Here’s David Cameron in the London Evening Standard, insisting that the new public sector pension proposals in Lord Hutton’s review are “fair”, and a “good deal”. He’s wrong.
Mr Cameron, addressing the annual conference of the Local Government Group in Birmingham, said reform was “essential”, warning that the pension system was in danger of “going broke” unless action was taken because people were living much longer.
If the public pension system is funded by the government (which it is), then the only way it can “go broke” is if the government refuses to fund it properly. It’s entirely in their hands. If Cameron was quoted in the Times tomorrow saying we were in danger of declaring war on Guinea Bissau, it would be no more ridiculous. It’s like someone telling their children their pocket money fund is in danger of going broke and they’d better do more chores or it will become unviable to pay them at all.
At least he admitted that gold-plated public pensions are a tiny exception to the norm. Almost half of all public service pensions are worth less than £6k a year, the article notes.
The balance between what public sector employees paid into their pensions and what the taxpayer contributed was getting “massively out of kilter”, said the Prime Minister.
Civil servants contribute around 1.5% and 3.5% towards their pension, compared with 19% from taxpayers, while taxpayers paid the equivalent of £1,000 per household towards maintaining public sector pensions, which Mr Cameron said was not fair.
This is the part that’s got me really annoyed. Mainly because it overlooks the fact that PUBLIC SECTOR EMPLOYEES PAY TAX. Quite a bit, actually. So to draw a line between public employees and taxpayers is stupid. It’s like pointing out that all car owners are subsidising drivers of yellow cars, when those drivers (whose only crime is questionable taste) pay road tax, etc. too. It’s an utterly false dichotomy, but one that seems to be increasingly popular.
I was talking to my father (who is a public employee) last night, and he pointed out that public sector workers have always earned less than their counterparts in equivalent jobs in the private sector, with the understanding that their pensions would be better and more secure. “I look forward to getting that as back-pay,” he quipped.
The argument that private sector pensions are terrible is no defence either. Standards of public pension provision should be the benchmark, not another contender in the race to the bottom, born of companies’ unwillingness to pay money to anyone not still contributing to their bottom line.
Ultimately, the decision not to fund the existing pension scheme is a choice, just as it was a choice to spend what is already a cool £300 million on intervention in Libya while cutting funding elsewhere, and to slash corporation tax while raising VAT.
There Is No Alternative?
Don’t You Believe It.