Leader: Stop playing politics with public-sector pensions

Ministers must negotiate with the unions in good faith.

Few now remember it, but there was a time when David Cameron sought co-operation, not confron­tation, with the trade unions. He became the first Conservative leader in more than a decade to meet the general secretary of the Trades Union Congress and appointed a union emissary, the former Labour MEP Richard Balfe, who spoke glowingly of the unions as "great, voluntary organisations". But that was in 2008, when Mr Cameron was still committed to Labour's spending plans. Now, as a result of his government's austerity programme - specifically its proposed reforms to public-sector pensions - Britain is facing the greatest threat of industrial action since the 1980s.

The decision by the Chief Secretary to the Treasury, Danny Alexander, to announce unilaterally an increase in the public-sector retirement age to 66 and an average 3.2 per cent increase in pension contributions makes the mass strike by teachers and civil servants on 30 June likely to be just the start of the unrest. The willingness of the government to pre-empt the outcome of its negotiations with the trade unions suggests that the talks are little more than a political front.

There is a strong case, as the unions acknowledge, for reforming public-sector pensions. Britain, like every other developed country, is facing an unprecedented demographic challenge. Average life expectancy in the UK, which stood at 72 in the 1970s, now stands at 80. By 2034, 23 per cent of the population will be aged 65 and above, up from the present 16 per cent. Consequently, ministers plan to increase the state pension age from 65 to 66 by 2020. It is unrealistic to expect the public-sector pension age to remain frozen at 60. But such proposals should be negotiated in good faith - something that ministers have consistently failed to do.

In his speech on 20 June, Mr Alexander promised that workers earning less than £15,000 a year would not face any increase in contributions and that those earning under £18,000 would have their additional payments capped at 1.5 per cent. Still, many low- and middle-income earners will suffer a real-terms wage cut as a result. At a time when workers are already enduring a two-year pay freeze, the unions are right not to accept a further cut in living standards. The government's decision to uprate benefits in line with the Consumer Prices Index, rather than the Retail Prices Index, has already reduced the value of some pensions by 15 per cent.

Ministers claim that the cost of public-sector pensions is expected to soar, but the evidence suggests that this is not the case. The report by the former Labour cabinet minister John Hutton for the coalition states that payments will "fall gradually to around 1.4 per cent of gross domestic product in 2059-2060, after peaking at 1.9 per cent of GDP in 2010-2011". As Mark Serwotka, general secretary of the Public and Commercial Services Union, argues in his interview with Mehdi Hasan on page 36, the government's plan to increase contributions is an act of "naked deficit reduction".

The government's attempt to set public- and private-sector workers against each other should be rejected. Two-thirds of private-sector employees are not enrolled in a workplace pension scheme, 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. Many pensionless private-sector workers depend on their partner's public-sector pension to ensure a basic standard of living in old age.

And yet, despite the government's obstinacy, union leaders should be wary of declaring what the Unison general secretary, Dave Prentis, has hyperbolically suggested will be the biggest programme of action since the 1926 General Strike. The Chancellor, George Osborne, hopes to exploit the strikes to distract attention from his failing economic strategy and the unions must avoid alienating otherwise sympathetic voters. In return, ministers must prove that they are willing to treat the unions with a respect that so far has been lacking.

This article first appeared in the 27 June 2011 issue of the New Statesman, The food issue

Photo: Getty Images
Show Hide image

No, IDS, welfare isn't a path to wealth. Quite the opposite, in fact

Far from being a lifestyle choice, welfare is all too often a struggle for survival.

Iain Duncan Smith really is the gift that keeps on giving. You get one bile-filled giftbag of small-minded, hypocritical nastiness and, just when you think it has no more pain to inflict, off comes another ghastly layer of wrapping paper and out oozes some more. He is a game of Pass the Parcel for people who hate humanity.
For reasons beyond current understanding, the Conservative party not only let him have his own department but set him loose on a stage at their conference, despite the fact that there was both a microphone and an audience and that people might hear and report on what he was going to say. It’s almost like they don’t care that the man in charge of the benefits system displays a fundamental - and, dare I say, deliberate - misunderstanding of what that system is for.
IDS took to the stage to tell the disabled people of Britain - or as he likes to think of us, the not “normal” people of Britain -  “We won’t lift you out of poverty by simply transferring taxpayers’ money to you. With our help, you’ll work your way out of poverty.” It really is fascinating that he was allowed to make such an important speech on Opposite Day.
Iain Duncan Smith is a man possessed by the concept of work. That’s why he put in so many hours and Universal Credit was such a roaring success. Work, when available and suitable and accessible, is a wonderful thing, but for those unable to access it, the welfare system is a crucial safety net that keeps them from becoming totally impoverished.
Benefits absolutely should be the route out of poverty. They are the essential buffer between people and penury. Iain Duncan Smith speaks as though there is a weekly rollover on them, building and building until claimants can skip into the kind of mansion he lives in. They are not that. They are a small stipend to keep body and soul together.
Benefits shouldn’t be a route to wealth and DWP cuts have ensured that, but the notion that we should leave people in poverty astounds me. The people who rely on benefits don’t see it as a quick buck, an easy income. We cannot be the kind of society who is content to leave people destitute because they are unable to work, through long-term illness or short-term job-seeking. Without benefits, people are literally starving. People don’t go to food banks because Waitrose are out of asparagus. They go because the government has snipped away at their benefits until they have become too poor to feed themselves.
The utter hypocrisy of telling disabled people to work themselves out of poverty while cutting Access to Work is so audacious as to be almost impressive. IDS suggests that suitable jobs for disabled workers are constantly popping out of the ground like daisies, despite the fact that his own government closed 36 Remploy factories. If he wants people to work their way out of poverty, he has make it very easy to find that work.
His speech was riddled with odious little snippets digging at those who rely on his department. No one is “simply transferring taxpayers’ money” to claimants, as though every Friday he sits down with his card reader to do some online banking, sneaking into people’s accounts and spiriting their cash away to the scrounging masses. Anyone who has come within ten feet of claiming benefits knows it is far from a simple process.
He is incredulous that if a doctor says you are too sick to work, you get signed off work, as though doctors are untrained apes that somehow gained access to a pen. This is only the latest absurd episode in DWP’s ongoing deep mistrust of the medical profession, whose knowledge of their own patients is often ignored in favour of a brief assessment by an outside agency. IDS implies it is yes-no question that GPs ask; you’re either well enough to work or signed off indefinitely to leech from the state. This is simply not true. GPs can recommend their patients for differing approaches for remaining in work, be it a phased return or adapted circumstances and they do tend to have the advantage over the DWP’s agency of having actually met their patient before.
I have read enough stories of the callous ineptitude of sanctions and cuts starving the people we are meant to be protecting. A robust welfare system is the sign of a society that cares for those in need. We need to provide accessible, suitable jobs for those who can work and accessible, suitable benefits for those who can’t. That truly would be a gift that keeps giving.