The myth of "unaffordable" public sector pensions

Forcing workers to pay more is a political choice, not an economic necessity.

The biggest strike for a generation has begun, with around 30 unions, including, for the first time in its history, the National Association of Head Teachers, and two million public sector workers walking out in protest at the government's reforms to public sector pensions. According to the Department for Education, around 58 per cent of England's 21,700 state schools will be closed, with a further 13 per cent partially shut.

With most polls showing a small majority against the strike and others showing support evenly split between the strikers and the government, the battle for public opinion has only just begun. Indeed, the most notable poll finding of recent days (courtesy of TNS-BMRB) is that just 4 per cent of private sector workers claim to know a lot about why the strike is happening. Despite the increasingly sharp rhetoric from both sides, the truth is that today's "day of action" may change little.

But there's no doubt that Osborne's new, tougher austerity programme has upped the stakes. As I reported yesterday, the Office for Budget Responsibility predicts that no fewer than 710,000 public sector jobs will be cut by 2017, 310,000 more than previously forecast. In addition, Osborne's plan to cap pay rises at 1 per cent means that some workers will have suffer an average 16 per cent pay cut over the next five years. If public sector workers can't go on strike in these circumstances, when can they?

For now, here are two myths that deserve to be rebutted again. The first is that public sector pensions, in their current form, are "unaffordable". David Cameron, for instance, has frequently claimed that the system is "broke". But as the graph below from the government-commissioned Hutton Report shows, public sector pension payments peaked at 1.9 per cent of GDP in 2010-11 and will gradually fall over the next fifty years to 1.4 per cent in 2059-60. The government's plan to ask employees to work longer and pay more is a political choice, not an economic necessity.

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As the Public Accounts Committee observed: "Officials appeared to define affordability on the basis of public perception rather than judgement on the cost in relation to either GDP or total public spending." In other words, the public have been misled and ministers are determined to keep misleading them.

The second is that inadequate pension provision in the private sector is a reason to reduce pension provision in the public sector. The Daily Mail et al repeatedly point out that two-thirds of private sector employees do not have a company pension, compared to just 12 per cent of public sector workers. But this is an argument for improving provision in the private sector, not for driving it down in the public sector. Ministers must not fire the starting gun on a race to the bottom. Indeed, many pensionless private sector workers depend on their partner's public sector pension to ensure a basic standard of living in old age.

We can debate the merits of industrial action as a form of protest. But with public sector workers facing a triple crunch - higher contributions, a tougher inflation index and lower benefits - it's hardly surprising that they feel compelled to defend their rights. Even before any of the Hutton reforms are introduced, George Osborne's decision to uprate benefits in line with CPI, rather than the RPI, has already reduced the value of some pensions by 15 per cent.

Strip away the government's rhetoric ("unaffordable", "untenable") and the truth is that ministers are forcing workers to take another pay cut, forcing them to pick up the tab for a crisis that they did not cause. The public might be on the side of ministers, for now at least, but the facts are on the side of the unions.

George Eaton is political editor of the New Statesman.

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How long will general election campaigning be suspended after the Manchester attack?

Parties have suspended political activities in a mark of respect. 

In the middle of the night, as news broke that an explosion in Manchester had killed scores of concertgoers, political parties reacted almost instantly. Campaigning was cancelled. For at least 24 hours.

Then the details of what happened emerged. That the explosion was deliberately created by a suicide bomber. That little girls died in the blast. Campaigning was suspended indefinitely.

But what does this mean for 8 June 2017? When will campaigning resume, and how? While most see the suspension of the political battle as a matter of respect, some, such as the blogger Guido Fawkes, argue that doing so only gives “the enemies of democracy some satisfaction”.

Here is what we know so far:

The parties have suspended national campaigning

All the mainstream parties have agreed to suspend national campaigning, and are likely to agree together before resuming campaigning again. 

However, Labour has advised candidates that local campaigning is at their discretion. If it does happen, it will be leaflets through doors, rather than public stalls.

Broadcast interviews have also been cancelled

The BBC's Andrew Neil interviewed Theresa May on Monday night, in what was supposed to be the first of a series of interviews with the leaders of different political parties. However, the second, with Ukip’s Paul Nuttall, was scrapped. 

A BBC spokeswoman said: "Following tragic events in Manchester, The Andrew Neil Interviews will not go ahead as planned whilst election campaigning is suspended." The decision to resume interviews is likely to reflect when campaigning resumes. 

The suspension is a gesture of respect

The UK terrorist threat level has risen to “critical”. Since the Westminster Parliament was the target of a terrorist attack only two months ago, you might think one of the primary reasons for stopping campaigning would be the security of the public figures involved.

However, party sources say the main motivation for suspending the campaign is out of respect, and a realisation that the public does not want to see parties squabbling at this point in time. 

Indeed, so far, politicians have not exactly been hiding. The Prime Minister Theresa May went to Manchester on Tuesday morning, while Labour leader Jeremy Corbyn and home secretary Amber Rudd attended the vigil in the evening. 

No one really knows when campaigning will resume

Because the parties want to begin campaigning at the same time, there is no fixed time for when candidates hit the streets again. However, the awkward fact remains that we are halfway through a general election campaign. The Scottish National Party cancelled its manifesto launch after the terror attack. So while “indefinite means indefinite”, as one party source told me, it can’t really mean 8 June. 

When the Labour MP Jo Cox was murdered during the EU referendum, campaigning was suspended for three days before resuming again. If the same rule is applied, campaigning may start as early as Friday. However, the parties may prefer to wait until the weekend, and make a fresh start on Monday.

The Scottish Greens certainly seem to be planning for this. A planned manifesto launch on Friday has been postponed, but may happen on Monday. 

Campaigning may look a bit different when it starts

When campaigning does resume, it is likely to be a gradual process, rather than epic photo ops and rosettes. In the meantime, expect more scrutiny of parties’ policies on terrorism, security and civil liberties. 
 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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