The lack of proper negotiation led to the action that was taken by public sector workers today.

I found it quite infuriating to hear less than honest words spoken in the House today.

Below is an email sent from an MP to a PCS member last week.  Highlighted in red are some key points:

Thank you for your email about the strikes next week. I have to be in Westminster next Wednesday, however my position is clear and this is what I am saying to anyone who contacts me.

The government must bear much of the responsibility for what is happening now because it jumped the gun and has, in effect, imposed a 3% tax on public sector workers, before John Hutton published his final report on public sector pensions, and then refused to negotiate on this crucial issue. This surcharge has nothing to do with the sustainability of public sector pensions and will hit public sector workers on low incomes hard.

It increasingly seems that the government is happy to see a disruptive strike. According to the Daily Telegraph, David Cameron has privately said that he is ‘delighted’ that the unions have walked into his ‘trap’. This is no way to approach the long term needs of the country and workers who believed they had a deal on their pensions when they set out on a public service career.. The constant mantra about “gold plated” pensions is quite frankly insulting. The average pension paid to pensioner members is around £7,800 per year, while the median payment is around £5,600. Half of women public service pensioners get less than £4,000 a year.

If more people opt out of occupational schemes because they cannot afford to pay this increase, it could end up costing the tax payer more in the future as more people rely on means tested benefits. The imposition of a 3% surcharge for all employees is not only unfair in the short term but also risks the sustainability of public sector pension schemes in the long term.

The government announced a three pence in the pound increase in contributions in the October Spending Review, long before Lord Hutton had published his final report. The 3 pence in the pound increase has nothing to do with the wider reform agenda outlined by Hutton. It is a measure which is simply geared towards paying down the deficit by squeezing public sector workers. The increase was imposed without any negotiation with public sector unions. This increase amounts to a 3p in the pound increase in tax for public sector workers, at a time when they are already facing a pay freeze, higher inflation partly driven by the government’s VAT increase, not to mention the biggest squeeze in living standards in a generation.

I know that people who rely on services don’t want to see a strike: from parents who will have to take a day off work to those who rely on home help. And public sector workers— nursing assistants, teachers and dinner ladies—also care too much about the people they serve day in day out to consider action as anything other than a last resort.

Rather than telling hundreds of thousands of low paid, part-time working men and women who are set to be much worse off that they should not strike, David Cameron should be taking responsibility and trying to negotiate a deal that’s fair to public sector workers and taxpayers alike. That is what I want to see and that is why I support the action that union members are taking..

My recent series of posts on pensions only skim the surface of why so many ordinary people decided to take strike action today.

Nearly one in five of us , living in the UK, is over the state retirement age.  A fair pension for all is affordable in the sixth largest economy in the world, if we choose it to be.

A pension is income deferred.  Whether it is through national insurance of contributions to an occupational scheme, we have set aside income today to pay for our pensions tomorrow.

We like to think of retirement as a time of relaxation and leisure, but for very many people it is a time of hardship and stress with a growing proportion having to choose between heating and eating.  Every winter tens of thousands of retired people die from cold-related illnesses.

We are all living longer and should welcome that life expectancy continues to improve, but those improvements have been very uneven, meaning that there is a huge life expectancy gap between the richest and poorest.  We must also consider the impact of working longer on unemployment, the impact that has on young workers staring off.  Youth unemployment is at the highest level on record.  Finally, we ought to acknowledge that longer retirements are not necessarily unaffordable, but are a question of priorities and balance.

The government is proposing little to tackle the scandal of private sector occupational pensions, or the poverty level of the basic state pension.  The government’s current attempts to cut public sector pensions will create more misery and more poverty in retirement.

UK pensioner poverty is among the worst in Europe – only Cyprus, Latvia and Estonia abandon their pensioners to a greater degree.  France spends over twice as much on pensions as the UK, Germany two-thirds more.

It is simply not true to say that the UK cannot afford better pensions when nearly every other European country does better by their pensioners.  The truth is that the value of the state pension has gone from being worth 25% of average male earnings to just 15%.

The basic state pension is currently £202 a week, worth only 57% of the government’s official weekly pensioner poverty level of £178.  Two and a half million pensioners in the UK live below that level.  Even before the above inflation energy price rises this year. 3.5 million pensioners lived in fuel poverty.

Many pensioners therefore rely on means-tested benefits like the pension credit, council tax benefit and housing benefit.  However, because of the stigma attached to claiming, over a million pensioners entitled to pension credit do not claim it.

Research by the Left Economics Advisory Panel estimates that the cost of means-tested benefits is £13bn per year.  This state of spending would not be necessary if private sector employers provided their staff in the same way as the public sector.  However, the proposed cuts to public sector pensions would mean that more and more public sector workers will be eligible for these benefits too.

The state pension age is currently proposed to rise from 65 to 66 by 2020, 67 in 2034 and to 68 by 2044.  We believe this is deeply regressive and will have a disproportionate impact on the poorest people.

Although the average person is living longer, there are massive inequalities in life expectancy: men and women in the wealthiest areas live 10 years longer, on average, than those from the poorest areas.  The wealthiest can often afford to take early retirement too, whereas the poorest often already have to continue working beyond the state retirement age.  Just because we are living longer, it does not necessarily mane we are fit to work for longer: 40& of people aged 65-74 have a disability of illness that limits their quality of life.

Pensioner poverty also intensifies the prejudices that exist over people’s working lives.  Women, disabled and ethnic minority pensioners are far more likely to be in poverty because they are discriminated against by employers.

Over several years, governments have allowed companies to abandon their pension duties to their staff, allowed the state pension to fall further and further behind living standards, and today’s government is now attacking public sector pensions too.

We don’t want equality of misery, but fair pensions for all: public, private and state pensions.

The collapse of private sector pensions is one of the greatest outrages of our time.  Just over a decade ago nearly half of all private sector workers were in a workplace pension scheme; today it is only a third.  The cost of that decline will be borne by the taxpayer through increased eligibility for means-tested benefits such as pension credit, housing benefit and council tax benefit; greater health and social care costs; and an increase in our already shocking levels of pensioner poverty.

However, while pensions have been ripped away from ordinary workers, the directors of large companies continue to net very generous pensions averaging £175,000 per year in retirement.  These generous fat cat schemes at the top lapped up the bulk of the £37.6bn in tax relief that private sector pensions get every year.

The only reason why companies have dumped pension schemes is to give more money to senior management and more profits for shareholders.  Corporate profits have expanded from 13% of GDP in the mid-197s to 21% today, and executive pay has risen several times the rate of the average worker.

In the 1990s, according to Inland Revenue figures, corporate Britain saved itself £18bn through pension holidays, while employees continued to contribute.  As the stock market declined many pension funds went into deficit – employers cut pensions rather than repay the monies avoided.

This graph shows the proportion of private sector workers in defined benefit schemes (red line) compared with corporate profit margins (grey line).  What the graph shows is that in the last 13 years the level of corporate profits has remained relatively constant, yet companies have closed defined benefit schemes at an alarming rate.

The number of private sector employees in defined benefit schemes had fallen from 34% in 1997 to 11% last year.  At the same time the proportion of workers in any occupational scheme has fallen from 46% to 34%.  Despite all the talk of corporate social responsibility, fewer and fewer companies show any responsibility to their own staff.

For the 11% of private sector workers still in a defined benefit scheme the average pension is £5.860 – about the same as the £5,600 average public sector pension, which demonstrates that is that is not a ‘gold-plated’ amount.  In fact it is less than half the income of a full-time worker on national minimum wage.

It has been estimated that changing pension indexation from RPI to CPI in the private sector would save employers £100 billion over the lifetime of existing schemes.  This would be a direct transfer or wealth from employees to shareholders.

Women in the private sector are likely to be in a far worse state than men – not just because of the earnings gap – but because many of the jobs done by women in the private sector (especially retail, catering and cleaning roles) come with no pension provision at all.

The media is full of scare stories about the escalating and unaffordable costs of pensions, and that people are living too long.  The reality is that employers are failing to pay their share – and that is unfair.

In 2012 the National Employee Savings Trust (NEST) will be established for workers with no occupational scheme.  However, NEST will take more from employees than employers and will not provide a decent pension.  The main beneficiaries will be the private pension industry.

Attempts to pit private sector workers against public sector workers are divide and rule.  The responsibility for the removal of pensions for private sector workers lies with employers and shareholders.

Private sector pensions are also heavily subsidised by the taxpayer.  Research by Richard Murphy shows that private sector pension schemes received £37.6bn in tax reliefs in 2007/8 – that same year they paid out pensions worth only £35bn.  As Murphy states, “Pension fund performance over the last decade has been a history of almost perpetual loss making despite the enormous subsidies.”  A quarter of that pensions tax relief goes to the richest 1%.

The pensions of public sector workers have come under intense scrutiny in recent months, with ministers and the media describing them as ‘gold-plated’ and ‘unaffordable’. Currently public sector workers are being told they must pay more and work longer for a lower pension – but is this necessary?

Last year the government asked Lord Hutton to lead an independent commission into public sector pensions. His report showed that their cost is falling over the long-term as the graph above demonstrates; falling from 1.9% of GDP today to a little under 1.4% by 2060.

The graph above does assume the government’s change to pensions’ indexation from the RPI inflation measure to the CPI measure.  This could reduce the value of the pensions by over 20% over the course of an average retirement.

However, a report into public sector pensions by the National Audit Office, published in December 2010, does not take into account the indexation change, nor does it make any assumptions about the size of the workforce.  It shows reforms agreed between the unions and the government in 2007-08 “reduces costs to the taxpayers by 14%” and “long-term costs are projected to stabilise around their current levels as a proportion of GDP”.  So even without these assumptions the costs are still not rising, but stable.

The Hutton report also “firmly rejected the claim that current public service pensions are “gold plated” …the median payment is around £5,600″.  This equates to just over £100 per week in retirement.  For a woman worker in local government the average pension is just £2,000.

Despite these facts taken from the government’s own commissioned report, ministers have continued to misrepresent public sector pensions and are simultaneously attacking the age at which they retire, how much they pay, and how much they get at the end.

This attack on public sector workers’ pension rights coincides with a pay freeze and, for many, their job being under threat too.  A significant minority of workers have said they will opt-out of schemes if they are forced to pay more for a smaller pension.  Opting out will mean a larger burden on the taxpayer in extra means-tested benefits.

It is only four years since public sector pensions were significantly re-negotiated with the previous government in a deal that meant for new starters the retirement age rose to 65, and future costs capped.  The pensions deal in 2007 was assessed in December 2010 by the National Audit Office, which found it “on course to deliver the saving and stabilise pension costs”, and will save £67bn for taxpayers.

The strike on 30th June gave the issue of public sector pensions increased profile in the media and exposed the government spin about affordability.  The government now says it’s about fairness but its proposals will lead to an inequality of misery: unfair to all.

In effect the coalition government is imposing a tax on public sector workers to pay for the mess made by the banks:  George Osborne said as much in parliament, “from the perspective of filling the hoe in public finances, we will seek changes that deliver an additional £1.8bn of savings per year in the cost of public sector pensions”.

There is also an ulterior motive in cutting pensions, as it will make public services more attractive for privatisation.  The CBI boss John Cridland has said public sector pensions are “a brake on competition and make it harder for those in the private sector to bid for public service contracts”.

As the next chapter demonstrates, private companies have withdrawn providing fair pensions to their employees, and they do not want fair pensions for public sector workers transferred to them.

Trade unions representing millions of workers are fighting this attack through legal action, political campaigning and industrial action.

Starting from today I will be publishing the contents of the pamphlet in instalments.

Introduction: a crisis of fairness

There is an economic crisis in the UK, but it was not caused by excessive public spending or the ‘gold-plated’ pensions and pay of public sector workers.  It was caused by a recession triggered by the banking collapse of 2007.  Now there is another crisis: a crisis of fairness in which those who caused the economic mess are forcing everyone else in society to pay for it.  It is clear whose side Cameron’s cabinet of millionaires is on.

Trade unions represent people in the public, private and voluntary sectors.  Our members will often experience each through their working lives – as will their partners, friends and family.  Good occupational pension schemes are important wherever you work.

Most pensioners are reliant on the basic state pension for the majority of income in retirement, but it pays below the government’s own poverty line.

Disgracefully today there are 2.5 million pensioners living in poverty in the UK.  Only on in three private sector is now a member of an employer-sponsored pension scheme, public-sector pensions are under threat, and the state pension is now worth just 15% of average male earnings.

On the other hand a quarter of all tax relief on pensions, amounting to more than £10bn annually, goes to the richest 1% in the country.  We hear about gold plated public sector pensions, yet the real gilded pensions are to be found in the boardrooms of private companies that have abandoned provision for their workforces.

There is a crisis of pensions in the UK but it’s not that we’re living too long or that pensions are unaffordable; it’s a crisis of fairness.  In retirement, as in working life, we are highly unequal.  UK pensioner poverty is among the worst in Europe – only Cyprus, Latvia and Estonia abandon their pensioners to a greater degree.

Action is needed to secure decent state pensions as the foundation for pensioner income and decent employer-sponsored pension provision for all workers in all employment sectors.

Yesterday was extremely busy and involved me getting up at the crack of dawn, which is unheard of for me.  The Public and Commercial Services (PCS) union took joint industrial action with three teachers unions (National Union of Teachers (NUT), University and College Union (UCU) and Association of Teacher and Lecturers (ATL)).  These unions are trying to persuade the government that changes to public sector pensions and the sweeping cuts to the public sector are unnecessary and avoidable.  The one day strike could have been avoided if the government had engaged in meaningful negotiations and given ground on some of the key issues on the proposed changes to pensions.  Pension contributions of public sector workers are set to double or triple and the proposed age for claiming the pension could rise from 60 to 65 and eventually 68.

Yesterday saw picket lines outside schools and Civil Service establishments.  My workplace had picket lines outside each entrance and as I am on the PCS branch committee I was there, camera in hand.

PCS and Unite (who have a large membership in government pension schemes)  have recently signed an agreement to take part in joint campaigning.  Unite were unable to ballot their members in the time frame so they were unable to take part in the joint industrial action although  they were  able to show their support and help out in other ways.     There are a large number of Unite members at my workplace, a considerable number of them stopped their cars on the way into work so that they could talk the people on the picket lines.  This caused further disruption by causing the traffic to queue at times.

At lunch time the Unite members marched out of work to join the trade unionists who had been taking strike action and members of the public for a short march.  This was followed by a lunch time rally, which was so well attended that people spilled out from the main hall into adjoining rooms.  The rally was addressed by speakers from each of the unions including Gail Cartmail, Assistant General Secretary of Unite.  Gail exposed many myths that are pedalled by the media about public sector pensions and public sector cuts, after each exposé she got the room chanting “Its a big fat lie“.

The day was a huge success both locally and nationally.  The estimated turn out for my branch was 88% of members, with around 500 people taking part in the march

More information on the myths about the public sector can be found here.

For more of this weeks PhotoHunt pictures check out tnchick.

A letter published in the Financial Times on 25th February 2011 exposes the myth of the Public Sector stereotype:

Looking to hire? You’ll get a great recruit from the public sector

From Mr Ian Watmore,

Sir, I read Brian Groom’s report (February 21) on the perceived limited employability of public servants in the private sector with great dismay. As one who has worked for 25 years in the private sector, and now six in the public sector, my message is simple.

If you are looking to hire into your company, forget the myths and stereotypes, you will get a great recruit from the public sector.

Why do I say that? Because I cannot think of a single skill that one needs in the private sector that people don’t develop in spades in the public sector.

Operational management? What about running a prison of sex offenders. Technology skills? Nothing comes close to the scale and complexity of the tax and benefits system. Commercial skills? Have you ever let a contract for a science facility that accelerates electrons to near light speed? Customer relations? We serve everyone from the young and old, rich and poor, ill and healthy. Turnarounds? A failing company is one thing, a failing secondary school on a sink estate is quite another. Mergers and acquisitions? Try taking over a collapsing bank in a weekend. Human resources? Just imagine what is involved in sending civilians into Helmand province. Security? I’d have to shoot you if I told you what our security services do on a daily basis, but, trust me, we are lucky to have them. Public relations? Well, we are always in the Thick of It!

Even business development is hugely in evidence as civil servants promote Britain’s interests abroad, or work in successful trading funds such as the Ordnance Survey or Companies House.

Public servants manage complex, multi-billion pound businesses – indeed, my last job oversaw an annual budget of £20bn. It is this level of challenge that continues to attract the best graduates every year. Latest figures show that more than 22,000 people showed an interest in just over 600 Fast Stream jobs.

In my six years I have managed staff in Norwich and Newport, Sheffield and Scotland, Warrington and West Midlands, Liverpool and London. I am proud of every one of them, for the unsung successes they achieve, and the family and national crises they avert. I learnt much in my 25 years in business, but I continue to learn so much in the public sector too.

Many former civil servants can be found in FTSE 100 companies at all levels. Only this week, one of my most senior managers is leaving to join a renowned multinational committed to innovation and technology. This should be no surprise. The civil service has invested heavily in increasing its professionalism and now compares favourably when independently benchmarked with the private sector.

As the public sector shrinks to balance the budget deficit, we are letting go many talented people, for whom the job itself is as much the reward as the remuneration.

So please, forget the stereotypes, and join the ranks of the enlightened companies that are hiring people from the public sector. They will give you a great deal in both senses of the phrase.

Ian Watmore

Chief Operating Officer

UK Government

Permanent Secretary, Cabinet Office

Index – Media myths about civil and public services.

The meeting itself was a little chaotic because most of the staff from the regional office were off sick. The regional secretary was also off sick and the guest speaker was unable to attend.

The office staff who arrange the meetings were amongst those off sick. Surprisingly the meeting went without any serious hitches and the only thing that was missing was was cups for the tea and coffee.

I was re-elected onto the regional committee which meant that I had to attend a small follow on meeting where duties were allocated to the newly elected committee members. After the meeting there was time for a bit of networking and catching up with friends.

I had to hang around in Birmingham a little bit longer than I intended because whilst I was sleeping my plans for my final bit of Christmas shopping had been rearranged for me and fast forwarded from the planned Friday or Saturday…

I finally got home at 9pm, but at least all the shopping is done now

This is a photo from last Christmas, there was too much rushing around for a photo yesterday. The centre was a lot busier than it is in this photo.