The solicitor advising voluntary sector representative groups on whether to mount a legal challenge to the Office of the Third Sector's decision to scrap 32 grants to charities has warned that it could be a difficult case to win.
"What the OTS has done is unlawful, but that is not the same as saying there is a legal remedy," said Diane Astin, a solicitor at the Public Law Project, a legal charity.
Astin has been advising umbrella bodies the NCVO and Navca following third sector minister Angela Smith's decision this month to abolish the £750,000 Campaigning Research Programme and transfer the funds to the £16.7m Hardship Fund.
The decision was taken without consultation, in breach of the Compact, three weeks after formal offers of funding had been sent.
Astin told Third Sector there was a legitimate expectation that public bodies should abide by public law – the set of legal principles that govern the exercise of power by public bodies. Offering contracts and failing to honour them had breached these principles, she said.
But she added that public law was "terribly complex" and the fact that the OTS had offered to compensate charities for their costs could protect it from any action.
The OTS also inserted a clause in the contract saying "both parties can agree to end or vary this agreement without the consent of a third party".
Astin said the failure of the OTS to abide by the Compact, which outlines how the public and voluntary sectors should behave towards each other, could also represent a breach of legitimate expectation.
"The OTS is definitely in breach of public law," said Astin. "But what legal action might achieve is hard to assess."
She said the NCVO was trying to find out more about the decision-making process behind the withdrawal by the OTS of grants before deciding whether to instruct the Public Law Project to instigate legal action on its behalf.