British Telecommunications Plc, R (on the application of) v Her Majesty's Treasury

Government may choose the statutory mechanism for protecting public service pension values, provided it acts rationally, takes relevant matters into account and remains within its powers. A general power to establish or amend a public service pension scheme cannot be used to circumvent a specific statutory regime governing inflation-linked increases to official pensions. A public authority may also reject a cheaper or more targeted option where implementation would be complex, insufficiently transparent or inconsistent with the policy objective. In assessing an alleged equality complaint, the court must identify whether the authority itself created the relevant difference in treatment. Where the difference arose from the claimant’s own pension rules, the authority’s uniform application of the statutory scheme was not irrational or discriminatory.

BT sought judicial review of HMT’s decision to extend the interim arrangement providing full indexation of guaranteed minimum pensions for specified public service pensioners reaching state pension age between December 2018 and April 2021. BT’s Section B pension rules mirrored increases under the public service pension legislation, producing substantial additional liabilities for BT. BT argued that HMT should have adopted alternatives, including conversion, a case-by-case approach, a statutory override or amendment of the Principal Civil Service Pension Scheme.

BT also challenged the Chancellor’s decision of 1 November 2018 to maintain the original decision after an inaccurate summary of legal advice had been corrected. The principal issues were whether HMT had acted irrationally or discriminatorily, whether the proposed PCSPS amendment was legally available, and whether it would interfere with scheme members’ property rights.

1. Outcome. Permission was refused on Grounds 2, 3 and 4. Permission was granted on Grounds 1 and 1A, but the claim was dismissed.
2. Conversion. HMT had consulted on the appropriate method for indexing and equalising public service pensions. It was entitled to reject immediate conversion and investigate it further because of unresolved methodological, data, legislative and litigation issues. The relevant timeframe fell within the Government’s wide margin of judgment. The challenge was not arguable under the Tameside principle or irrationality in its strict sense.
3. Case-by-case option. HMT was entitled to reject this option because it would require complex systems and continuing calculations, would not provide a sufficiently transparent mechanism, and would not fully honour the commitment to index public service pensions. A detailed cost-benefit analysis was not a necessary precondition to that conclusion.
4. Discrimination. The differential impact on BT arose from BT’s own Rule 10.2, which caused its scheme to mirror public service pension increases. HMT treated all schemes subject to the Increases Legislation alike. The decision was therefore not irrational or discriminatory.
5. PCSPS workaround. The court held that BT had presented amendment of the PCSPS as part of a package requiring a statutory override, rather than as a freestanding fallback option. In any event, HMT had independent policy reasons for refusing to prefer BT’s financial interests over the pension interests of Section B members.
6. Statutory powers. The Pensions (Increase) Act 1971 and sections 59 and 59A of the Social Security Pensions Act 1975 formed a detailed and self-contained regime for inflation-linked increases to official pensions. The general powers in sections 1 and 2 of the Superannuation Act 1972 could not be used to carry out or supplant that regime. Nor could those powers lawfully be used for the collateral purpose of saving BT money.
7. Property rights. If necessary, the court would have held that Section B members’ rights to indexation under the Increases Legislation engaged Article 1 of Protocol No. 1. The scheme rules, longstanding administrative practice and the nature of the accrued entitlement supported that conclusion. The point was not necessary to the result because the claim failed on other grounds.
8. 1 November decision. The Chancellor was asked only whether correction of the inaccurate legal summary affected his earlier approval. He was not required to reconsider the whole decision or arguments developed during litigation. The narrow reconsideration was lawful, and the statutory harmless-error provision applied.

First-instance judicial review in the Administrative Court. The court granted permission on Grounds 1 and 1A but refused permission on Grounds 2, 3 and 4, and dismissed the claim.