The writing is on the wall. The government wants us to pay more, get less, and work longer – and preferably die before we retire...

Pensions attack: institutionalised looting

WORKERS, JULY 2011 ISSUE

For over ten years the private sector has been attacking workers’ pension schemes. The result is that there are now almost no final salary benefit schemes open or available to new workers taking up employment in the private sector in Britain. Robert Maxwell’s looting of Mirror Newspapers’ pension scheme, a scandal in the 1980s, has now become the institutionalised norm in the private sector.

Now the government’s assault on workers’ pensions, which are our deferred wages, is shifting to public sector provision.

A concerted softening-up process has been going on for months from the government and big business – alleging that public sector pensions provide for “fat cats”; that pensions are the principal cause of the financial crisis; that an ever-growing longer-living population will bankrupt the nation; that “we” are living beyond our means; that there needs to be “fairness” and “equality” in pension provision; that we have created a financial black hole sucking the life blood out of the economy; that our pension schemes are unaffordable, unsustainable and will bankrupt us. This list goes on, with regular mantras and tantrums from the press and media.

Already the government has by sleight of hand changed the basis on which pensions are calculated, by moving from the Retail Prices Index to the Consumer Prices Index, an EU model that ignores key British economic indicators such as mortgage payments. There was no need to adopt an economic model that does not fit British conditions except for government loyalty to the EU and the fact that it gives them an easy way to devalue pensions. The net result is to reduce the value of pensions by around 1 per cent a year and to cut pensions benefits by £84 billion over the next 15 years. This will contribute to a poverty-ridden elderly working class.

Another example of government trickery was to have an “independent” review of pension provision by John Hutton, former Labour MP and minister and now a lord.

Hutton oversaw Labour’s pensions attack in 2006–8 and after negotiation with the trade unions agreed the changes in the Civil Service, NHS and Local Government schemes. Now he reappears and produces an independent report which the government has embraced in its entirety. Why? Because it will rip the heart out of public pension provision. Wrapped in sweet words of “fairness” and “equality”, it will ensure that the race to the bottom for pension provision is the norm – never a levelling up but a levelling down.

The government, as legally required, is consulting on the proposals but with a clear message to those involved in its negotiations with the TUC that nothing is going to change its position. Nothing other than a serious upping of the ante as the autumn approaches and trade unions look towards action rather than words, that is.

Ironically, while these discussions are taking place the cross-party House of Commons Work and Pensions Committee published a report saying that the pension reforms introduced from 2006 to 2008 under Hutton will ensure that the pension schemes are stable, affordable and will benefit the Treasury by £67 billion over the next 50 years.

Viability

The report goes on to attack the change from RPI to CPI as devaluing pensions and threatening savings. It says that the likelihood of members opting out of the schemes owing to unnecessary increases in pensions contributions is threatening the viability of the schemes. The report is damning about the impact that slashing public sector pensions will have as poverty and increased demand for health and social care then impacts into local government and NHS provision. The short-termism of the government’s proposals will have a significantly destructive long-term result.

The proposed pensions changes, effectively a doubling of worker contributions, have nothing to do with improving pensions or savings. The increases year on year from 2012 represent a straightforward Treasury tax on pensions.

The government mantra is pay more, receive less, work longer and die before you are able to claim your pension, as the age of retirement keeps being ratcheted up and up. The original state pension introduced in 1909 by Liberal prime minister Lloyd George was only if you reached 70 years (and was means tested). The same writing is on the wall now: work until you die or are too infirm to enjoy your retirement.

Devaluation of pensions will exacerbate poverty in old age.

Britain’s pension funds equate to £1,900 billion, which finance capital jealously eyes. An estimated 20 million people in Britain are dependent on, receive or will receive a public-sector pension, effectively a third of Britain’s population. Not that these pensions for the vast majority will be enormous – averaging £4,000 for a man and £2,500 for a woman in local government, for instance – hence the government’s talk of introducing a flat-rate state pension of £140 a week. What sounds like an improvement for many will be heavily means tested with every obstacle possible to prevent workers receiving it.

The government’s consultation exercise is set to conclude by the start of July. A number of trade unions – PCS, UCU, NUT, ATL and others – took strike action on 30 June with further action planned, and other unions are to ballot in the autumn. There are differences in the trade unions over timing and ability to deliver a strike, when, how long and of what effectiveness. Some argue it is better not to provide the government with an excuse to introduce further legislation to effectively outlaw industrial action in the public services. Most public sector unions decided to bide their time until the consultation exercise finished, though the genuineness of the exercise was in doubt with Treasury Chief Secretary Danny Alexander announcing the outcome well before it finished.

Not all public sector workers can or should necessarily act at the same time. The leftist cry for “all at once, now” creates division and tension. Each part of the public sector differs in the readiness to fight and in the specific issues on which they might agree. Maintaining unity will not happen through TUC-directed action, but through active engagement with each employer.

Slow, gentle persuasion is under way to bring crucial groups of workers not normally associated with the TUC into the camp of organised labour. For instance, unions with no-strike clauses in their rules such as some of the smaller teaching and professional unions; unions not TUC affiliated but with a voice the government shudders to hear when they speak out on professional matters, such as the doctors and nurses in the BMA and RCN; unions involved in the public sector but to a lesser degree than others – Unite, for example. Some unions believe they can find some wriggle room to compromise with the government out of cowardice.

Each union has to be in a position to deliver a legal ballot. Each union needs to be able to generate a legitimate trade dispute, which could be scheme specific. Workers understand that the government is not going to change course after a one-day stoppage, but that sustained industrial action has to be marshalled on many fronts. A far from easy prospect calling for clear, united leadership and member involvement – both essential – which will not be resolved by mind-numbing chants for a general strike, often by those stood outside the conflict.

Attack

Nobody should think the government is unprepared for this industrial action. As they had the Ridley Plan in the late 1970s to address how they would attack the trade unions in the then nationalised industries – coal, utilities, transport, docks and manufacturing industry – so they are priming the pump now for what they see as tackling the public sector unions.

Every NHS hospital has since the winter of 2010 been updating its emergency plans to thwart industrial action. These include using retired staff, agency staff, migrant and refugee staff, private contractors and scabs.

This is coupled with rafts of US-style anti-union, anti-collective, anti-worker legislation aimed to paralyse and destroy trade union organisation. (Education Secretary Gove is now calling on parents and headteachers to thwart teacher action.)

To respond to this challenge we need imaginative thinking, innovative tactics, a propaganda campaign to capture the minds and organising ability of workers to firmly place this discredited and disgraced government in the firing sights of millions of people.

The trade unions need to develop a new unity based not on some “leftist” grouplet trying to seize control with a fake anti-this or anti-that front but on the real involvement and engagement of workers in every workplace. The battle over pensions, provision for everyone’s future, gives us a unique opportunity to resurrect trade unionism and workplace organisation. The critical core to all of this is the workplace – being organised and the political understanding that arises from it.

The wider context of the purpose of public service and the government of the country cannot be ignored. Campaigning on that will complement the pension struggle – maintaining the NHS, comprehensive education provision, effective social services, and so on – and not forgetting to neuter the real fat cats. ■