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Hutton calls for changes to public sector pensions

Increased longevity means current schemes are "not tenable in the long run."

Public sector pensions should be linked to average career salaries rather than final salaries, according to Lord Hutton's pension report.

His independent review of public service pensions argued that the changes, which would be implemented in 2015, would make pension schemes "sustainable and affordable in the future" as life expectancy rises.

The new career average schemes would mean lower pensions for public sector workers unless they work longer to make up the difference.

The report recommended that the normal pension age (NPA) should be raised from 60 to 65 to bring it in line with the state pension age. The NPA and state pension would then increase simultaneously in future.

Lord Hutton stressed that the changes would be fairer to "the majority of members that do not have the high salary growth rewarded in final-salary schemes."

He said that current schemes were "not tenable in the long run," but the move has been criticised by trade unions.

Dave Prentis, general secretary of the Unison union, told the BBC that the recommendation "brings the threat of industrial action closer."

Lord Hutton was commissioned to carry out the review by the coalition government after it was elected last year.

His initial report, published in October, found that longer life expectancy meant that pension schemes were becoming too expensive. He also recommended that public servants should make higher contributions in future.

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Labour tensions boil over at fractious MPs' meeting

Corbyn supporters and critics clash over fiscal charter U-turn and new group Momentum. 

"A total fucking shambles". That was the verdict of the usually emollient Ben Bradshaw as he left tonight's Parliamentary Labour Party meeting. His words were echoed by MPs from all wings of the party. "I've never seen anything like it," one shadow minister told me. In commitee room 14 of the House of Commons, tensions within the party - over the U-turn on George Osborne's fiscal charter and new Corbynite group Momentum - erupted. 

After a short speech by Jeremy Corbyn, shadow chancellor John McDonnell sought to explain his decision to oppose Osborne's fiscal charter (having supported it just two weeks ago). He cited the change in global economic conditions and the refusal to allow Labour to table an amendment. McDonnell also vowed to assist colleagues in Scotland in challenging the SNP anti-austerity claims. But MPs were left unimpressed. "I don't think I've ever heard a weaker round of applause at the PLP than the one John McDonnell just got," one told me. MPs believe that McDonnell's U-turn was due to his failure to realise that the fiscal charter mandated an absolute budget surplus (leaving no room to borrow to invest), rather than merely a current budget surplus. "A huge joke" was how a furious John Mann described it. He and others were outraged by the lack of consultation over the move. "At 1:45pm he [McDonnell] said he was considering our position and would consult with the PLP and the shadow cabinet," one MP told me. "Then he announces it before 6pm PLP and tomorow's shadow cabinet." 

When former shadow cabinet minister Mary Creagh asked Corbyn about the new group Momentum, which some fear could be used as a vehicle to deselect critical MPs (receiving what was described as a weak response), Richard Burgon, one of the body's directors, offered a lengthy defence and was, one MP said, "just humiliated". He added: "It looked at one point like they weren't even going to let him finish. As the fractious exchanges were overheard by journalists outside, Emily Thornberry appealed to colleagues to stop texting hacks and keep their voices down (within earshot of all). 

After a calmer conference than most expected, tonight's meeting was evidence of how great the tensions within Labour remain. Veteran MPs described it as the worst PLP gathering for 30 years. The fear for all MPs is that they have the potential to get even worse. 

George Eaton is political editor of the New Statesman.