LLG Issue Judicial Review Proceedings Seeking to Quash the Exit Payment Cap Regulations

Publish date: 20/11/2020

Amidst confusion caused by the Exit Payment Cap Regulations clashing with the requirements of the Local Government Pension Scheme, in the absence of any indication from HMT or MHCLG that they will take action to address the procedural and substantive legal flaws, LLG and ALACE have reluctantly taken the decision to issue judicial review proceedings seeking to quash the Exit Payment Cap Regulations.

Given these concerns and in light of LLG's objective of promoting good governance in public bodies, LLG and ALACE sought advice from Nigel Giffin QC, who identified a number of clear procedural flaws in bringing these regulations forward and also substantive issues as to the basis on which the regulations have been made some of which also affect the MHCLG's draft pension regulations on which consultation has not yet concluded.

Quentin Baker, President of LLG said "The reason given for introducing a cap on these payments was stated as being to address excessive payments to high earners or so called 'fat cats'. However, the government's own figures show that the effect of these regulations, if they include pension strain, will impact on a large swathe of long serving local government officers across the income range, by retrospectively reducing a fundamental benefit of the LGPS pension scheme".

Up to 86% of officers facing redundancy over the age of 55 are likely to be adversely affected. Given the increased likelihood of restructure in the sector and further likely job losses because of the impact of COVID on local government finances, the timing seems particularly pernicious.

At a time when local government needs to transform the way it provides services this retrospective removal of a key employment benefit will hamper attempts to reorganise council services.

Ian Miller, Honorary Secretary of ALACE, said "This is not about protecting 'fat cats'. The provisions in the statutory pension scheme are available to all serving local government officers who are made redundant at a late stage in their careers and who will find it more difficult to find work again, due to a perfect storm of their age and the current economic instability. We share the deep concern of LLG and our fellow local government unions about the impact on long-standing arrangements that exist to protect key workers."

It doesn't have to be this way. The Government could choose to remove the pension strain from the calculations completely, or the changes could apply solely for future pension contributions, protecting those rights earned to date. LLG and ALACE would expect the government both to protect employees' legal rights and legitimate expectations and, importantly, to follow proper process.