Pension scheme - Amendment - Civil service pension scheme - Civil service compensation scheme

Public and Commercial Services Union and others v Minister for the Civil Service: QBD (Admin) (Mr Justice McCombe): 10 August 2011

Following the general election of 2010, the new government was of the view that the size of the civil service had to be cut and the cost of severance terms for departing civil servants had to be reduced.

To that end, the defendant minister for the civil service sought to amend the Civil Service Compensation Scheme (CSCS) that would reduce the benefits paid to scheme members on redundancy or early retirement. In December 2010, a new scheme was introduced under section 1 of the Superannuation Act 1972 (the 1972 act) which was less generous than the previous scheme.

The Superannuation Act 2010 (the 2010 act) also received royal assent. It capped the benefits payable under the old CSCS while providing protection for lower-paid staff and, pursuant to section 2(3A), amended section 2(3) of the 1972 act to remove the requirement of trade union consent to changes that reduced compensation payments.

The claimants applied for judicial review of the introduction of the new scheme, a declaration of incompatibility under the Human Rights Act 1998 and/or a quashing order in respect of certain provisions of the 2010 act.

They submitted that: (i) the changes to the CSCS that resulted from the introduction of the new scheme and the 2010 act constituted unlawful interferences by the minister and/or by that act contrary to the rights of civil servants under article 1 of the First Protocol to the European Convention on Human Rights; (ii) the new arrangements unlawfully breached the legitimate expectations of civil servants under domestic law; (iii) the steps taken had breached their rights under article 11 of the convention by the annulment of arrangements made under a collective bargaining agreement with trade unions; and (iv) the new arrangements were ultra vires the statutory powers contained in the 2010 act because they made non-consensual changes to benefits which were not ‘compensation benefits’ within the meaning of that expression as defined by the 2010 act.

The application would be dismissed.

(1) The rights under the CSCS as they stood prior to December 2010 had constituted possessions for the purposes of article 1 of the First Protocol to the convention. There had been a relevant interference with those possessions. However, the reduction in benefits had been reasonable and commensurate and the interference with article 1 of the First Protocol had not gone beyond what was reasonably necessary to achieve the legitimate aim of reducing the national budget deficit (see [37]-[39], [41], [62] of the judgment).

(2) It was not necessary for a decision-maker to identify by any particular label the expectation or understanding that his proposed course of action would traverse. It was sufficient that he recognised that such was the effect of what was proposed and why he considered nonetheless that that course of action was justified (see [73] of the judgment).

In the instant case, justification for overriding any legitimate expectation of the civil servants had been shown. Part of that justification was the clear will of parliament. The assertion of the expectation would have required the court to go behind a government decision in the macro-political/macro-economic sphere. That was not for the court. On the evidence, recognition of the effect of the proposal had taken place on numerous occasions but the minister had considered that the proposals remained justified (see [70]-[71], [73] of the judgment).

(3) In the instant case, the trade unions would remain fully active and recognised in representing their members’ interests in negotiations with the employer. Collective bargaining would continue. The case had come nowhere close to a situation where there had been an infringement of article 11 of the convention (see [77] of the judgment).

(4) Early access to pension on an unreduced basis, as had been available under parts of the old scheme, meant that an individual received more pension on early departure than otherwise. Normal pension was not paid by reason of loss of office or employment but the additional benefit paid on an unreduced basis was.

That early payment was not received because of past contributions and service. Nothing in the 2010 act interfered with or removed accrued pension rights (see [67] of the judgment).

Nigel Giffin QC and Nick Randall (instructed by Thompsons Solicitors) for the claimant; Ingrid Simler QC and Clive Sheldon QC (instructed by the Treasury Solicitor) for the defendant.