R (Staff Side of the Police Negotiating Board) v Secretary of State for Work and Pensions

The court considered judicial review challenges to the Government’s decision to change statutory uprating of social security benefits and linked public service pensions from the Retail Price Index (RPI) to the Consumer Price Index (CPI) from April 2011. Key legal issues were (i) whether CPI is a permissible measure under section 150 of the Social Security Administration Act 1992; (ii) whether the decision was tainted by irrelevant considerations or an improper purpose (Padfield principle); (iii) legitimate expectation arising from past references to RPI; and (iv) compliance with the public sector sex equality duty in section 76A of the Sex Discrimination Act 1975.

The court (majority Elias LJ and Sales J) held that CPI is a lawful and legitimate price index for the purposes of section 150, that the Secretary of State was entitled to select CPI (and to have regard to economic considerations where CPI is a genuinely appropriate measure), that no clear, unambiguous promise to preserve RPI indefinitely gave rise to a public law legitimate expectation, and that the equality duty (if engaged) was discharged in substance. McCombe J dissented on the second ground, concluding that economic considerations impermissibly drove the choice and would have quashed the orders.

This case challenged the Government’s decision to uprate certain social security benefits and public service pensions by reference to the Consumer Price Index rather than the Retail Price Index. The decision produced two statutory instruments: the Social Security Benefits Up-rating Order 2011 (Up-rating Order) made under the Social Security Administration Act 1992 and the Pensions Increase (Review) Order 2011 (Pensions Order) made under the Social Security Pensions Act 1975, which applied the same percentage to public service pensions pursuant to the Pensions (Increase) Act 1971.

Parties and relief sought:

• Claimants: two groups of claimants including trade unions, representative bodies and individual pensioners challenged the lawfulness of the decision and the two implementing orders.
• Defendants: Secretary of State for Work and Pensions and HM Treasury.

Issues framed by the court:

1. Whether the CPI is a permissible index under section 150(1) and (2) of the Social Security Administration Act 1992 for determining the general level of prices.
2. Whether the decision was made having regard to irrelevant considerations or for an improper purpose (i.e. driven primarily by an aim to secure public expenditure savings).
3. Whether a legitimate expectation that RPI would continue had been created and, if so, whether it was lawfully overridden and whether adequate consultation took place.
4. Whether the Secretary of State and the Treasury complied with the public sector sex equality duty under section 76A of the Sex Discrimination Act 1975 (and related equality duties).

Court’s reasoning (concise):

• On statutory interpretation, the majority judged that CPI is a recognized and lawful measure of price change and that its use, including the geometric mean aggregation method, is consistent with the statutory obligation to determine whether benefits/pensions have retained their value relative to the general level of prices. The court rejected the contention that CPI improperly measures cost of living or consumer substitution in a way that makes it incompatible with section 150.
• On improper purpose/irrelevant considerations, the majority concluded that the Secretary of State was entitled to adopt any method he genuinely considered a fair and genuine measure of price change; if more than one such method existed, economic considerations could legitimately inform a choice between them. They further found evidence that CPI was regarded as preferable on grounds independent of pure savings. McCombe J dissented, finding that economic savings were the primary and substantial reason for the choice and that the statutory review had not been conducted free of extraneous considerations, such that the Orders should be quashed.
• On legitimate expectation, the court found no clear, unambiguous promise or practice that RPI would be preserved indefinitely; explanatory materials and negotiation history were read as qualified by scheme rules and statute and did not found enforceable public law expectations. Even if a legitimate expectation could be shown, the Government had engaged with representations and, in any event, the claimants did not show the requirement to honour it.
• On the public sector sex equality duty, the court concluded (on the facts) that any duty was satisfied. The Treasury’s equality impact assessment was carried out and the responsibility split between departments meant that reliance on the Treasury assessment and Carltona principles was sufficient. The court was also prepared to conclude that the statutory exemption for acts in connection with proceedings in Parliament likely applied to the making and laying of the Orders, so the duty may not have been engaged in any event.

Outcome: The majority dismissed the claims and upheld both statutory instruments; one judge dissented on the improper purpose ground and would have quashed the Orders.

The High Court (Elias LJ and Sales J majority; McCombe J dissenting on one issue) dismissed the judicial review claims and upheld the Up-rating Order and the Pensions Order. The majority held that CPI is a lawful measure under section 150 of the Social Security Administration Act 1992, that the Secretary of State did not act for an improper purpose (economic considerations may legitimately inform a choice between genuinely appropriate indices), that no clear legitimate expectation to preserve RPI indefinitely was established, and that the public sector sex equality duty was satisfied (and likely in any event excluded by the parliamentary-proceedings connection). McCombe J concluded that economic considerations improperly drove the choice and would have quashed the Orders.