By Richard Johnstone | 21 March 2012
The Court of Appeal has unanimously dismissed trade unions’ legal challenge against the change in the inflation measure used to up-rate public sector pensions.
The shift from the Retail Prices Index to the narrower Consumer Prices Index was introduced last April as part of the government’s wider reforms to public sector pension schemes.Two groups, comprising ten trade unions, challenged the legality of the move but yesterday lost their appeal against last December’s High Court judicial review decision that the move was lawful.
The unions had argued that, as the change was a measure introduced to reduce the deficit, it was illegal under the Pensions (Increase) Act 1971, as no change is permitted for any reason other than to meet rising prices.
However, the Appeal Court three judges decided that that either inflation index ‘could perfectly properly be used for the purpose of up‐rating public sector pensions’.
The judgment stated: ‘It was permissible for the government, when choosing between them, to take into account the effect on the national economy, at least if the effect was significant and there was a need to benefit the economy.’
The judges added that the government would most likely have changed the measure to the CPI, even if it had no economic impact, to match that used by the Bank of England.
In their verdict, the justices also refused to grant the applicants permission to appeal to the Supreme Court.
However, it is open to the unions to ask the Supreme Court itself for permission, and the two groups said they would now consider their next steps.
One includes the Public and Commercial Services union, the Prison Officers Association, the Fire Brigades Union, the National Association of Schoolmasters/Union of Women Teachers, Unite, and Unison.
A statement released by Thompsons, the solicitors for these six, said they had mounted the challenge ‘on behalf of millions of public sector workers who would be hit by the switch’.
The CPI is around 1.2% lower on average than the RPI. If the gap widens to 1.4%, as predicted by the Office for Budget Responsibility, the unions said as much as 15% could be wiped off pension values.
The second group, which includes Prospect, the FDA union for senior civil servants, the GMB and the Police Federation, would also be ‘considering the grounds for appeal’, GMB national secretary for public services Brian Strutton said.
He added: ‘How could it be right that pensions already being paid could be reduced by around 15% in value just at the whim of the government?
‘Unfortunately, the courts seem to take the view that the government can do what it likes, even if this amounts to taking money off pensioners just because they used to work in the public sector. It’s not right and together with the other unions we will be considering the grounds for appeal.’
