The coalition gears up for a fight on public sector pensions

Danny Alexander defends plans to make workers work longer and pay more.

Unbowed by the threat of mass strike action, the government is continuing its drive to reform public sector pensions. Danny Alexander has been on the airwaves this morning defending plans to raise the retirement age from 60 to 66 in 2020 and to increase workers' contributions by an average of 3.2 per cent. In an article for the Telegraph, the Chief Secretary to the Treasury writes: "It is unjustifiable that the taxpayer should work longer and pay more tax so that public sector workers can retire earlier and get more than them."

However, in an attempt to sweeten the pill, Alexander has announced that those earning less than £15,000 a year will not face any contribution increases while those earning under £18,000 will have the increase capped at 1.5 per cent. In addition, the increase will be phased in over three years from next April, taking into account the two-year public sector pay freeze.

But the risk remains that many average earners, already facing the steepest fall in living standards since the 1920s, will quit their pensions rather than pay more. As Unison general secretary Dave Prentis remarked: "[T]hose on above £18,000 a year who will see their contributions increase by much more than 50 per cent. These days £18,000 is not a huge amount and this will affect lots of public sector workers, including nurses and social workers." Yet given that the cost to the taxpayer is due to rise from £4bn a year at present to £9bn a year by 2015, ministers believe that they are on the right side of the argument.

In the meantime, the debate over whether the government should tighten existing anti-strike laws continues. Unlike Boris Johnson, who has called for the introduction of a 50 per cent threshold for strikes, ministers currently believe that there is no need to change the law, although in his Telegraph article Alexander pointedly notes that: "Only one in five members of the Public and Commercial Services (PCS) union voted on Wednesday for strike action - the vast majority realise that such a step is unjustifiable."

But it's another Lib Dem, employment minister Ed Davey, who has offered the clearest argument yet against new anti-union legislation. In a speech at the National Liberal Club he warned that changing the law would be "antagonistic and inflammatory", adding that it would "play into the hands of the militants" and undermine moderate union leaders.

All the same, Davey went on to remark that "it's also not as Boris Johnson would have you believe, that the Lib Dems are lily-livered. If there's a case for taking action, we'll take action." Everyone, it seems, wants to keep all options on the table.

George Eaton is political editor of the New Statesman.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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