Danny Alexander denies public sector pension 'assault'

 

Danny Alexander: "I think that's a very fair and balanced offer"

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Treasury minister Danny Alexander has said plans for public sector pensions will "protect them for the long term".

In a speech in London he said proposals were "not an assault" on pensions and accused some unions of spreading "scare stories" about government plans.

Contributions will rise and some people will have to work for longer but the low paid would be protected, he said.

But unions said the timing of the speech, while they negotiate over changes, was "deeply inflammatory".

The two sides have been holding negotiations over pensions but tensions have risen in recent days after unions representing up to 750,000 public sector workers voted to strike on 30 June.

On Friday the National Association of Head Teachers said it would also ballot its members about striking over pension cuts.

Chief Secretary to the Treasury Mr Alexander said he was making the speech on Friday because the issue had been getting "a lot of public attention" and accused a minority of unions "hell bent on premature strike action" of misrepresenting the government's position.

Current public sector pensions

Sector Employee contribution Pension age

*Depending on scheme. Source: IPSPC

Teachers

6.4%

60 or 65

NHS

5.5 - 8.5%

60 or 65

Civil service

1.5 or 3.5%*

60 or 65

Police

9.5% or 11%*

55

Firefighters

8.5% or 11%*

55 or 60

Military

0%

55

Local govt

5.5 - 7.5%

65

In his speech he confirmed the government would adopt many of the recommendations on pension reform made in the Hutton report in March.

He acknowledged the issue of pension was "sensitive", particularly at a time of widespread job cuts and a pay freeze across the public sector, but said public servants could not be "insulated" from the economic pressures facing society as a whole.

He said the government was proposing that public sector workers - bar the armed forces, police and fire service - would receive their occupational pension at the same time as the state pension in future.

Many can currently receive a full pension at 60. The state pension age is due to rise to 66 for both men and women by April 2020.

Under government plans, workers - on average - would have to pay 3.2% more in annual pension contributions phased in between 2012 and 2014.

But low-paid public sector workers on less than £15,000 would not face any increase in contributions and those earning less than £18,000 would have their contributions capped at 1.5%.

And he insisted all pension benefits earned before any reforms are introduced - including retirement ages and final salary benefits - would be protected.

In his final report in March, former Labour cabinet minister Lord Hutton concluded there was a "clear need for reform".

'Best deal'

He rejected any suggestion that public sector pensions were "gold-plated" but said in order to make them affordable in future, millions of employees should work longer, receive less and have their pensions linked to career average earnings, rather than final salaries.

ANALYSIS

After months of negotiations with trade unions behind closed doors, the government feared its message was being misrepresented and wanted to make its case direct to the public.

But as news of the speech emerged last night, union leaders were furious.

It was not the eye-catching language referring to some as "hell bent" on premature strikes that most angered them.

It was the clear statement of detailed policy that unions felt undermined negotiations.

While Danny Alexander characterised his plans as proposals, the government is understood to regard them as the core principles of any package.

It points out the basis of reform has long been established, in Lord Hutton's review of pensions and earlier Treasury announcements.

Privately, some in Whitehall regard the trade union reaction as predictable sabre rattling.

But union leaders argue this speech has left much less room for negotiation, and made widespread industrial action more likely.

Mr Alexander suggested the government's offer, based on the Hutton recommendations, was "by far the best likely to be on the table for years to come" and it was "unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more themselves".

"This is not an assault on public sector pensions but an attempt to protect them for the long term," he stressed.

He urged union leaders to re-engage in what had been "constructive" talks - suggesting there was a "great deal" to discuss on transitional arrangements to the new system and support for local government workers, many of whom are contracted out to the private sector.

"I think engaging in this conversation we are having is the best way rather than going to the barricades," he said.

But Brian Strutton, of the GMB union, said he was worried Mr Alexander was "determined" to drive the plans through irrespective of union backing.

He told the minister: "All of the items you have spoken about you presented to us a couple of weeks ago as discussion points. Today you present them as your formal proposals in the public domain outside of our negotiating process.

"How are you going to convince me that our negotiations are still alive and you are not actually almost scuppering them today?".

TUC General Secretary Brendan Barber added: "At such a critical time in complex negotiations this is a deeply inflammatory public intervention."

'Flawed'

And Chris Keates, head of the largest teachers' union, NASUWT, accused Mr Alexander of "political game playing".

"It is a flawed, high-risk strategy which has the potential to undermine confidence in the negotiations at a time when some progress was being made and there are still many crucial issues to be debated," she said.

Labour leader Ed Miliband said the government was "hopelessly mismanaging" the issue, accusing it of pre-empting the findings of the Hutton report and then "shouting from the rooftops" at workers.

"What people want the government to do is to get round the table and sort this out on the basis of negotiation not on the basis of megaphone diplomacy," he said.

 

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  • rate this
    +2

    Comment number 237.

    No-one disputes the value of public sector workers. I hope no-one disputes the value of private sector workers either. Both have their roles and contribute to the success of the UK economy. I see no case for inequality of treatment between the two.

  • rate this
    -4

    Comment number 134.

    Welcome to the real world. It's about time public service workers realised that they are no more important than the rest of us. The taxpayer has little or no say on how our money is spent yet public servants expect us to continue to subsidise them to a better standard of living than many of the people struggling to 'make do'! Come off it!.

  • rate this
    +6

    Comment number 93.

    Less than 1% of the current civil service on less than 15K. This amounts to a further pay cut whilst declared inflation is running at 4.5%. Actuially over 6! No pay rise for two years, contractual obligations dismissed. aftwer 30 years, they want to change legally agreed terms and conditions, all this from a Govt, who were not elected.

  • rate this
    +14

    Comment number 25.

    The banks didn't pay into any kind of insurance or contingency scheme, yet received billions.
    Those who have been faithfully paying into their pensions are told they will have to accept less.
    This is fundamentally unfair; this anger will not go away. I fully support those striking on June 30th and hope that the government has enough sense to change course before we end up like Greece.

 
 

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