British Medical Association, & Anor R (on the application of) v Secretary of State for Health

Where pension regulations confer power to determine the method of uprating pensionable earnings, a determination is not complete until the methodology is sufficiently detailed to produce a mathematically certain result. Once that method has been determined and implemented with ministerial approval, it cannot be retrospectively revoked to the detriment of affected pensioners.

A determination made during a financial year may be revoked before the end of that year without impermissible retrospection. A substantive legitimate expectation may arise in relation to an identifiable class of pensioners, but ministers may nevertheless disappoint it where the decision involves major financial consequences for taxpayers and scheme contributors. Procedural expectations may be satisfied through appropriate discussions and correspondence.

The British Medical Association and a retired general practitioner challenged the Secretary of State for Health’s decision concerning the method used to calculate general practitioners’ pension dynamising factors under paragraph 11(2) of Schedule 2 to the 1995 regulations.

The claimants contended that the Secretary of State had adopted a method based on changes in actual general practitioner NHS earnings, and that the later decision to apply a different cumulative increase retrospectively was unlawful. The Secretary of State argued that she had only approved a process for recommendations and had retained the final decision on each annual factor.

The issues were whether a binding determination had been made for 2003/04 to 2005/06 and 2006/07, and, alternatively, whether substantive or procedural legitimate expectations constrained the Secretary of State’s conduct.

The claim succeeded on the principal issue for 2003/04 to 2005/06. The Secretary of State’s decision of 7 December 2006 had no effect for those years. The claim failed on the subsidiary legitimate-expectation grounds.

1. Meaning of determination. Under paragraph 11(2) of Schedule 2 to the 1995 regulations, a determination required more than a decision in principle. The details had to be worked out so that the uprating method produced a mathematically certain figure. By September or December 2004, and at the latest by May 2005, the methodology had been agreed and implemented by officials with ministerial approval.
2. No retrospective revocation. The published documents, correspondence and conduct showed that the method had not been made conditional on later approval of its financial outcome. The Secretary of State could not change it retrospectively after its cost became apparent, insofar as that adversely affected the years 2003/04 to 2005/06.
3. 2006/07 onwards. The determination for 2006/07 was made during that financial year. Its revocation before the year ended was lawful and effective for that year and later years. The percentage figures in the December 2006 letter formed part of a package and did not bind the Secretary of State as to the future method.
4. Alternative grounds. The facts would have established a substantive legitimate expectation among general practitioners, but the Secretary of State would have been entitled to disappoint it. The issue involved major financial consequences and was one for ministers rather than the judiciary. The procedural legitimate expectation was satisfied by the discussions and correspondence between the Department and professional representatives.

Permission to appeal was granted on both bases. Costs were awarded against the defendant, with the precise form of relief left to be agreed.

This was a first-instance judicial review in the Administrative Court. Permission to appeal was granted on both bases after judgment.