FIRE BRIGADES UNION (R on the application of) v HIS MAJESTY’S TREASURY

The claimants challenged HM Treasury’s Public Service Pensions (Valuation and Employer Costs Cap) (Amendment) Directions 2021, asserting that the Treasury unlawfully amended the cost control mechanism (CCM) under the Public Service Pensions Act 2013 by including the costs of remedying McCloud/Sargeant (“the McCloud remedy costs”) within the costs measured by the CCM. The principal legal questions were statutory construction of s.12 of the 2013 Act (what “costs” may be included), legitimate expectation, Public Sector Equality Duty (s.149 Equality Act 2010), procedural fairness and consultation, Article 6 ECHR (fair trial) and the Padfield principle.

The court held that the statutory term “costs” in ss.11–12 of the 2013 Act is broad and does not exclude transitional or remedy-related costs; the Treasury therefore had power to direct inclusion of the McCloud remedy costs in the CCM. Claims that an enforceable legitimate expectation had arisen from policy documents failed because there was no clear, unambiguous promise that such costs would be excluded. The PSED/EQIA and consultation challenges failed on the facts because the government had considered equality impacts and stakeholder involvement to a degree sufficient in the context, and any shortfall would not have produced a substantially different outcome. Article 6 and Padfield-based grounds were likewise rejected. The judicial review applications were dismissed.

This is a first-instance judicial review of the Treasury’s 2021 Directions amending the 2014 Directions under the Public Service Pensions Act 2013 to (i) lift the 2019 pause on the cost-cap element of the 2016 valuations and (ii) include an allowance for the expected cost of the McCloud remedy within the CCM. The claimants were the Fire Brigades Union (and two firefighter members) and the British Medical Association, representing interests of members of the Firefighters’ Pension Scheme 2015 and the NHS Pension Scheme respectively. The defendants were HM Treasury and relevant responsible Secretaries of State; interested parties included bodies representing other public sector schemes.

The claimants sought quashing of the 2021 Directions and associated relief. Grounds included: (a) error of statutory construction (that s.12 of the 2013 Act precluded including McCloud remedy costs within the CCM); (b) substantive legitimate expectation that such costs would be excluded; (c) breach of the Public Sector Equality Duty (s.149 Equality Act 2010) and defective equalities analysis; (d) failure to consult or to take into account relevant information (Tameside duty); (e) breach of the Padfield principle; and (f) infringement of Article 6 ECHR by effectively frustrating earlier judicial review proceedings.

The court analysed the text and statutory context of ss.11–12 2013 Act and the accompanying regulatory and guidance materials. It concluded that the statutory terms are wide and permit directions to specify which costs or changes in costs (including those arising from legacy scheme service or a remedy) are to be taken into account. The court emphasised limits to reliance on pre-enactment policy material where statutory language is clear. On legitimate expectation the court applied the established two-stage test (clear and unambiguous promise; then whether departure was a proportionate response) and rejected claims because no unqualified promise to exclude the McCloud remedy costs could be identified and, in any event, decisions about broad public expenditure and scheme design lie in the macro-political field with a wide margin of appreciation. The PSED challenge was dismissed: the decision-maker had adequate, proportionate analysis of differential impacts, considered mitigation and had further actuarial equalities work (GAD) informing the decision; any deficiency would not likely have produced a different outcome. Procedural fairness and consultation claims failed because no statutory or sufficiently specific common-law duty to consult arose and stakeholder involvement had occurred. The Article 6 challenge failed because there was no retrospectively effective interference with a judicial determination that engaged Zielinski principles. The Padfield and discrimination claims likewise failed. The court dismissed the applications and refused relief.

The court dismissed the judicial review applications. It concluded that (i) the statutory wording and context of the Public Service Pensions Act 2013 (in particular ss.11 and 12) allowed the Treasury to specify which costs are taken into account and did not categorically exclude McCloud remedy costs; (ii) no clear, unambiguous promise created a substantive legitimate expectation to exclude those costs, and even if such an expectation had been arguable the decision to include the costs was proportionate in the macro-political context; (iii) procedural and equality-duty challenges failed because the decision-making record and equality assessment were adequate and any procedural shortfall would not probably have changed the outcome; and (iv) Article 6 and Padfield grounds lacked merit. Accordingly the 2021 Directions were lawful and the claims were dismissed.