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Thursday, 30 June 2011

Strike One?

Well, I'm not going to do an Ed Miliband this week and shy away from the biggest public sector strikes for 5 years that took to the streets of London today.

It seemed a half-hearted affair to me. I was in Whitehall this morning, and I couldn't work out why more union members weren't on the picket lines putting their case across and making more of an impact. At the Ministry of Justice and DWP, there were probably no more than six or seven people. By 2.30pm, with the march over, pubs in Westminster were spilling over with union members who appeared to be done with the marching, thank you very much, and were tucking into the pints.

There's no doubt that the pensions deal for public sector workers represents a serious step back from the status quo. It's a worse deal.

Treasury Minister Justine Greening got into a bit of hot water on the Today programme yesterday as to whether the current public sector pensions bill was "unaffordable" or "untenable". She conceded that it wasn't unaffordable, but that the Government had decided they were untenable.

It's an important distinction, because it confirms the Government is doing this on the basis of fairness (or, more crudely: cuts) than because public sector pensions are inherently unsustainable. It represents a change in tack from the Government who previously ran the "we're all getting older, state is having to pay more" line. Hutton's report does actually show the cost of public sector pensions falling, not rising, as a proportion of GDP.

But I still believe this reform is, in a time where savings must be found to reduce the deficit, a necessary course correction. To close the gap between public and private sector pensions, given that the gap between average public and private sector earnings has also closed in recent years.

Successive governments have failed to grasp the nettle of public sector pension reform. Even if the status quo is affordable, the Government's proposals I think represent a balanced and fair way of delivering fairer and more balanced public sector pensions. They still give public sector workers a better deal than they would find in the private sector. In doing so, they still offer reward and recognition for public service - but in a less evangelical way than previously. Whilst public sector workers deliver so much for our communities, it's never been as simple as public sector (good), private sector (bad) - even with the banking crisis. The previous public sector pension deals frankly got the balance of fairness wrong as compared with the private sector.

So, the government will prevail. Mainly because public opinion will be with them on this one and not with the unions. Whilst everyone else is tightening their belts, and whilst the pension deal remains a better one than is available in the private sector - there's almost no argument beyond "this is a worse deal than we had before".

Credit to the coalition government for this brave course correction. Just don't lose your nerve again.

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