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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"Do not let us down": Scottish MEP receives standing ovation after begging European Parliament

While Alyn Smith won applause, the Scottish Government moved behind the scenes. 

The Scottish National Party MEP Alyn Smith was not exactly a household name before the EU referendum. 

But his impassioned speech to his fellow MEPs begging them to help Scotland stay in the EU has caught the imagination of many Remain voters.

In a session where UKIP's Nigel Farage told MEPs "virtually none of you have ever done a proper job in your lives, Smith struck a very different tone.

Waving a sheet of paper showing Scottish voters had voted to Remain, he said: "I want my country to be internationalist, co-operative, ecological, fair, European. And the people of Scotland, along with the people of Northern Ireland, and the people of London, and lots of people in Wales and England also, voted to Remain within our family of nations."

He urged MEPs to negotiate with cool heads and warm hearts.

And then, raising his voice, he told MEPs: "Please, remember this. Scotland did not let you down. Please, I beg you, cher colleagues, do not let Scotland down now."

MEPs rose to applaud the heartfelt speech. And meanwhile, hundreds of miles away in Holyrood, the Scottish Government had hit the phones.

First Minister Nicola Sturgeon announced she would be meeting European Parliament President Martin Schultz on Wednesday.

Although the SNP's promise of an independent European Scotland was shot down during the Scottish referendum, it seems this time round MEPs are more sympathetic.

Guy Verhofstadt, the former Belgium PM, who leads the Alliance of Liberals and Democrats for Europe parliamentary group has already tweeted: "It's wrong that Scotland might be taken out of [the] EU."