A tax on public sector workers

By Dave Prentis, General Secretary of Unison

For many public sector workers, this morning’s news of how much more the government wants to force them to pay for their pension will have been a shock – as well as very frightening. It will have also worried the public into thinking it is facing a massive bill for public sector pensions, when in reality, it is not.

As far as our members – and UNISON – were concerned, the sector specific meetings, looking at each scheme in depth, had only just begun. The first meetings took place this week, looking at areas to be covered and a timetable for further talks was agreed.

UNISON has entered into talks in good faith – we want to avoid strike action. But by broadcasting details of what it wants to achieve, the government has thrown these talks into jeopardy.

We really want the government to behave in a sensible and mature way, and to approach these negotiations seriously. This is not some sort of playground game. We are talking about real people, hard-working individuals who signed up to, and pay into, a pension scheme that is supposed to cushion them against poverty in old age.

And when they do retire – it won’t be on a gold plated pension. The average pension in local government is £4,000, but for women it is just £2,800 (£56 a week). In health it is £7,500, and just £3,000 for women.

Members of those schemes already pay in between 5.5% and 7.5% of their salaries to save for their retirement. Stuck on a pay freeze, and with inflation rising, many will struggle to afford to pay more. The danger of raising contributions is that people will leave the schemes if they become too expensive, causing them to collapse – something even Tory ministers like Andrew Lansley are waking up to. Shut out of saving for their retirement, this would only throw the burden onto the taxpayer, by way of a whopping means tested benefit bill.

But the taxpayer is already facing a looming benefits timebomb. A shocking two-thirds of private sector employees – 15 million workers – are not in a workplace pension to which their employer contributes. Many of them will have to rely on benefits top up from the taxpayer – at a cost of £15,000 each.

What’s often forgotten in the fog of misinformation about public sector pensions is that the local government and the health schemes are cash rich. £2 billion more goes in than out of the health scheme every year. And the employers’ contribution is already capped. If the cost of the health scheme goes up, employees will have to foot the bill. The local government scheme could fund all its liabilities for twenty years without a single penny more in contributions.

Any extra contributions won’t go back into the pension scheme, but straight to the Treasury to pay off the country’s deficit – effectively a tax on public sector workers. That is totally unjust – especially when you consider that bank bonuses reached £14 billion last year. It wasn’t nurses, social workers and teaching assistants that cause this crisis – but they are paying for it three times over with job cuts, pay freezes and now an attack on pensions.

The government’s attacks are not about affordability, but based on ideology. The schemes were thoroughly re-negotiated just three years ago to make sure they would be both affordable and sustainable. And these changes worked – recent studies by independent experts the Institute for Fiscal Studies (IFS) and the Chartered Institute of Public Finance and Accountancy (CIPFA) have shown that the cost of these schemes as a proportion of GDP is falling, and that they are affordable and sustainable for the long-term.

We still want to negotiate. But the government has been warned – whilst we are hoping for the best, we will be ready for the worst. If the talks fail, or the ‘offer’ that finally emerges is inadequate, we will ballot our 1.2 million members in the schemes for what will be sustained industrial action. We know that a one day strike won’t be enough, our action will have to be for a longer period of time to get the government to change its damaging course.

The only way the government can avoid this is to brush up on its negotiation skills, start talking to us in a reasonable and mature fashion, and base any negotiated changes on evidence, not ideology. The clock is ticking.