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10 March 2011

Public-sector pension reform is part of a wider agenda

Pension obligations are the biggest barrier to further privatisation.

By Peter Wilby

The report on public-sector pensions from the former Labour minister John (now Lord) Hutton must be understood as part of a wider agenda.

First, after private-sector recklessness, greed and incompetence plunged us into financial crisis and recession, Tory politicians and right-wing newspapers aimed to deflect popular anger on to public-sector workers. They eagerly pointed out that, while stock-market falls and near-zero interest rates had slashed the value of most private-sector pensions, teachers, nurses, firefighters and local government bureaucrats continued to enjoy the prospect of a “gold-plated” retirement, on up to half their final salaries, with ample protection from inflation.

Government measures, notably changing the inflation index used in calculating payments, have already cut their value by around 25 per cent. But ministers reckon there is mileage in continuing the jihad.

Second, pension obligations are the biggest barrier to more privatising and outsourcing of public-sector services. Public services, we are repeatedly told, are run for the employees, not the public. They are being “reformed” so that they can be run for the benefit of capital.

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This blog post is taken from Peter Wilby’s First Thoughts column in this week’s New Statesman, available now.