Unions to challenge pensions ruling
Trade unions have vowed to challenge a 2-1 majority 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 normally faster-rising retail price index (RPI), to measure price increases influencing pension upgrades.
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 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.
They agreed that, in any event, the Government chose CPI because it considered that it provided a better measure of price inflation than RPI.
But the third panel member, 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.
A spokesman for law firm Thompsons Solicitors, which acted for six unions, said: "While the High Court's split ruling is disappointing, the unions are pleased that their main argument, that the Chancellor was motivated by deficit reduction when he made the switch, was accepted.
"It is encouraging that one judge agreed that this was illegal. We have instructions to lodge an appeal urgently on behalf of the unions."
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."