Thursday, 6 October 2011

Time to rebuild economy and put pensions and savings at heart of it

Letter to Birmingham Post - October 6th

Dear Editor

I read with alarm the article attacking public service pensions – a piece based on myth, a lack of understanding and more than a little prejudice (‘unions please think again before striking’, September 29).

The author, Russell Luckock, says that unions ‘would not accept any change in their pensions’, yet only a few years ago unions negotiated substantial reform of public sector schemes with the then government. As a result, new cost-sharing arrangements were put in place so that if life expectancy rose faster than anticipated, the resulting cost would fall mainly on scheme members rather than on the taxpayer. Lord Hutton said in his report earlier this year that these changes alone reduced the value of the schemes to current members by 10 per cent, rising to 25 per cent once the impact of the change in indexation from RPI to CPI is factored in.
However, none of the changes this government has announced – a further increase in contributions, a rise in pension age and a change in indexation from RPI to CPI – were done so with any consultation. More importantly the proposed increases in staff contributions have nothing to do with the long-term affordability of the schemes, but are pure and simply about taxing low-paid public sector workers in an attempt to pay down the deficit.

The changes risk making public sector pensions more unaffordable and could see thousands of low-paid workers leaving the schemes. Without pensions provision in their old age the state would be faced with picking up a very expensive benefits bill as millions of pensioners are forced into pensioner poverty. This is the reality of the government’s race to the bottom.

The unions want to see ‘pensions justice,’, not just for public sector workers, but for all workers in the UK. Rather than undermining the basic rights of public service workers, ministers should be legislating to improve pension provision in the private sector. The UK needs a private sector where businesses adopt and support good quality pensions for their entire workforce and not just for their top executives. We need to rebuild our economy and put pensions and savings at the heart of the UK economy.

Finally, Russell Luckock makes reference to the ‘real world’ and the difficulties that retailers and manufacturers are facing. Tough times are here for everyone, with the possible exception of the city where it is pretty much back to business as usual.

That’s why the TUC has been leading the call for an economic alternative to the government’s austerity. Deep and rapid spending cuts have sucked demand out of the economy, choked off growth and undermined UK Plc. We need action from the government to stimulate growth and to tackle unemployment. Stigmatising public service workers is not the answer to the economic perils that we face. We need to get Britain working and spending again, otherwise businesses and communities ‘in the real world’ will continue to suffer.

Despite union plans to ballot their members this autumn, we still hope that a settlement can be reached through negotiation. However, unless there is a significant shift in the government’s position, it is likely there will be co-ordinated action across the public sector at the end of November. So, rather than asking unions to think again, Russell Luckock should be asking the government to take a long hard look in the mirror, to think again and to avoid causing yet more misery to millions of families.

Rob Johnston

Regional Secretary, Midlands TUC

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