Cable and Alexander on union strike threats: there’s got to be pensions reform, but we want to negotiate

With trade unions threatening “sustained and indefinite” strike action if the Coalition goes ahead with its aims to reform public sector pensions in line with Labour peer Lord Hutton’s recommendations, Lib Dem cabinet ministers have been sticking to a simple message to calm the situation: there has to be reform, but we’re very hapy to engage in constructive negotiation.

Here’s Lib Dem business secretary Vince Cable speaking today:

(Video clip also available here.)

His deliberately low-key response to the unions’ invoking of strikes echoes Lib Dem minister Ed Davey’s down-playing of suggestions the Coalition might seek to tighten current strike law legislation:

“There is no compelling case to change the strike laws. We are asking public sector workers to take some very difficult decisions on pensions including changes to payment contributions, a later retirement date and end to final salary schemes. To rush to the statute book simply because they hold a strike ballot would be an over-reaction. What I mean by engaging is talking to the unions, listening to them, and changing policy as appropriate. And we have been engaging at a higher level frequently.

“Yes, we want to persuade them not to go on strike, but simply because workers decide to strike, the idea that we should get even tougher on strike legislation seems to me to not understand where workers are coming from. Bringing in such legislation would be antagonistic and inflammatory and plays into the hands of the militants, rather than engaging with the reasonable moderate trade union leaders.”

Their tone is a little more emollient than that struck by Lib Dem chief secretary to the treasury Danny Alexander, when he triggered a storm on Friday with his Telegraph article expressing disappointment that “a minority of unions seem hell-bent on premature strike action before these discussions are even complete”. Here’s Danny explaining the Coalition’s pensions reform on BBC News:

(Video clip also available here.)

After recent Coalition climbdowns, most notably on the NHS reforms, the unions may reckon the Government can be forced to re-think its pensions reforms, too — especially in the face of disruptive strikes. But whatever the soothing words of Lib Dems in recent days, this is one area of reform where the government knows it cannot afford (almost literally) to U-turn.

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  • “this is one area of reform where the government knows it cannot afford (almost literally) to U-turn.”

    They have U-turned already. The Guardian is reporting that the Treasury criticises Alexander’s speech and backtracks on pension reform plans.

  • I’m not sure who approved Danny Alexander’s comments yesterday, but whomever it was, they were unwise and not at all helpful.

    Unions know there needs to be change on pensions, they will negotiate.

  • @Stephen Tall
    the soothing words of Lib Dems in recent days
    Yesterday Danny Alexander said “our offer is by far the best that is likely to be on the table for years to come.” That doesn’t sound very soothing to me.

    “this is one area of reform where the government knows it cannot afford (almost literally) to U-turn.”
    Actually they can afford it. Hutton’s interim report showed that after peaking this year the cost of paying pension benefits – as measured by a % of GDP – will fall for the next few decades so that by 2050 it will be less than 2000 levels. A compromise position between the Unions and the government is surely both sensible and possible.

    Well said Ed Davey – a rational and reasonable voice.

  • I agree – far from being “soothing words” on the issues of pensions, Danny Alexander’s dictatorial pronouncement was downright confrontational! What he said and the way in which he said it was bound to come across as inflammatory and antagonistic. People will not respond to dictats such as this which they feel are being imposed upon them without due negotiation beforehand.

    I agree with Muxloe – Ed Davey has it right and in a more measured way.

    OK – the Lib Dems may wish to negotiate with the Unions – good, they definitely need to.

    Danny has to learn how to put things across in a far more measured manner – “foot in mouth” comes to mind!

  • But whatever the soothing words of Lib Dems in recent days, this is one area of reform where the government knows it cannot afford (almost literally) to U-turn.

    “What the chief secretary put forward were not concrete policies. They are proposals that are subject to negotiations. That is why we are still in negotiations,” said a Treasury official.

    “We are continuing to discuss these issues with the unions.”


    Look’s like the U-turn is underway.

    Poor Danny Alexander, sent out to do the Tories dirty work then hung out to dry when they realise it’s not as popular as they’d hoped with the public.

    The only major policy area this government have not very publicly retreated on is tuition fees, and that’s an issue that as long as it festers will harm the Lib Dem’s, not the Tories.

  • O.K. First off declare the interest. (Might be good practice for some who regularly comment on Lib Dem voice articles – but that’s another story…). I am a member of the NHS pension scheme. I don’t know about all of the public sector pension schemes being non-contributary but I do know about mine. If mine is non-contributory, as Danny Alexander says public sector pensions are in his BBC interview, then I would very much like to know where the little item of deduction on my payslip each month that says “superannuation”, goes each month?. The simple fact is that by “unfunded” it presumably means that the NHS pension is not a defined scheme, inasmuch there is not a ring-fenced sum of dosh labelled “NHS pension fund”. Pensioners essentially get paid out of the contributions of the current working members of the scheme. And just for the record Danny, the NHS scheme at least, makes a net contribution to the Treasury of around up to a billion quid each year a surplus as acknowledged by the National Audit office. Admittedly the teachers and the armed forces schemes have a deficit, when measured against the same parameters, also acknowledged by NAO. However, overall public sector pensions, as information from the Treasury’s own long term forecasts, which are supported by the OBR, show that public sector pensions overall currently cost the taxpayer the equivalent of 1.8 per cent of gross domestic product and projections show that this rate is predicted to rise to 1.9 per cent over the next 20 years, before returning to 1.8 per cent and then, by 2049/50, falling below current levels to 1.7 per cent of GDP. Not an ever increasing burden after all it seems

    However, the NHS scheme depends on there being an NHS pension scheme in the first place to return a surplus. If Mr Lansley gets his way with the NHS “reform” there is unlikely to be an army of NHS employees to pay the contribution, as they will have been farmed out to “Social enterprises” – but again, that’s another story.

    If “reforming” public sector schemes al la Hutton review is really the aim then well we will see. But from the worm’s eye view from the ground it certainly feels like the public sector workers are paying the price for the bankers bail out. So generally they may just feel a little miffed perhaps?.

    All this tabloid talk about gold plated public sector pensions is garbage, when the average pension actually paid is around £5,000 p.a.. To also talk about it being unfair on private sector workers who have had their pensions destroyed over the last twenty years by employers slashing and burning them in pursuit of their balance sheets, or just sheer fraud, remember Maxwell?. It is a bit rich to say that public sector pensions should also be destroyed to be “fair” to say the least the least.

    So the less Danny Alexander says the better I would suggest.

    Finally to return to the NHS pension scheme again, which has already been “reformed” in 2008. Quoting from the BMA evidence to the Hutton review is as good as any other –

    “The Scheme changes were introduced by the Review Partners in a spirit of consensus. The aims of the review undertaken were to ensure that the Scheme remained affordable and sustainable in the long term whilst meeting the needs of the NHS. Our members were willing to take responsibility for maintaining appropriate contribution rates and now typically pay contributions of either 7.5% (for earnings up to £107,846) or 8.5% (for earnings in excess of £107,847), which represented an increase in contributions by doctors of up to 2.5%. In addition GP members – who are self-employed and accrue pensions based on total career earnings – must also pay their own employer contributions of 14%, which means that most GPs pay 21.5% – 22.5% of their pay in contributions to the scheme.

    The agreement limits future employer contributions to 14% with cost pressures arising from higher value benefits being borne by members in the form of additional contributions or reduced benefits. In the last two notional funding cycles (undertaken every four years) the NHS Pension Scheme has been in surplus and provided a positive funding balance to the government.”

  • Nick (not Clegg) 19th Jun '11 - 10:44am

    “So the less Danny Alexander says the better I would suggest.”

    Amen. (On all topics)

  • Kevin Colwill 19th Jun '11 - 10:58am

    For one second I ask you to put aside a bias against the public sector and those who work in it.
    I’ve worked in both public and private sectors and found the lazy and the incompetent in both and the hard working and committed in both. My experience of life the supposedly moribund world of local government was of a dynamic and customer focused environment than where genuine imitative was encouraged. My experience with a large private sector employer in a supposedly ultra competitive, customer focused industry was of mechanistically following procedures in a blame culture where workers at all levels were driven by a fear of mistakes rather than any desire to serve.
    One key difference between the sectors was the private focused on pay whilst the public sector workers have always had much more focus on terms and conditions of service. We should not forget that many talented individuals who entered the public sector because it afforded better terms, including better pensions, and took a lower rate of pay as a quid pro quo. Nor should we forget thousands of very low paid public sector staff who have given massive commitment only to feel undervalued and thought of as second rate.
    Reform is necessary but the gusto with which some on the right attack the public service is totally unwarranted. I am saddened by the desire for the Lib Dems become poster boys for kicking the public sector. You can’t beat the Tories at their own game and only serve to further alienate those left leaning voters who were once prepared to put an X against a Lib Dem candidate

  • @kevin Colwill

    Exactly my experience of rhe private and public sectors so well explained – all Alexander has done with his cack handed approach is to lose even more former Lib Dem voters, – the inexperience of senior Lib Dems at the art of negotiation and presentation is just a gift to the Tories – Clegg neeks to bang the table hard with his ministers – if he cant/wont/doesn’t know how to he really does need to think about his position before it’s all far too late for any recovery.

  • Aside from replacing Robert Maxwell with the state in terms of trustworthy administrators of pension plans, the politics of this leave me breathless, and dolefully aware that our limo-using colleagues have learned nothing at all. So our base in the Universities was smashed with the tution fees disaster, so now we’re happily going to smash what’s left of a base amongst public sector workers by resiling from their contracted pension arrangements.

    give me strength.

  • David from Ealing 19th Jun '11 - 1:11pm


    I agree. Unfortunately, almost every time he opens his mouth, Danny Alexander loses us votes. Both what he says and the way he says it often gets me almost screaming at the TV.

    I was in public sector pension schemes for 28 years and I certainly contributed.

  • Andrew Duffield 19th Jun '11 - 6:46pm

    Danny Alexander has merely stated how it is “unjustifiable to ask the taxpayer to work longer and pay more so that public sector workers can retire earlier and receive more themselves.”

    Spot on.

    He now needs to peg the pension age to average life expectancy and be done with it.

  • @Andrew Duffield

    Public sector workers are taxpayers too! Alexander is using right wing Tory tactics of pitting the public against the private sector by implying that those funded by taxation are greedy and lazy. I’d expect that of the Daily Mail, not the Liberal Democrats.

  • Andrew Duffield

    I like the way you blithely talk about pegging the retirement age to life expectancy when we have just seen the survey that shows that there is an increasing gap between the life expectancy in the rich and poor areas – happily seeing a man in Glasgow working to 67 or 68 when his life expectancy is not much more than this whereas someone in West London can look forward to a happy 25 years of retirement.

    Pensions need reforming but this needs to be include the parasitical behaviour of those in the pensions industry and the value for money they provide. The fact that private sector workers have been ripped off by their bosses over the years should not make it compulsory for the Government to do the same.

    Alexander is a weasel and he is going to find himself out of a job come 2015 – back to working in the tourist offfice again I hope – as said above every time he opens his mouth he loses the party votes

  • “He now needs to peg the pension age to average life expectancy and be done with it.”

    All I can say is that it’s a good job this approach wasn’t adopted by the Liberal government that introduced state pensions, or the pension age would now be 103!

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