CPS report urges Government to reform pensions and stand up to irresponsible trade union tactics

September 09, 2011 6:00 PM

Trade unions have announced further plans for widespread public sector strikes. Compounding the gloom of the passing of summer, commentators are now talking of an ‘Autumn of Discontent.’

Not satisfied with the disruption earlier in the year, they plan a fresh wave of strikes intended to bring many public services to a standstill once more, this time over proposed reforms to public sector pensions. In a new report, the Centre for Policy Studies (CPS) warn:

“the on-going negotiations between the government and the unions are as great as any other negotiations between government and unions in history.“

Andrew Haldenby of Reform - who themselves have a report out today on public sector reform - has an excellent article for the Telegraph today, arguing the Coalition cannot and must not let the TUC derail plans to reform public services. The public sector has grown so much that it is now unaffordable and urgently needs slimming down. Ordinary taxpayers cannot be expected to continue paying the generous pensions of public sector workers when figures show that one in six have had to stop paying into their own.

 In his article, Haldenby quotes Tony Blair on public sector “reformers” and “wreckers.” It is obvious which bracket the trade unions fall into. Haldenby concludes:

“Britain needs excellent public services with smaller, better workforces and great results… the TUC’s retrograde vision would achieve none of these things.”

And today's CPS report reiterates how important pension reform is:

“The relatively lavish pensions enjoyed by many public sector workers are a burden which will largely be met by the private sector. Yes, reform of public sector pensions is tremendously difficult. But this must be ruthlessly pursued if we are to have a lasting and fair solution."

Five years ago contributions into and withdrawals from pension funds were roughly in balance. Today the shortfall is expected to exceed £5.8bn and will rise to £8bn if the Hutton Review’s measures are not implemented in full. Public sector pensions must be self-sufficient as soon as possible because it’s not fair to leave taxpayers to foot the bill.  And if plans to privatise organisations like Royal Mail go ahead, their enormous pension liabilities look set to stay with taxpayers.

Trade unions often argue that lower pay in the public sector warrants generous reward in retirement. But Office for National Statistics now show that gross pay is 4 per cent higher and rewards are 13 per cent higher in the public sector, completely discrediting their case.

The size of the pension black hole illustrates how essential it is that public sector pensions are reformed as soon as possible. The Government must stand firm against union action, as giving into the “wreckers” will simply leave future generations of taxpayers to pick up the tab.

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