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Nick Hayns: For all our sakes, summer of discontent must not succeed

THE Summer of Discontent. It doesn’t sound too terrifying. Indeed, nothing ever seems quite so bad when the sun’s shining.

However, this is exactly what the public sector unions are threatening us with, their rabble-rousing leaders promising a summer of closed schools, closed hospitals, services decimated.

Dave Prentis tells his Unison members that “this is the fight of our lives... and it is a fight we must win” The Government has developed an alarming penchant for U-turns in recent times; but this time it must stand firm. In fact, if anything, it should go further.

The issue igniting all this anger is something remarkably dry, but nonetheless crucial: pensions reform.

The Government wants pension contributions from public sector workers to go up; the unions say this is unfair.

However, it is not. Currently, public sector pensions cost nearly 40 per cent of salary for most public sector workers (for police officers that figure is nearer 70 per cent); however, neither employers nor employees pay anything near that into the schemes.

The result is a huge black hole, funded by taxpayers’ money, with the ongoing liabilities being passed on to the next generation of taxpayers. In fact, total public sector pensions liabilities are now far larger than the official national debt.

“Ah,” people like Dave Prentis and the RMT’s Bob Crow will say, “but people in the public sector get paid less than people in the private sector. It’s their benefits – better pensions, increased job security – which even things out”.

Except that’s not true, either. For some time now, average pay in the public sector has been outstripping the private sector (Office for National Statistics figures put the difference at roughly £1,200).

Indeed, over the past two years, the pay gap between what a typical public sector worker earns over and above their private sector equivalent has grown to 16.5 per cent. That means that if you work in the private sector and are unlucky enough to find yourself needing to attend a hospital which has been closed on one of the threatened strike days, the reason it will be closed is because people who have better job security, better pensions and will, on average, be paid more than you have decided to walk out over pay and conditions. It hardly seems fair.

Recently, the BBC ran a news piece on the story. It contained an interview with a 28-year-old primary school teacher who was lamenting the proposed reforms, saying that one of the reasons he had gone into teaching was because of the generous pension scheme that came with the job. I think we were supposed to feel sympathetic.

However, if sympathy is to be directed anywhere, it should be to the children who were variously mucking about or pulling faces behind him. Not simply because they are being taught by someone whose motivations for entering the profession were so boringly monetary, but because it is they – and their children, and their children’s children – who will be picking up the bill through their taxes. What the unions need to remember is that the Government currently spends over half of all national income. We are running an annual deficit of some £160bn and official national debt has soared to over £1 trillion (the true level of national debt is actually nearer £5 trillion). Reform of public sector pensions therefore cannot be avoided and taxpayers must not be held to ransom by sabre-rattling unions.

Dave Prentis, Bob Crow and Mark Serwotka of the PCS union – they are all paid large sums of money to be wilfully ignorant of the facts, or at least to hail forth very loudly in language which would indicate that they are.

There are 25 million people working in the private sector, only five million in the public. The private sector has already learnt to operate in the new financial climate – budgets have been cut, efficiencies made, benefits curtailed – and it is time the public sector woke up.

From now on, contributions into schemes must cover the true costs. This will inevitably mean that final salary schemes are no longer affordable but this was realised a long time ago in the private sector, where pension schemes have been radically reformed. “No more gold-plated pensions?!” the union bosses wail. Precisely. Good – it’s the rest of us who have been paying for them.

Reform is essential. Don’t let your summer be ruined by picket lines and placards. Get out there and enjoy the sunshine (when it arrives) and vow that no longer will your tax money be used to fill a pensions black hole caused by public sector pensions scheme members who do not want to pay their fair share. Your children will thank you for it.

Nick Hayns is the communications officer at the Institute of Economic Affairs.

 

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