Danny Alexander repeats the ‘big lie’ that pension reform needed to stop spiralling costs

Danny Alexander's continued spin that we need to push up public sector pensions premiums so we can afford them is a myth that doesn't stand up to scrutiny.

Chief Secretary to the Treasury, Danny Alexander, has defended the Coalition’s intentions to ask public sector workers to pay up to £3,000 per year more for their pensions this morning, on the old government line that public sector workers need to pay greater premiums  so we can afford such provision in future.

The Treasury’s press release claims that the reforms:

“are designed to ensure that public service pensions remain among the very best available, while dealing with increased costs of people living longer.”

However, this is pure piffle. As Michael Burke wrote on Left Foot Forward earlier this month:

“The justification for the attack on public sector pensions is rapidly being unravelled. The chart below has had a good airing and even made it onto the BBC’s main news programme last night.

“The government has repeatedly claimed that the pension entitlements are “unaffordable”. The chart shows that – under current arrangements – the cost of pensions has already peaked at 1.9% of GDP and that they will fall to 1.4% of GDP over the next 40 years.”

The real reason, as Micheal Burke pointed out, for this reform, is to prime the public sector for privatisation, as set out in the terms of reference of the Hutton Report:

“…the growing disparity between public service and private sector pension provision, in the context of the overall reward package – including the impact on labour market mobility between public and private sectors and pensions as a barrier to greater plurality of provision of public services.”

Privatisation and outsourcing of public services is a good thing or a bad thing, but that’s what we ought to be arguing about here as it’s the real issue. The ‘we have to reform because we’re all living longer and can’t afford this pensions’ is a myth that Alexander should stop indulging in. In fact, if the changes spark a withdrawal, the Treasury will lose money overall.

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