David Cameron has just used his LGA conference speech to defend reforms to public sector pensions, arguing that his proposals are fair. He has suggested that people are being told “scare stories” about the government plans. (Here is the full transcript on the Downing St website and this is our news story).
Does he have a point?
The prime minister has claimed that there are rumours that the government is “closing defined benefit schemes and replacing them with defined contribution schemes”. He also claimed that people are being told that “we are stripping workers of the benefits they have already accumulated.”
This is not true, he points out. Not only will workers still have defined benefit schemes. They will also maintain the “final salary link” for benefits already accrued. “Any suggestion otherwise is completely untrue“.
But who is actually saying this? Anyone? Or has the PM created a paper tiger?
The scare stories are the fault of the unions, Cameron appears to suggest, without actually naming them: “they are giving really bad advice to teachers, nurses and the police officers who are wondering whether to continue with their pension.”
UPDATE: Apparently the PM is not blaming the unions per se, his aides claim. Instead this emanated from the fact that Cabinet Office has spoken to public sector staff, who say they are worried about losing such benefits. “We’re very keen to get the message across out there about what we’re really doing,” says one Downing St aide.
In fact the unions are angry about the following changes, which are not yet set in stone but are proposed by the government – as my colleague Brian Groom recently explained:
* Higher contributions to pensions that will have to be made, typically rising by 3.2 per
Geoff Lewtas of the PCS union warned this morning that the chaos around the new “LEPs” being set up to replace RDAs could mean “hundreds of millions in euros” of development money lost.
The union official said that there were real concerns about the shambolic way that these “local enterprise partnerships” are being created, covering only parts of the country. Until now the RDAs were responsible for handling huge amounts of development money from Brussels:
“It will take some time before they are recognised by the EU as acceptable bodies to handle this (development aid), there could be hundreds of millions of euros in development money being held backand possibly not made available,” he warned.
“That seems to me a pretty dire consequence and a serious risk that doesn’t seem to have been taken into account.”
I am told by a reliable source that ministers have struck a deal with five out of the six civil service unions over the civil service compensation scheme. (The PCS* are apparently still holding out but its national executive is meeting this afternoon to discuss the offer). An announcement is expected as early as today.The deal could pave the way for the coalition to cut redundancy terms for civil servants and lay off up to 100,000 jobs out of the 500,000 covered by the scheme.
Francis Maude, cabinet office minister, is currently legislating for the new arrangements via a parliamentary bill which has its third reading next week. He has wanted to reduce the cost of making civil servants redundant by about two-thirds, claiming the current scheme is “way out of kilter” with the private sector.