British Telecommunications Plc v BT Pension Scheme Trustees Ltd & Anor [2018] EWCA Civ 2694

“(1) 5% increase to excess over guaranteed minimum pension: (a) On 1 April 1993 (or such other date as the Trustees may, with the agreement of the Principal Company, decide) and in each year thereafter the annual amount of pension … shall be increased by the lesser of 5% and the percentage ratio (calculated to the nearest one place of decimals) by which the index figure of the General Index for the month of January (or such other month as the Trustees may, with the agreement of the Principal Company decide) in the year in which the increase takes effect exceeds the index figure for the same month in the immediately preceding year. . . . (3) Changes to the General Index If the General Index ceases to be published, or is so amended as to invalidate it in the view of the Principal Company as a continuous basis for purposes of calculating increases, the Principal Company shall substitute such other index or appropriate basis of comparison as it shall in consultation with the Trustees decide. (4) Meaning of “General Index”

“On each 1 April or such other date as the Trustees with the agreement of the Principal Company decide each pension in payment, except for any GMP which is payable and any pension attributable to additional voluntary contributions, will be increased by the increase in the cost of living during the 12 months up to and including the previous January (or such other month as the Trustees with the agreement of the Principal Company decide) subject to a maximum increase in each year of 5%. The pension may be increased by a higher percentage in respect of that period if the Trustees and the Principal Company agree. The cost of living will be measured by the Government’s published General (All Items) Index of Retail Prices or if this ceases to be published or becomes inappropriate, such other measure as the Principal Company, in consultation with the Trustees, decides.”

“14. A pension scheme, such as the one in issue on this appeal, has several distinctive characteristics which are relevant to the court’s selection of the appropriate interpretative tools. First, it is a formal legal document which has been prepared by skilled and specialist legal draftsmen. Secondly, unlike many commercial contracts, it is not the product of commercial negotiation between parties who may have conflicting interests and who may conclude their agreement under considerable pressure of time, leaving loose ends to be sorted out in future. Thirdly, it is an instrument which is designed to operate in the long term, defining people’s rights long after the economic and other circumstances, which existed at the time when it was signed, may have ceased to exist. Fourthly, the scheme confers important rights on parties, the members of the pension scheme, who were not parties to the instrument and who may have joined the scheme many years after it was initiated. Fifthly, members of a pension scheme may not have easy access to expert legal advice or be able readily to ascertain the circumstances which existed when the scheme was established. 15. Judges have recognised that these characteristics make it appropriate for the court to give weight to textual analysis, by concentrating on the words which the draftsman has chosen to use and by attaching less weight to the background factual matrix than might be appropriate in certain commercial contracts: Spooner v British Telecommunications plc [2000] Pens LR 65, Jonathan Parker J at paras 75-76; BESTrustees v Stuart [2001] Pens LR283, Neuberger J at para 33; Safeway Ltd v Newton [2018] PensLR 2, Lord Briggs, giving the judgment of the Court of Appeal, at paras 21-23. In Safeway, Lord Briggs stated (para 22): “the Deed exists primarily for the benefit of nonparties, that is the employees upon whom pension rights are conferred whether as members or potential members of the Scheme, and upon members of their families (for example in the event of their death). It is therefore a context which is inherently antipathetic to the recognition, by way of departure from plain language, of some common understanding between the principal employer and the trustee, or common dictionary which they may have employed, or even some widespread practice within the pension industry which might illuminate, or give some strained meaning to, the words used.”

“19. . . . These are powerful points, but in my judgment the furthest they lead is to the conclusion that it might, or even would, be better if the 2016 Rule had conferred a power on BT (whether alone or jointly with the Trustee). The fact that an alternative solution may have been a better one falls far short of establishing that the parties to the Rules intended that solution. The breadth of the concept (becomes inappropriate) does not mean that it is impossible, or even unsuitable, for it to be determined by the court in case of disagreement. The court is well used to reaching a decision on matters that involve value judgments in a number of different areas.”

“. . . to the extent it is permissible to look to the 1993 Rule, the fact that it expressly conferred a power on BT to make a decision in relation to the gateway for departing from RPI as the measure of indexation tends to suggest that the absence of an equivalent express power in the 2016 Rule indicated a deliberate change in approach.”

“. . . In my judgment, these potential consequences do not outweigh the construction reached on the basis of the ordinary meaning of the language. In reality, whether the determination is an objective or a subjective one, nothing will happen unless and until BT makes a decision. The essential difference between the two alternatives, therefore, lies in the circumstances in which that decision can be challenged. If the determination is an objective one, then the decision can be challenged if the court itself concludes, on the balance of probabilities, that RPI has become inappropriate. If the determination is a subjective one, then BT remains throughout the decision-maker, and its decision can only be challenged if the court concludes that BT’s decision failed the test of rationality and good faith. The potential for delay exists in either case.”

“The cost of living will be measured by the Government’s published General (All Items) Index of Retail Prices or if this ceases to be published or becomes inappropriate, such other measure as the Principal Company, in consultation with the Trustees, decides.”

“24. . . . We are deciding where Parliament intended that the lines be drawn under the Children Act 1989. The task in all these cases is to decide what Parliament intended. In the Shah case, it was common ground between the parties on all sides that it was for the local education authority to decide the facts. No one mounted an argument such as has been mounted in this case. We do not need to decide how it would have fared in 1983, any more than we need to speculate upon how it might be decided now. In the Puhlhofer case [1986] AC 484 the statutory duty to provide accommodation for the homeless was clearly expressed in terms that the local authority was satisfied that the criteria existed, as indeed is its successor today. Lord Brightman emphasised, at p 518, that the 1977 Act ‘abounds with the formula when, or if the housing authority are satisfied as to this, or that, or have reason to believe this, or that’ in support of his conclusion that ‘Parliament intended the local authority to be the judge of fact’. … 26. . . .The 1989 Act draws a clear and sensible distinction between different kinds of question. The question whether a child is ‘in need’ requires a number of different value judgments. What would be a reasonable standard of health or development for this particular child? How likely is he to achieve it? What services might bring that standard up to a reasonable level? What amounts to a significant impairment of health or development? How likely is that? What services might avoid it? Questions like this are sometimes decided by the courts in the course of care or other proceedings under the Act. Courts are quite used to deciding them upon the evidence for the purpose of deciding what order, if any, to make. But where the issue is not, what order should the court make, but what service should the local authority provide, it is entirely reasonable to assume that Parliament intended such evaluative questions to be determined by the public authority, subject to the control of the courts on the ordinary principles of judicial review. Within the limits of fair process and ‘Wednesbury reasonableness’ there are no clear cut right or wrong answers. 27. But the question whether a person is a ‘child’ is a different kind of question. There is a right or a wrong answer. It may be difficult to determine what that answer is. The decision-makers may have to do their best on the basis of less than perfect or conclusive evidence. But that is true of many questions of fact which regularly come before the courts. That does not prevent them from being questions for the courts rather than for other kinds of decision-makers. 28. The arguments advanced by Mr Béar might have to provide an answer in cases where Parliament has not made its intentions plain. But in this case it appears to me that Parliament has done just that. In section 20(1) a clear distinction is drawn between the question whether there is a ‘child in need within their area’ and the question whether it appears to the local authority that the child requires accommodation for one of the listed reasons. In section 17(10) a clear distinction is drawn between whether the person is a ‘child’ and whether that child is to be ‘taken to be’ in need within the meaning of the Act. ‘Taken to be’ imports an element of judgment, even an element of deeming in the case of a disabled child, which Parliament may well have intended to be left to the local authority rather than the courts.”

“I confirm that in the event of any unforeseen problems, e.g., ambiguities arising in the interpretation of the re-written BTPS Rules, reference will be made to the preexisting Trust Deed and Rules with a view to resolving such problems.”

“3. The Scheme is governed by Rules dated 20 March 2009 as amended from time to time. . . . 5. The power to amend the Rules is contained in Rule 37 (Changing the Rules) of the main edition of the Rules which states that except as prohibited by the Pensions Act 1995 and subject to the British Telecommunications Act 1981, the Principal Company and the Trustees may together by deed change the provisions of any or all of the Rules from time to time in force (and may do so retrospectively) subject to certain exceptions. This Power is a reiteration of the power of amendment contained in the Trust Deed and Rules dated 2 March 1983 which established the Scheme and is capable of amending any provision of the Scheme effective on or after that date. All the amendments included in this deed are permitted under this amendment power. 6. In exercise of [the Scheme’s] amendment power, the Principal Company and the Trustees amend the current Rules as set out in the Operative part below. . . . Operative part . . . 11. The Special Edition of the Section C Rules dated 20 March 2009, as amended, are replaced with the rules set out in Schedule C and, without prejudice to the generality of the foregoing, are amended so that:- 11.1 the words or other text that are shown as crossed out in Schedule C are omitted; and 11.2 the words or other text that are shown as underlined in Schedule C are inserted. . . . Operative part 12. Except as set out in: … . . . the amendments in Schedule A, B and C take effect on and from 6 April 2016. . . . 17. Clean copies of the amended Section A Rules, Section B Rules and Section C Rules are respectively appended to this deed at Schedules D, E and F. . . . Schedule F Section C Rules (Clean) . . . Main Edition of the Rules including provisions applicable to Section C Members . . . . . .”

“34. In my judgment, BT’s interpretation is to be preferred. It is clear, in particular from the terms of clause 6, that the operative part of the deed was concerned with amending the 2009 Rules. This is reinforced by rule 12.2 which causes the amendments in the Schedules to take effect from 6 April 2016. There is no equivalent provision which causes those parts of the 2009 Rules which have not been amended to come into effect on any particular date. Nor is there anything purporting to restate the prior rules. 35. . . . I consider that the reasonable recipient of the amending deed would assume that the drafter's intention was limited to amending the existing Rules and, in particular, that the drafter did not intend to alter in any way those provisions of the existing Rules, including Rule 10.2, that had not been identified in Schedule C as being amended. 36. The second Defendant's argument, however, would mean that the drafter had made a substantive alteration to the terms of Rule 10.2: whereas, on 4 April 2016 it had meant "becomes inappropriate [after the date the relevant prior rules came into force]", on 5 April 2016 it now meant "becomes inappropriate [after 5 April 2016]". . . I consider that the reasonable recipient of the document would consider that the "replacement" of the prior rules by the 2016 Rules was intended to be no more than a convenient way of setting out the now amended rules (in contrast to the more cumbersome mechanic of setting out either the amendments to be made, or the amended provisions, but no more, in a schedule).”

“30. . . (4) Even if construing the rule as being forward-looking had the potential for damaging the interests of members, I do not agree that this would provide a sufficient basis for construing it otherwise. Mr Spink relied in this respect on the possibility that events had occurred which, unbeknown to BT or the Trustee caused RPI to have already become inappropriate at the time that the 2002 Rule came into effect. In my judgment, if that had occurred (and no-one suggests it in fact did occur) then it would not preclude a switch from RPI being made. That is because a reasonable recipient of the Rules would make the assumption that neither BT nor the Trustee was aware, at the time the Rules came into effect, that RPI had already become inappropriate. Absent that assumption, the rule could not have achieved its purpose, of ensuring that members' pensions were increased by reference to an appropriate index. Accordingly, "becomes" inappropriate is to be construed as encompassing matters, whether or not they occurred before 1 May 2002, provided they were unknown to BT and the Trustee as at that date.”

“[I]t may be sufficient, to demonstrate that RPI had "become" inappropriate, that there had been a wholesale loss of confidence in it as an accurate measure of inflation and its widespread discontinuance” but concluded that the point was likely to be theoretical, “since it is unlikely that there would be such consequences without RPI also being de-designated as a National Statistic, which the second Defendant accepts is the sort of indirect change which could cause the gateway to be passed through.”

“102. First, in providing a comprehensive picture of how price indices are compiled, the various purposes for which they are produced, and of the advantages and disadvantages of RPI in that context. An understanding of these issues is critical, since the ultimate question to be decided is whether – having regard to the purpose for which reference to an inflation index is necessary under the 2016 Rule and the package of merits/disadvantages of RPI – RPI has become inappropriate for that purpose. 103. Second, in identifying the materials relied on by either side as relevant to the ultimate issue, including materials emanating from statutory bodies such as the UKSA and the Office of National Statistics ("ONS") and papers from other respected commentators in the field. 104. In both respects, there was much common ground between the experts, particularly relating to the history of RPI and CPI, and the differences between them.”

“The clothing change – 2010 117. In 2010, as part of the numerous routine changes made to both CPI and RPI from year to year, the ONS implemented what were intended to be improvements in the collection and use of clothing prices. As explained by Mr Johnson (and agreed by Mr Briscoe), in collecting and comparing prices, a definition is needed for what counts as the same good one month to the next. If a price collector cannot find the same item in a shop this month as they found last month, then a new item is selected and the new index starts. Because of frequent changes in styles and fashions a large fraction of clothing items were classed as not comparable between one month and the next. The change implemented in 2010 consisted of guidance so as to allow more direct month-to-month comparisons to be made. In other words more items of clothing were henceforth to be considered comparable to one another.”

“. . . Between 2001 and 2009 clothing and footwear prices in the CPI fell by 5.3% on average, and by 2.5% on average in the RPI. In 2011 they rose by 2.3% in the CPI and by 11.5% in the RPI. More importantly, for present purposes, the clothing change resulted in an increase in the formula effect of between 0.4% and 0.5%. Since 2010 the formula effect has resulted in RPI being on average between 0.9% and 1% higher than CPI.”

“The clothing change undoubtedly had a significant impact on the formula effect, and is an important factor to take into account when considering the cumulative effect of the seven matters relied on by BT. In itself, however, I do not regard it as having caused RPI to become inappropriate, for two main reasons. The first relates to the broader points I make below in connection with the cumulative effect of the matters relied on, namely that the formula effect, and the 'upward bias' had been known factors in RPI in 2002. RPI was not inappropriate for the purposes of the 2016 Rule before the clothing change, and the only impact of the clothing change was to increase, in percentage terms, the formula effect. This is an instance where, in my judgment, it is relevant to consider the impact on the protection for pensioners if RPI was replaced by any other index. In particular, given that any other index would remove not only that part of the upward bias introduced by the clothing change, but the whole of the upward bias (already running at an average of 0.5%) which had always been present, that would deprive the pensioners of an important element of protection which opting for the index with in-built upward bias gave them. The second reason is that RPI remained a National Statistic, and continued to have widespread support (as shown by the responses to the consultation in 2012) for some time after 2010.” responses to the consultation in 2012) for some time after 2010.” 60. The Judge considered the “freeze” of RPI in isolation at [194] – [198] as follows: “The 'freeze' of RPI 194. The initial 'freeze' in RPI occurred with the announcement of the National Statistician in January 2013. It was far from a complete freeze, however, since it envisaged that changes would continue to be made to RPI relating "…to issues such as the annual update of the basket and weights, improvements to data validation and quality assurance etc." What was not to change was "the basic formulation of the RPI", which was accepted as currently defined. This meant, in particular, that the RPI would continue to be based, to the same extent as it currently was, on the Carli formula. 195. The 'freeze' was reiterated in the statement from Mr Pullinger, the National Statistician, in March 2016. This confirmed that routine changes would continue to be made, including so as to update the basket and weights, computer systems upgrades and improvements to data validation and quality assurance methods. These were described as examples of changes that would continue to be made as "required to continue production of a consistent, fit for purpose RPI". Whereas in 2013 it had been stated that there would be no change to the basic formulation of RPI, it was now stated that "methodological changes" to RPI would be made if those changes were necessary in order to make improvements to CPI and CPIH. 196. In my judgment, the imposition of the freeze in 2013 did not cause RPI to become inappropriate for the purposes of calculating pension increases under the Scheme. As was made clear in the March 2016 announcement, the freeze did not prevent RPI from remaining "fit for purpose". That announcement also recognised that RPI continued to be widely used for legacy purposes. The legacy uses of RPI included its widespread use in private pension schemes – as the responses to the UKSA's 2012 consultation made clear (in particular, those from the RSS and the Pensions Management Institute). These legacy purposes were those for which RPI's fitness was to be maintained. As Mr Johnson accepts, the imposition of the freeze has not so far caused any change. His concerns as to possible future uncertainty are met, in my judgment, by the fact that the UKSA is committed to ensuring that RPI remains fit for purpose, as well as by the fact that, if by reason of its inability to change, RPI in the future becomes inappropriate, then any decision made now does not inhibit a different conclusion being reached then. 197. The UKSA's and ONS's reasons for the imposition of the freeze do not detract from this conclusion. The ONS's paper of January 2013 notes – as the negative qualities of RPI – that it is its use of Carli which is the primary source of the formula effect, and that Carli does not meet current international standards. These were matters that were known to be attributes of RPI in 2002, and thus not matters which can be said to have caused RPI to become inappropriate since 2002. In any event, the essential conclusion of the ONS was to reject the proposals for change, in large part because "…Carli's properties are well understood and there is significant value to users in continuity of the RPI's long time series." This was expanded upon (at p.11 of the ONS paper), as follows: "…the respondents' views, that the properties of the Carli are known and have been used in the construction of the RPI since its creation are also pertinent, especially in the context of the Code of Practice for Official Statistics." At paragraph 28, the "weight of users' requirements and the desire for continuity" were cited as reasons militating against change. While the ONS (1) stated that it would not advocate the use of Carli in the construction of a price increase index if it were starting from scratch, (2) recognised there were counterbalancing arguments for change, and (3) noted that "[t]he RPI's continued use should be reassessed by users, and other indices that are closer to international best standards should be considered as alternatives", I do not consider that the views of the ONS, derived from the paper as a whole, constituted a conclusion that it was inappropriate for RPI to continue to be used in the legacy contexts where it was already in use. 198. The reiteration of the 'freeze' in 2016 cannot – if the original imposition had not rendered RPI inappropriate as from 2013 – render it inappropriate from 2016. There was no substantive worsening of the 'freeze'. If anything, there was a minor relaxation to the extent that it made clear that methodological changes would continue to be made, if necessary so as to improve CPI/CPIH.”

“219. Having regard to the totality of the matters relied on by BT and the second Defendant [Ms Bruce-Watt] as demonstrating, respectively, the disadvantages and merits of RPI, notwithstanding the powerful statements from the UKSA, ONS and others to the effect that RPI is flawed and that it ought not to be used as a measure of inflation, I have reached the conclusion for the above reasons that RPI has not at this time "become inappropriate" for the purposes of uprating pensions, within the meaning of that phrase in the 2016 Rule so as to meet the gateway threshold.”

“…the task for this court in looking to see whether the judge was ‘wrong’ so that the appeal should be allowed is to ask whether the judge had legitimate and proper grounds for reaching the decision [s]he did, rather than simply for this court to approach the matter completely afresh and make up its own mind without regard to what the judge decided.”

“29…Where an appeal is to proceed, like this one, by way of a review of the judgment below rather than a re-hearing, it will often be appropriate for this court to give weight to the assessment of the facts made by the judge below, even where that assessment has been made on the basis of written evidence which is also available to this court. The weight to be given to the judge’s own assessment will vary depending on the circumstances of each particular case, the nature of the finding or factual assessment which has been made and the nature and range of evidential materials bearing upon it. Often a judge will make a factual assessment by taking into account expressly or implicitly a range of written evidence and making an overall evaluation of what it shows. Even if this court might disagree if it approached the matter afresh for itself on a re-hearing, it does not follow that the judge lacked legitimate and proper grounds for making her own assessment and hence it does not follow that it can be said that her decision was ‘wrong’.”

“Some conclusions of fact are, however, not conclusions of primary fact of the kind to which I have just referred. They involve an assessment of a number of different factors which have to be weighed against each other. This is sometimes called an evaluation of the facts and is often a matter of degree upon which different judges can legitimately differ. Such cases may be closely analogous to the exercise of a discretion and, in my opinion, appellate courts should approach them in a similar way.”

“207. These are flaws which pre-date the first introduction of the relevant wording, in the 2002 Rules. As noted above, in the HM Treasury document published in December 2003, the formula effect was identified as having contributed approximately 0.5% to the gap between CPI and RPIX since 1997. Similarly, David Fenwick's 1999 paper for the ONS referred to the formula effect as a known quantity, commented on the fact that a formula based on a geometric mean would always produce a lower number than that based on an arithmetic mean, noted that the formula effect was particularly pronounced for clothing, and noted that the introduction of broader item descriptions in 1996 contributed to the formula effect. Mr Johnson, in cross-examination, acknowledged that the criticisms which he makes of RPI, including that it 'overstated' inflation by a percentage point a year could have been made equally in 2002, albeit that the extent of the 'overstatement' was increased as a result of the clothing changes in 2010. He also acknowledged that the fact that RPI failed the axiomatic test had been known for a long time, and certainly in 2002 (Q: If you were doing the research from scratch in 2002, let us say, you, like Professor Diewert, would have identified these axioms and would have noted that going back for a long time before then academic statisticians had identified the problem with the arithmetic mean and the failure of the time reversibility: it was well-known? A: Yes, that has been known for a long period.") 208. Two consequences follow, in my judgment, from this. First, the starting point for considering whether RPI has become inappropriate within the meaning of the 2016 Rule is that RPI must be taken to have been appropriate, for the purposes of calculating increases in pensions payable under the Scheme, notwithstanding the fact that RPI is based on a formula that failed parts of the axiomatic tests and that it produced a headline number for inflation that was 0.5% higher than CPI. Second, the drafter of the 2016 Rule has opted, in the knowledge that CPI produced a lower rate of inflation, to identify as the default index for increasing pension payments, an index which (by reason of the formula on which it is based) produced a higher rate of inflation than an index based on a different formula, in particular CPI. Members therefore had the protection of an index known to have built into it the same upward bias which is the main focus of the current objection to RPI.”

“. . . Third, users have sought clarification on the future of the retail prices Index (RPI). Put simply, I believe that the RPI is not a good measure of inflation and does not realistically have the potential to become one. I strongly discourage the use of RPI as a measure of inflation as there are far superior alternatives. Nonetheless, RPI is still used for a number of legacy purposes and its production is mandated by legislation. My intention is that from the start of 2017, ONS would publish the minimum of RPI-related data necessary to ensure the critical and essential needs of existing users are met. . . . The RPI would continue to be maintained through routine changes. This covers all changes required to continue production of a consistent, fit for purpose RPI (for example the annual update of the basket and weights, computer systems upgrades and improvements to data validation and quality assurance methods). With due consideration to the requirements of the Statistics and Registration Services Act 2007, ONS would only consider making methodological changes to the RPI if to not do so would inhibit the improvement of CPIH and the Consumer Prices Index.”

“We will continue to produce RPI for legacy uses. However, the RPI is a flawed measure of inflation with serious shortcomings and we do not recommend its use.”

“189. On 15 November 2017, the Executive Director of the RSS wrote to the Chancellor of the Exchequer expressing the RSS members' increasing concern at the continuing use of two different inflation indices for what is essentially the same purpose i.e. compensation for changing prices. The letter complained in particular that all too often government formulae which affected people's incomes (such as pensions and benefit increases) used CPI, which normally provided a lower estimate of inflation, whereas many key formulae which affected people's outgoings (such as student loan repayments and rail fares) were related to RPI, which generally gives a higher estimate. This was described as not only unfair but unjustifiable. In particular it was said that it was indefensible that millions of people's outgoings are still being linked to RPI nearly 5 years after its technical shortcomings led to it losing National Statistics status. Particularly as it seemed unlikely RPI would ever regain that status after the ONS had made it clear it had no intention of "in effect, repairing this index". The last paragraph read as follows: "accordingly we urge you to announce, in your budget, a timetable for ending long-standing but increasingly untenable uses of the retail prices index so that, in future, people's incomings and outgoings are both increased in ways which – unlike RPI – command widespread confidence and are, statistically, fit for purpose." 190. I record that the second Defendant objected to the late introduction of this document into evidence, the timing of which precluded Mr Briscoe from undertaking any research into the view of the RSS, and in particular whether the RSS had changed the views it had previously expressed in September 2015 when responding to the UKSA's consultation paper dated June 2015. In my judgment, and paying due regard to the Second Defendant's and Mr Briscoe's lack of opportunity to carry out investigations into the RSS's current views, this letter does not demonstrate that the RSS has changed its views as to the appropriateness of RPI, per se, as expressed in September 2015. I note, in particular, that the thrust of this document is an objection to the mismatch between RPI being used for the purposes of increasing millions of people's outgoings, but CPI was used for the purposes of increasing their income. Beyond this, I consider that the letter demonstrates no more than an acceptance by the RSS that its recommendations made in responding to the UKSA's 2015 consultation (including its recommendation that RPI ought not to be frozen) had not been taken on board.”

“That the Freedome of Speech and Debates or Proceedings in Parlyament ought not to be impeached or questioned in any Court or Place out of Parlyament.”

“We agree that parliamentary privilege generally will not apply to statements made outside of Parliament even if those statements simply repeat what has been said inside Parliament. But we do not agree with the suggestion in your letter that “parliamentary privilege does not apply to statements made within Parliament and then affirmed outside it”

“RESPONSE to the inquiry into “The Use of the Retail Prices Index (RPI) currently conducted by the House of Lords Economic Affairs Committee. Issued: 5 September 2018.”

“45. The same point can, however, be made where a Member of 92. ‘It is common ground in this appeal that statements made outside Parliament are not protected by absolute privilege even if they simply repeat what was said therein. That proposition, established by R v Abingdon (1749) 1 Esp 226 and R v Creevey (1813) 1 M & S 273 was more recently applied by the High Court of Ontario in Stopforth v Goyer (1978) 87 DLR (3d) 373 and the Supreme Court of the United States in Hutchinson v Proxmire (1979) 143 US 111, 126 et seq. In such a case there will inevitably be an inquiry at the trial into the honesty of what the defendant had said, and if the defendant’s extra-parliamentary statement is found to have been untrue or dishonest the same conclusion would ordinarily, although not always, apply to the parliamentary statement also. But such an inquiry and such a conclusion are not precluded by article 9, because the plaintiff is founding his claim on the extra-parliamentary publication and not the parliamentary publication.’ 46. Lord Bingham went on to hold that it made no difference that, in that case, the repetition of what had been said in Parliament was merely by reference. At para 17 Lord Bingham tested this conclusion for compliance with the principle underlying the absolute privilege accorded to parliamentary statements, namely the right of Members of Parliament to speak their minds in parliament without any risk of incurring liability as a result. He concluded that liability for repeating outside Parliament what had been said within did not conflict with this principle. 47. The jurisprudence to which I have referred is sparse and does not bear directly on the facts of these appeals. It supports the proposition, however, that the principal matter to which article 9 is directed is freedom of speech and debate in the Houses of Parliament and in parliamentary committees. This is where the core or essential business of Parliament takes place. In considering whether actions outside the Houses and committees fall within parliamentary proceedings because of their connection to them, it is necessary to consider the nature of that connection and whether, if such actions do not enjoy privilege, this is likely to impact adversely on the core or essential business of Parliament.”

“. . . There is no reason why the courts should not receive evidence of the proceedings of Parliament when they are simply relevant historical facts or events: no “questioning” arises in such a case . . .”

“Royal Statistical Society – written evidence (RPI00001) : “1. This note provides evidence from the Royal Statistical Society (RSS) to the inquiry into ‘The Use of the Retail Prices Index’ (RPI) currently being conducted by the House of Lords Economic Affairs Committee. 2. The RSS is a learned society and professional body for statisticians and data analysts. We have around 9,000 members worldwide – but the majority of our membership is UK-based. Key points 3. The RSS welcomes this important and timely inquiry by the Economic Affairs committee. We would particularly like to make the four key points, which follow below: a. in the RSS’s view, no one consumer price index can meet all user needs. In particular, different indices are needed for (i) macroeconomic purposes and (ii) measuring the impact of inflation on households b. the Office for National Statistics (ONS) is currently developing the new Household Costs Indices (HCIs). Subject to their satisfactory development, we believe the HCIs could ultimately replace, or become an alternative to, the RPI c. however, the RPI is likely to remain in widespread use for many decades, due to the extent to which it is embedded in countless contracts. Accordingly, we believe the index should be managed so that it is the best measure possible; changes should not be restricted to routine updating d. the RSS recently convened and hosted an important and wellattended meeting on ‘The Future of the RPI’, which involved many distinguished speakers. A wide range of views were expressed but there was broad agreement that the current situation is unsatisfactory, change is needed and clarity about the RPI’s future is essential.”

“The RPI would continue to be maintained through routine changes. This covers all changes required to continue production of a consistent, fit for purpose RPI.”

“In the end, I find that little assistance is to be gained from the respective experts' views on the ultimate question for two reasons. First, because their views on the "appropriateness" or otherwise of RPI, generally or in respect of uprating pensions generally, is of only limited relevance to the question of its appropriateness specifically for the purpose of calculating pensions increases under the Scheme. Second, because the question whether RPI has "become" inappropriate – again with specific reference to the meaning of that phrase in the 2016 Rule – is not one in respect of which either expert can claim any particular expertise.”

“205. The question I have to determine, however, is not whether RPI is inappropriate, generally speaking, as a measure of inflation, but whether it is inappropriate specifically for the purpose of uprating pensions within the meaning of the 2016 Rule. Similar to the analysis undertaken by the ONS when determining to retain the Carli formula in RPI in January 2013, while it may well be true that it would be inappropriate to use RPI if starting from scratch, for example in a pension scheme created today, it does not necessarily follow that RPI has "become inappropriate" for the purposes of uprating pensions in the Scheme. In this context, I consider that two factors (developed in the following paragraphs) are particularly important: first, the flaws which underlie all of the matters relied on by BT were present, and known to be present, in RPI in 2002, albeit that the formula effect has worsened, and the perception of those flaws has hardened, in the intervening years; and second, the purpose of the 2016 Rule is to provide protection for pensioners against increases in the real cost of living to which they are likely to be subjected. . . . . 209. While I acknowledge (as noted above) the limitations in an appeal in the abstract to the purpose of an uprating provision being to protect pensioners nevertheless in considering the concept of "appropriateness" within the rule it is in my judgment legitimate to have regard to that purpose. In particular, it would be an important factor against concluding that RPI has become inappropriate if jettisoning RPI would introduce a material risk that increases in pensions would not keep rate with increases in the cost of living likely to be experienced by the relevant pensioners. This is particularly so taking into account that the pension is likely to constitute the principal, if not the sole, source of income for the relevant pensioners. 210. On the basis of the evidence I have summarised above, I consider that there are reasonable grounds to conclude that jettisoning RPI would lead to such a material risk for the pensioners under the Scheme. 211. First, as is common ground, inflation is a latent variable, and any index can do no more than provide an estimate of the increase in cost of living as experienced by any given household, or even type of household. Thus, it is impossible to say that RPI is wrong and CPI is right, or even that RPI is more wrong (or right) than CPI, as an estimate of the likely increase in cost of living for pensioners under the Scheme. 212. Mr Johnson, while accepting that this is so, says nevertheless that "if you know there is a problem in the construction of an index in the way that the Carli creates biases, then whilst you might not know the right answer, you do know that you are trying to get there in the wrong way." This is, however, not a complete answer to the latent variable point, since it is common ground that there is no established correlation between the fact that Carli fails certain of the axioms, and the extent of the formula effect. 213. Second, there is convincing evidence (see, for example, the papers cited above from Dr Altmann, the Rowntree Foundation, Donald Hirsch and the RSS) to support Mr Briscoe's conclusion that there are certain respects in which CPI might be said to underestimate inflation (albeit probably to a lesser extent) as well as respects in which RPI might be said to overestimate it, and that in some instances pensioners are likely to be particularly affected. While the most significant cause of the difference between RPI and CPI is the formula effect, there are other material causes, including property costs, which accounted on average for 0.5% of the increase. Although another factor – termed "weights" in the Office of Budgetary Responsibility's revised assumptions for the long-run wedge between CPI and RPI – accounts for a negative difference of -0.4%, that does not detract from the point that there are reasons why RPI is greater than CPI which are not in themselves sufficient to render RPI inappropriate (and in any event have not caused RPI to become inappropriate since 2002). As I have noted in connection with the clothing change, a consequence of replacing RPI by an index based on Jevons would wholly remove the upward bias, a substantial part of which was inherent in RPI on its adoption as the default index in 2002.”

“233. . . In my judgment, given the routine nature of the clothing change, and the fact that its impact was limited to contributing to a widening of the already existing formula effect, it does not qualify as such an amendment. More importantly, I do not consider that a rational decision-maker in the position of BT could determine otherwise, because to do so would constitute a mis-interpretation of the rule. 234. Finally, the widening of the formula effect occurred in 2010. Even if that had the effect of precluding a valid comparison as between 2009 and 2010, then for the reasons given in paragraph 228 above, the formula effect has remained constant ever since so that the clothing change, in 2010, cannot have constituted an amendment that rendered RPI invalid for the purposes of comparison as between any of the consecutive years since 2011.”

“keep[ing] up to date. . .. being a continuous measure absolutely does not mean that nothing changes. At least the basket of goods and the weight applied need to keep pace with actual consumer behaviours”, and “achieve an appropriate balance between continuous improvement and ensuring continuity of measuring the same thing. In general, when better data becomes available or it becomes evident that a different measure of prices is a better reflection of actual prices then continuity is best served by change. . .”