Unions lose pensions appeal.

FDA & Ors, R (on the application of) v Secretary of State for Work and Pensions & Anor [2012] EWCA Civ 332

The Court of Appeal has upheld an earlier decision that the Government was entitled to change the measure of inflation used in public sector pensions from the retail price index ( RPI) to the consumer prices index (CPI). The Unions had argued that the switch was a deficit reduction measure.

The appeal was by a number of Unions consisting of  Fda, Prospect, Civil Service Pensioners’ Alliance, GMB, National Union of Teachers, Fire Brigades Union, National Association of Schoolmasters Union of Women Teachers, Public and Commercial Services Union and the Prison Officers Association.

The Unions appealed on two grounds,

  1. Whether or not the adoption of the CPI was consistent with the Governments statutory obligation.
  2. Whether or not the Government took into account irrelevant considerations because it’s motive was deficit reduction.

The Master of the Rolls acknowledged that the switch would damage pensions however he said that CPI could “fairly be said” to be a measure of the change in prices.

He also considered that CPI was the measure of inflation of other European Countries and the Bank of England. The judge said that the Government was not precluded from taking into account the countries economic situation in limited circumstances.

“Provided that the Secretary of State acts rationally and takes all appropriate (and no inappropriate) matters into account, it is a matter for him which index he chooses. The instant criticism of his choice of CPI is based on the way in which the weighting of items within a category of items is effected. It is quite impossible to say…that the weighting method adopted by CPI is irrational, and that as I see it is the end of the matter”
“It seems to me that the decision to use CPI as the index by reference to which the 2011 uprating should be effected would certainly have been made by the Secretary of State even if he had put out of his mind any consideration of the benefit to the national economy on that decision.”

The unions have not been granted permission to appeal to the Supreme Court.

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