information to enable them to take fully informed decisions.”

But Lord Pannick said judges would be prevented in all circumstances from granting a permission to bring an application for judicial review unless financial information was provided.

He said a degree of discretion was needed to allow a case to proceed in the public interest even if some financial information had not been provided.

Lord Pannick warned that if the threshold for providing information was set too low it would inevitably deter people from contributing to judicial reviews brought in the public interest because of the risk of having to pay the defendant’s costs.

Lib Dem QC Lord Marks of Henley-on-Thames said a limited exemption for small scale supporters wouldn’t reduce the “chilling effect” of the Government’s move.

Former lord justice of appeal and independent crossbencher Lord Brown of Eaton-Under-Heywood said it was another example of the Government seeking to weaken the power to hold it to account.

He warned this would have the “inevitable effect of chilling and in many cases making it practically impossible to bring a challenge”.

Peers later accepted a Government compromise, by 190 votes to 160, Government majority 30, on the issue of the costs incurred by third-party interventions in judicial review cases.

Lord Faulks said the taxpayer was often left to pick up the bill from such interventions. He suggested a “sensible” compromise giving “taxpayers the protection they need”.

But Lord Pannick said courts already had “ample powers” to control who could intervene and how.

He said the Government had failed to identify any cases in which the court lacked sufficient power.

Commenting on the secure colleges defeat, a Ministry of Justice spokesman said: “Secure Colleges will be a pioneering approach to youth custody, with education at the centre. By moving away from the traditional environment of bars on windows and giving these young people skills, qualifications and self-discipline we can help them turn their back on crime and become productive members of society.

“We are disappointed by the outcome of this vote and will now consider our next steps as the Parliamentary process continues.”

The Bill now returns to the Commons for MPs to reconsider the amendments.