Whatever the rightwing attack dogs say, the cost of public sector pensions are due to fall as a proportion of GDP.
As soon as the TUC voted to undertake industrial action in defence of public sector pensions on November 30th, the right-wing ideologues were doing the rounds of TV studios.
Attack dogs like Mark Littlewood, Director-General of the Institute for Economic Affairs, laid out their central argument, which is that, both in terms of short-term deficit reduction and long-term debt maintenance, public sector pensions are unsustainable.
You are likely to hear that a lot over the next few months. However, it is worth repeating again and again and again that it is not true. As reported by Stephen Henderson on Left Foot Forward in July:
“The Office of Budget Responsibility’s July 2011 Fiscal Sustainability report (pdf) looks long into the future (2060) and guesses at the likely proportions of GDP that might arise as the population becomes more elderly.
“The assumptions are based on current policies, not government proposals. Confirming earlier findings in the Hutton Report (pdf), they clearly predict the cost of public pensions will fall from 2% of GDP to 1.8% in 2030 and 1.4% in 2060 – without any of the current Hutton proposals.”
And, as written by Michael Burke earlier that 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.
Ministers Francis Maude and Justine Greening have attempted to supplement this point with the claim that the costs will rise ‘as we are all living longer’. But this factor is already included in the Hutton (pdf) calculations of falling costs, as rising life expectancy is included in the calculation (clearly noted in the chart).
Burke went on to argue:
“The real reason for the attack on public sector pensions is actually set out in the terms of reference that Hutton accepted from the government.
“In the very first point of the terms of reference Hutton must have regard to:
“‘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…’
“The ‘greater plurarity of provision of public services’ is Treasury-speak for privatisation; therefore the very first objective of the review is to ensure private firms can take over the functions of the public sector services – and that they can do so without the costly inconvenience of providing pensions.”
Whatever is being disputed here, it is not about affordability. As the right-wing noise machine roars into life, remember that fact.
87 Responses to “Don’t buy the right-wing spin: Public sector pension costs set to fall”
Leon Wolfson
@7 – Don’t confuse public sector pensions and state pensions. They’re not the same thing at all.
Tony Dowling
Don't buy the right-wing spin: Public sector pension costs set to fall: http://t.co/W8t7kdzz writes @danielelton @leftfootfwd #Nov30
Graeme
Mark,
Your statement
The essential point is that private sector workers on say £10,000 or £12,000 per annum are going to be contributing to public sector pensions so generous that they are practically inconceivable in the private sector.
Could be easily be turned upside down. The vast majority of public sector workers earn less than the national average, their pensions are going to be small and through their taxes they are paying towards the tax breaks afforded to the private sector elite who earn more in a year than they will see in a lifetime.
Instead of swallowing right wing guff people need to be aware of a few important details, public sector workers contribute money by way of monthly contributions to their pension, again the majority of these earn less than the national average salary. It’s not a free pension. There are high earners in the public sector but these are still paid less than the top private sector workers, let’s not go in the banking industry. The tax breaks afforded to the contributions of these top earners of the private sector are huge.
There is unfairness with the private sector pensions of those on low pay, but you don’t resolve that by introducing unfairness to the public sector pensions. That is a race to the bottom but Governments are happy to set private against public sector in the age old tactic of divide and conquer.
Private sector pensions suffered because they were either raided by various Governments or by the companies themselves wanting to boost profit to shareholders. That was done when they were in surplus, gambling that the economy would always be good and produce another surplus. We all know what happened next. The surplus if left would have provided some protection when the going got bad.
The NHS workforforce is huge, but unlike private sector pension schemes there is no statement every year telling what’s in it. There is not a specific item in the Government accounts where they can point to and say that’s the pension pot. The reality is the Govt just spends it on whatever, wars, propping up banks, all sorts of reasons good and bad, but they gamble that the state of the nation will always allow them to pay out when needed.
As for that trillion liability, irresponsible to say the least to avoid any comment that states that huge sums are being paid into the pot. That doesn’t suit the right wing agenda though does it?
Private sector pensions aren’t fair for thousands, and that needs changing, but that would mean the Tory paymasters and the right wing taking a hit and they can’t bear that so it’s easier to try and con those workers into feeling better about themselves by hammering the public sector. Get the majority to the bottom and then the minority can accumulate even more eh ?
Kevin Skerrett
RT @leftfootfwd: Don't buy the right-wing spin: Public sector pension costs set to fall http://t.co/Zz4Ba6CK
Keith Reynolds
The attack on public sector pensions in the UK fails the fact test http://t.co/WqJECEJD #cdnpoli