Unions to fight pensions ruling

TRADE unions have vowed to challenge a High Court ruling that has upheld government changes to the way annual public-sector pension increases are calculated.

A variety of unions and individual workers accused the government of unlawfully attempting to reduce pension costs in the battle to cut the UK’s financial deficit.

The legal challenge followed a decision to use the consumer price index (CPI), instead of the retail price index (RPI), which usually rises faster, to measure price increases influencing pension upgrades.

Yesterday, the High Court in London accepted that the “immediate driving force” behind the change from RPI to CPI – a move expected to save almost £6 billion a year by 2014 – was “the need to secure cuts in the welfare budget”.

Two of the judges, Lord Justice Elias and Mr Justice Sales, ruled that the government was entitled to have regard to cost implications when deciding which index to adopt, provided the selected index could properly and reasonably be said to measure price changes.

But Mr Justice McCombe said he would have quashed the decision because “potential savings to the public purse” were an “irrelevant consideration” that had been allowed to dominate the decision-making process.”

Later, TUC general secretary Brendan Barber said: “This is a disappointing judgment.”

A Treasury spokesman said: “The government welcomes the High Court’s acceptance of its decision to use the Consumer Prices Index for inflation-proofing certain pensions and benefits.”

But unions immediately lined up to announce that they were backing an appeal.

A spokesman for law firm Thompsons Solicitors, which acted for six unions, said: “At a time when public-sector employees are being forced to bear the burden of the financial crisis, the unions will not allow this unfair and, in our view, unlawful breach of the contracts of millions of workers to rest.”