04/05/93 12:57
NU. 660
POOT
more supplement than that required to compensate him for the inflation of sterling.
8.
We would not agree with the logic of this argument. However you present it, the fact remains that certain pensioners who have suffered exchange rate losses will get paid more than comparable pensioners who have not suffered exchange rate losses. So the supplement mechanism is being used to compensate them for exchange rate losses. Once overseas increases are taken into account, these pensioners are getting more supplement than that required to compensate them
them for inflation of sterling.
It seems to us, therefore, that your proposals do not preserve the principle that supplement is not used to compensate for changes in exchange rate. On the other hand, they do introduce an element of discrimination between the pensioner who has overseas increases and the pensioner who has not. The former is compensated for changes in exchange rate and the latter is not, and that seems difficult to justify logically.
10. It seems to us, therefore, that there is a real doubt as to the legal competence of what you propose, on the basis that you are compensating for changes in exchange rates and that is
is beyond the scope of Section 11. It could be pointed out that while Section 11(4)(b) gives express cover for taking into account factors which increase the value of pensions there is no similar cover for taking into account factors which decrease the value. You could argue that to give true equivalence of supplement it is necessary to take into account the effect of exchange rate changes, but if that is so you should be taking into account the effect of exchange rate changes across the board, and that is something you do not do and do not want to do.
11. Looking at things realistically. no-one would
would have 2 legitimate interest in challenging the vires of regulations on the basis you propose. The Regulations would benefit numerous people and make no-one worse off. The pensioners who are not getting overseas increases and therefore would not benefit should not be able to challenge the Regulations or insist that you legislate also for them.
12. But apart from strictly legal considerations the policy implications of the proposal seem worrying. For the first time, you will be using Section 11 in effect to compensate for exchange rate losses. Is this not likely to fuel demands for extension of this use of the Section in future which ODA and Treasury will find embarrassing? Are the pensioners who (because they do not get overseas increases) are excluded from the benefit of the Regulations not strongly placed to
not strongly placed to mount a political campaign for inclusion, on grounds that they are being discriminated against?
Genn
в бли
GEORGE/C DUKE
9 November 1992
Solicitor's Office Room 2/52
NSAH
Ext 4880
HMC00109.112
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