Prospect and seven other unions and pensioner organisations had challenged the Government’s decision to adopt the Consumer Prices Index for uprating pensions rather than the established Retail Prices Index. The change was announced in June 2010 without consultation or negotiation, and implemented in April 2011.
Prospect argued in the High Court in October that CPI was not a fair indicator of inflation as it does not compare prices for the same goods but assumes consumers faced by rising prices will switch to cheaper brands.
The High Court rejected this argument, ruling that CPI had become “a well-established method of establishing the relative increase in prices.” The 0.7-1.4% gap between RPI and the lower CPI means benefits and public sector pensions will be 15-25% lower than if the RPI link had been retained.
The second argument made by the unions was that the Secretary of State for Work and Pensions had erred in law by putting economic considerations before his statutory duty to reflect the increase in the general level of prices.
The court dismissed this on a majority decision, saying that the Secretary of State could adopt any method that protects “the purchasing power of the relevant benefits and pensions.”
The minority view of Mr Justice McCombe accepted the claimants’ submission that “the need for deficit reduction was the driver for the change in index” and he would have quashed the Orders under challenge for that reason. However, he was overruled by Lord Justice Elias and Mr Justice Sales.
The case taken by Prospect and its solicitors, Russell Jones & Walker, was supported by the Police Negotiating Board, the National Association of Retired Police Officers, the FDA, Civil Service Pensioners’ Alliance, National Union of Teachers, Association of Principal Fire Officers and National Federation of Occupational Pensioners.
A separate challenge mounted by PCS and five other trade unions was joined with Prospect’s case. This argued that a legitimate expectation had been created that RPI would be used to uprate pensions; and that the Government was in breach of the public sector sex equality duty. Both arguments were rejected by the Court.