Unions lose pensions change battle

 

Unions representing millions of workers have lost their Court of
Appeal battle against a Government decision to change the way public
sector pension increases are calculated.

Three appeal judges today refused to overturn a High Court 2-1 majority ruling last December which backed the Government's approach.

The case relates to Work and Pensions Secretary Iain Duncan Smith's decision to use the consumer price index (CPI) instead of the, normally faster-rising, retail price index (RPI) to measure price increases influencing pension upgrades.

The unions say the CPI route will see the value of pensions cut by up to 20% over a normal retirement, costing every affected worker thousands of pounds.

They accused the Government of unlawfully attempting to reduce pension costs in the battle to cut the UK's financial deficit.

Their appeal was dismissed by Master of the Rolls Lord Neuberger, sitting with Lord Justice Maurice Kay and Lord Justice Sullivan.

The judges unanimously ruled the Government decision valid, dismissing the union argument that it was unlawful because the "driving force" behind it was the national economy.

The unions are now considering whether to attempt to take their case to the Supreme Court, the highest court in the land.

The change from RPI to CPI is expected to save almost £6 billion a year by 2014.

Lord Neuberger said: "The Government clearly believed that the state of the national economy was grave, and that any savings which could properly be made should be made - and made as soon as possible."

The judge also said: "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 Pensions Secretary "must seek to identify a rational basis for making his estimate, and one which he honestly believes achieves the aim of the section, namely to assess the decline in the purchasing power of benefits and pensions - and other payments".

But that did not rule out him taking into account the wider consequences and the effect on the national economy, as long as he acted proportionately.

The judge said it was "unsurprising to suggest that the wider public economic interest can have a proportionate and limited bearing on an annual decision which will cost the national exchequer many hundreds of millions of pounds in most years".

The driving force, or spur, behind the selection of CPI rather than the RPI was the need to fill the "black hole" in the finances of the Department for Work and Pensions created by the decision to uprate certain social security benefits by 1.5% in 2010 - and concerns about the future effect on the national economy, said the judge.

However, CPI was also selected "not merely because of the wider economic consequences, but also because it was believed to be an inherently more satisfactory index than RPI for uprating purposes", said the judge.

The fact that it was the effect on the national economy that initially drove choosing CPI did not alter the fact that it "was considered on its merits to be an appropriate index".

The judge added: "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 to put out of his mind any consideration of the benefit to the national economy of that decision."

PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Cleaner

£15000 - £16500 per annum: Recruitment Genius: If you've got first class custo...

Recruitment Genius: Mobile Applications Developer / Architect - iOS and Android

Negotiable: Recruitment Genius: This is a great opportunity to join a medium s...

Recruitment Genius: Telesales Account Executive - £40K OTE

£11830 - £40000 per annum: Recruitment Genius: Working in a friendly, sales ta...

Recruitment Genius: Web Designer

£15000 - £27000 per annum: Recruitment Genius: One of the UK's leading web des...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most