United they strike

With general election fever in full swing it is not just the political parties that are finalising their policy platforms for the election and beyond. The National Union of Teachers (NUT) voted at their conference in Liverpool to joint industrial action with the Public and Commercial Services Union. The joint action means simultaneous strike ballots will be held by the two unions if pay is frozen or pensions cut. The resolution that was passed backed “a co-ordinated campaign of action, up to and including strike action where needed, to oppose pay freezes, threats to pensions and cuts to services”.

A delegate from Newham, East London, boldly stated:

“When they come for our pensions — and they will, have no doubt — it is not just us. We will stand with our sisters and brothers in the public sector unions, and when we take action we will take it together.”

Indeed, there have been calls to reform current public sector pension. Today the CBI have warned the next government to reform public sector pensions to prevent the already £1,000 billion taxpayer liability from spiraling out of control. John Cridland, deputy director general challenged the next government to make a statement of intent on reforming public sector pensions within its first 100 days of taking office.

The CBI calculates that public sector pension benefits are worth an average of 26 per cent of salary each year. This compares with less than 15 per cent for most private sector employees. The shortfall in the public sector pension pot was growing at £10 billion a year – all of which is underwritten by the taxpayer.

Recent research by the TPA highlighted the heavy burden placed on local taxpayers from the Local Government Pension Scheme (LGPS). Councils across the UK have a combined pension deficit of £53 billion, which is up from £42 billion in 2007-08 – an increase of 27 percent. Earlier TPA research found that £1 of every £5 of council tax was spent on employer contribution to the LGPS.

With the public finances in such disarray the next government has to make cuts in public spending. All political parties have admitted public sector pensions are an area that needs to be reformed – but none have outlined a substantial plan of action.  In the book How to Cut Public Spending (and still win an election) it is outlined that increasing employee contributions to pensions by 33 percent from 2010/11 onwards would reduce the cost of unfunded public sector pension by £2.5 billion every year. This is one step to reform unfunded public sector pensions.

It is clear however, that joint industrial action across the public sector is likely to occur when the next government is brave enough to reform unsustainable public sector pensions. The next government will need to face the public sector unions down. 

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