Pensioned off

The spending cuts season is well underway, and hot on the heels of the child benefit controversy comes an equally explosive report on public sector pensions.

This is an issue which has plagued successive governments for years, and there is little doubt that reform is long overdue of a system which costs the public purse some 32bn a year.

The appointment of former Labour minister John Hutton to chair the inquiry was inspired. His views are respected, and his involvement ensures a degree of cross-party involvement.

Lord Hutton's proposals will, however, please few on the Labour Left. The call for higher contributions from public workers amounts to an effective pay cut for nurses, teachers and council staff already facing pay freezes and swingeing job cuts. The more militant union leaders, typically, have described the proposals as "robbery".

The harsh reality is that hard-pressed private workers can no longer afford to prop up a generous scheme which allows public servants to stop work early and spend up to 40 per cent of their lives in comfortable retirement.

Final salary schemes which are rapidly becoming extinct in the private sector – witness Asda's announcement of the closure of its scheme – are equally unaffordable for the Government.

But Lord Hutton is also right to point out that, contrary to common perception, there is nothing "gold-plated" about the vast majority of public sector pensions which average less than 8,000 a year.

When the final decisions are taken, the Government must ensure it is the "fat cats", and not the school dinner ladies, who take the hardest hit.