Staff Side of the Police Negotiating Board & Ors, R (on the application of) v Secretary of State for Work and Pensions & Anor

A statutory decision-maker may select any established index which he genuinely and rationally considers a fair and genuine measure of the general level of prices. He may prefer one suitable index to another for rational reasons, including the resulting cost to public funds. The use of the Consumer Price Index, including its geometric-mean methodology, was therefore lawful.

A legitimate expectation requires a clear, unambiguous and unqualified promise or practice. General references to the Retail Price Index in pension literature and past practice did not promise its indefinite use. An equality impact assessment may be undertaken by another suitably placed department, and need not quantify effects which cannot reliably be estimated.

Two groups of public service pensioners, employees and representative organisations challenged the Social Security Benefits Up-rating Order 2011 and the Pensions Increase (Review) Order 2011. The Orders changed the index used for annual increases in benefits and public service pensions from the Retail Price Index to the Consumer Price Index.

The claimants argued that CPI was inconsistent with the statutory requirement to measure the general level of prices; that the decision was driven by savings and therefore involved irrelevant considerations or an improper purpose; that it defeated legitimate expectations founded on pension literature, negotiations and past practice; and that the public sector sex equality duty had not been complied with.

1. Disposition. The applications for judicial review were dismissed. The court was unanimous on grounds (1), (3) and (4), and divided on ground (2). Elias LJ and Sales J formed the majority; McCombe J dissented on the irrelevant-considerations and improper-purpose ground.
2. Statutory index. CPI was a well-established price index. Its use of the geometric mean did not turn it into a cost-of-living index or cease to compare like with like. Section 150 of the Social Security Administration Act 1992 left the choice of a suitable method to the Secretary of State.
3. Economic considerations. The majority held that once the Secretary of State was satisfied that CPI was a fair and genuine method of preserving purchasing power, he could prefer it to RPI because it produced savings or for other rational reasons. The statutory purpose did not require selection of the objectively best index. The majority also held that the use of CPI by the Bank of England was a permissible, although minor, consideration. McCombe J considered that savings could not be the primary reason for selecting the methodology and would have quashed the Orders.
4. Legitimate expectation. The material relied upon did not contain a clear, unambiguous and unqualified promise that RPI would be used indefinitely. The claims therefore failed at threshold. Even if an expectation had existed, it could have been overridden by the public interest. Any consultation obligation would in any event have been satisfied by the extensive representations made before the Orders were made.
5. Equality duty. Assuming the duty in section 76A of the Sex Discrimination Act 1975 applied, it was satisfied. The Treasury’s equality assessment could discharge the Secretary of State’s duty because the Treasury was suitably placed and had a veto over the Up-rating Order. The assessment sufficiently identified the greater adverse effect on women; greater precision would have involved speculation.
6. Parliamentary proceedings. The court expressed the provisional view that the section 76A(4)(a) exemption applied because the Up-rating Order required affirmative approval by both Houses and directly engaged Parliamentary control of public expenditure. Section 149 of the Equality Act 2010 did not apply retrospectively to Orders made before it came into force.

First-instance judicial review proceedings concerning the Social Security Benefits Up-rating Order 2011 and the Pensions Increase (Review) Order 2011. No earlier decision is stated in the judgment.