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

The statutory power to operate a public-service pension cost-control mechanism permits Treasury directions to take account of broad categories of scheme costs, including costs arising from transitional protection remedies, provided they affect the measured cost of the scheme. Earlier policy documents and guidance cannot narrow clear statutory language or create a legitimate expectation without a clear, unambiguous and unqualified promise. There is no general common-law duty to consult. A duty arises only in recognised circumstances, such as a statutory requirement, a promise or established practice, or exceptional conspicuous unfairness. The public sector equality duty is a duty of process. It requires informed and rigorous consideration, but not a precise mathematical assessment of every impact. Indirect discrimination requires a causal link between the challenged provision, criterion or practice and the disadvantage suffered.

The Fire Brigades Union and the British Medical Association challenged Treasury directions made under the Public Service Pensions Act 2013. The directions lifted the pause on the cost-control element of the 2016 pension valuations and included the costs of the McCloud remedy in the cost-control mechanism.

The claimants argued that the directions misconstrued the Act, frustrated legitimate expectations, unlawfully interfered with pending judicial review proceedings, caused indirect discrimination, were made without adequate consultation, breached the public sector equality duty and failed to satisfy the duty of reasonable inquiry. The central issues were whether the remedy costs could lawfully be included in the mechanism and whether the decision-making process was unlawful.

1. Construction. Sections 11 and 12 of the Public Service Pensions Act 2013 confer a broad discretion as to the costs and changes in costs that may be taken into account. The ordinary meaning of costs is apt to include the financial resources required to provide pension benefits. The Act does not exclude transitional protection costs or McCloud remedy costs. Costs of connected legacy schemes may also be taken into account where they produce changes in the cost of the new scheme.
2. Legitimate expectation. The policy documents and guidance did not define member costs or promise that costs in the nature of the McCloud remedy costs would be excluded. Nor did provisional indications of floor breaches amount to a categorical assurance that benefits would increase or contributions decrease. The claims therefore failed at the requirement for a clear, unambiguous and unqualified promise. The macro-economic character and very large class affected would also have made departure easier to justify.
3. Padfield and Article 6. Including the remedy costs did not frustrate the statutory purpose of keeping pension costs sustainable and sharing risks between members and taxpayers. The 2021 Directions were not retrospective legislation designed to determine pending proceedings. The earlier valuation had not been invalidated, and no completed valuation under the relevant directions had triggered the statutory benefit-adjustment procedure.
4. Discrimination. The direct effect of including remedy costs was to negate floor breaches affecting all members. The alleged age and other disparities arose from the unchallenged design and cut-off date of the McCloud remedy, not causally from the challenged practice. In any event, the decision pursued legitimate affordability and sustainability aims and was proportionate.
5. Consultation, equality and inquiry. No statutory or legitimate expectation-based duty to consult arose, and the circumstances did not involve conspicuous unfairness. The equality assessment identified the differential effects, considered mitigation and was sufficient as a process. The decision-maker had considered alternative options and possessed sufficient information. Both claims were dismissed.