Judicial review: Changes to the ‘cost cap mechanism’ in public service pension schemes not unlawful

10 Mar 2023

The Administrative Court today handed down judgment in R (Fire Brigades Union) v HM Treasury & SSHD (CO/4288/2021) and R (The British Medical Association) v HM Treasury & SS Health and Social Care (CO/4351/2021).

The two unions, the FBU and the BMA, brought judicial review challenges, which were heard together, to the decision of HM Treasury to make statutory directions contained in the Public Service Pensions (Valuation and Employer Costs Cap) (Amendment) Directions 2021. The challenges concerned the ‘Costs Cap Mechanism’ or ‘CCM’, which is a mechanism intended to control costs and changes in costs of public pension schemes and operates by modifying members’ benefits (and/or contributions to such schemes) should the measured cost of pension provision deviate from a set target. The CCM was modified by the 2021 Directions to reflect within the CCM the costs of what has been called ‘the McCloud Remedy’, which follows the decision in Lord Chancellor v McCloud & Ors. The costs of the McCloud Remedy are estimated to be £19 billion across the public service.

The Claimants brought a total of 8 grounds of challenge, namely: (1) Article 6 ECHR, (2) legitimate expectation, (3) Padfield, (4) indirect age, race and sex discrimination, (5) error of statutory interpretation, (6) failure to consult, (7) breach of PSED and (8) Tameside.

Mr Justice Choudhury dismissed the application for judicial review on all grounds. The unions are seeking permission to appeal.

Imogen Proud acted for HM Treasury, the Secretary of State for the Home Department and the Secretary of State for Health and Social Care, as part of a multi-chambers counsel team.

The judgment is available here.