Unions Lose High Court Battle Over Pensions

A powerful group of public sector unions have lost their high court challenge to the Government's pensions reforms.

Unions argued that Chancellor George Osborne's decision to use the Consumer Price Index (CPI (Berlin: CEJ.BE - news) ) rate of inflation to calculate annual increases in public sector pensions, instead of the higher Retail Price Index (RPI), was unlawful.

But the accusation was rejected by Lord Justice Elias, sitting with Mr Justice McCombe and Mr Justice Sales - just two days after tens of thousands of public sector workers took part in a nationwide strike over pensions reforms.

The unions said they would appeal the High Court ruling.

Fire Brigades' Union (FBU) general secretary Matt Wrack told Sky News the judgement concludes the Government's measure is nothing to do with pensions.

"We were told this is a serious debate about life expectancy and all those issues, but what we're finding out is that this attack on public sector pensions ... is all about putting more money in George Osborne's coffers to pay for the mess the bankers have made of our economy," he said.

The panel of three High Court judges found unanimously against the unions on three of their four points. They ruled by a majority of two-to-one against them on the fourth.

The unions had tried to argue that the switch to CPI was a deficit reduction measure, primarily intended to save the Government money.

The Treasury's own figures estimate the change will save £6bn by 2014.

The judges agreed that the swap was motivated by the need to reduce the deficit, stating: "There can be no doubt that the immediate driving force behind the change from RPI to CPI was the need to secure cuts in the welfare budget."

But they found that CPI was a "proper measure of inflation" that the government was entitled to adopt.

The unions said they would seek an expedited appeal, which could see the case back in the court of appeal by mid-February.

Speaking after the judges' decision, the largest teachers' union, NASUWT general secretary Chris Keates, said they would "seek to exhaust all possible legal remedies".

"Hardworking serving teachers and their retired colleagues who have given a lifetime of service to children and young people were looking for justice in the face of a government decision which overnight slashed the value of their pensions," he said.

"They will clearly be disappointed that the High Court has not found in their favour.

"They can however take heart from the fact that the judges were unable to reach a unanimous decision on all of the key issues put before the court. One of the judges did believe that the government had acted unlawfully."

The switch to CPI, which came into effect in April, was announced by Mr Osborne in the June 2010 emergency budget.

Unions say the move will reduce the pensions of retired members by up to 15%.