Union resistance over pensions a ‘colossal mistake’

By Alex Stevenson

The gulf between union bosses and ministers has widened further as Danny Alexander announced the public sector pension retirement age will rise to 66.

Up to 750,000 public sector workers are set to strike later this month over the changes to their generous pensions, which are viewed by teachers, nurses and others as a reward for their contribution over the years.

In a speech to the Institute for Public Policy Research (IPPR) thinktank Mr Alexander, the chief secretary to the Treasury, confirmed that public sector workers will have to work for longer by 2020.

"It is absolutely wrong to pretend that public servants can be insulated from the pressures that everyone else are facing," he said.

"It is unjustifiable that other taxpayers should work longer and pay more tax so public service workers can retire earlier and get more than them."

Earlier, he explained on the Today programme: "The fact remains that people in this country are living longer.

"That's why we're increasing the state pension age, why we are recommending there is an increase in pension contributions.

"If we make those changes alongside changes going on for every other person in this country, then we can protect that those who give their working lives in the service of the public continue to receive the very best pensions in retirement."

Last year the coalition confirmed it would raise the state pension age to 66. Public sector workers will receive a pension based on their average salary over the course of their careers. Contribution increases could be limited for the lowest earners.

Union bosses reacted with anger to Mr Alexander's announcement, claiming it undermined their confidence that the government was acting in good faith during negotiations.

GMB union chief Brian Strutton told the same programme: "If they've made their minds up, that really is a showstopper.

"The key question here is come on government – can we have confidence in these negotiations, do we have an open mind on these issues? Or is it a waste of all our time?"

Unite assistant general secretary Gail Cartmail said his comments were "tantamount to bombing the talks".

"It is completely wrong of Danny Alexander to hit the media airwaves to make detailed announcements on the current negotiations," she said.

"We have moved in the flash of a media soundbite from tough, detailed negotiations to gunboat diplomacy by the Treasury."

TUC general secretary Brendan Barber added his voice to the criticism, saying today's announcement was "deeply inflammatory".

"I have found over many years that if you are seriously trying to build trust to settle a difficult dispute you should talk honestly and openly inside the negotiating room and exercise self restraint outside," he commented.

"This speech, and the media-spinning operation around it, has dealt a serious blow to union confidence in the government's good faith in these talks."

Mr Alexander said the negotiations, which have been extended into July, contained many areas of agreement.

"These talks are being conducted in a very positive manner," he insisted.

"They are incredibly important and I think there is progress to be made."

Writing for the right-wing Telegraph newspaper, however, he offered a more hardline stance.

"It may be that those who oppose change think they can force the government to change its mind," he wrote.

"This is a colossal mistake. We will reform public service pensions. This is the time to shape that change, not to try to block it."

Former work and pensions secretary John Hutton's report on public sector pensions, published in March this year, concluded that the current model is "not tenable" in the long-term.

He recommended scrapping final-salary pensions and linking the normal pension age in most public service pension schemes to the state pension age – the move to be announced today.

With pension payments being tagged to the consumer price index (CPI) rather than the retail price index (RPI), which is usually higher, the cost of public sector pensions is already set to drop by 25%.

The pension age is already at 65 for most new recruits, while job losses and pay freezes across the public sector will also serve to hammer down the cost to the taxpayer.