Talks over public service pension reform continue

In July 2011, following a one-day strike by four unions over public service pension reform, the UK government and union leaders agreed to continue discussions over proposed changes. The government subsequently announced increased pension contributions for civil servants, health workers and teachers, prompting strong criticism from unions. Public service pensions are the focus of a number of draft resolutions to be debated at the annual conference of the Trades Union Congress in September.

Continuing discussions between government and unions

Since the one-day strike by four public service unions on 30 June 2011 (UK1107019I), there have been a number of developments relating to the issue of public service pension reform.

On 18 July 2011, a meeting of unions representing public service workers agreed to extend talks with the UK’s Conservative-Liberal Democrat coalition government on public sector reform. The government and the Trades Union Congress (TUC) have held a series of discussions on the issue, focusing on the recommendations of the Public Service Pensions Commission, chaired by former Labour minister Lord Hutton (UK1103019I), and contribution increases proposed by the government.

In a letter to the TUC dated 18 July, the Chief Secretary to the Treasury, Danny Alexander, outlined the progress made in the talks so far and the format and agenda for further discussion. Talks at the level of the specific pension schemes affected are now taking place with the appropriate trade unions about short-term cost savings and ‘headline’ proposals for their reform. The government intends that details of the scheme should be finalised in time to enable legislation to be enacted by parliament in 2012–2013 and for the new schemes to be implemented from 2015. The central discussion process will continue, as required, alongside scheme-specific discussions, including on cost ceilings and headline proposals for scheme reform.

In a statement, the TUC clarified its position:

Further talks will take place centrally, and individual unions will be actively considering also participating in scheme level talks in order to fully explore all the issues and to enable unions and their members to reach a judgement on whether agreement is possible or whether more unions will enter into dispute and plan industrial action. The TUC has made it clear to the government, in agreeing to continue negotiations, that unions have not agreed to or accepted any of the government’s objectives.

Increased pension contributions announced

On 28 July, the government announced how much extra public service workers will be expected to pay in pension contributions from April 2012. The proposed rises will affect civil servants, National Health Service staff and teachers. Under proposals subject to consultation, some 750,000 staff earning less than GBP 15,000 (€17,130 as at 11 August 2011) would not have to pay increased contributions, while for those earning between GBP 15,000 and GBP 21,000 (€23,980) increases would be capped at 0.6 percentage points (before tax relief) in 2012-13, increasing to 1.5 percentage points by 2014–2015. Higher earners face more substantial increases with a potential maximum increase of six percentage points by 2014–2015. There are significant variations between schemes in the way in which the proposed increases will be implemented.

Commenting on the announcement, TUC General Secretary Brendan Barber said:

Today’s consultation documents reveal exactly what kind of increases could soon be hitting millions of public sector workers, when they are already in the middle of a pay freeze and facing a huge squeeze on their living standards. The proposed increases, along with other changes the government wants to make to public sector pensions, present the individual schemes talks with a hugely difficult agenda to address over the summer. Only if the government demonstrates real flexibility in the coming talks and shows that it is genuinely listening and prepared to change course, will it avoid more unions deciding to enter into dispute and planning industrial action later this year.

The leaders of both Unison, the UK’s largest public service union, and the Public and Commercial Services Union (PCS) said that the announcement could jeopardise the talks with the government. It also prompted renewed threats of industrial action from a number of public service unions, including the National Union of Teachers (NUT).

Pensions a key issue at TUC conference

Public service pensions are the focus of a series of draft resolutions submitted by unions for discussion at the annual conference of the TUC on 12–14 September. Unison urges the TUC to ‘robustly defend public sector pensions and campaign for affordable pensions for all workers’. Draft resolutions from PCS and the NUT congratulate those unions that took strike action over public service pensions on 30 June and instruct the TUC’s General Council to support and coordinate further industrial action in opposition to the government’s proposals.

Mark Hall, IRRU, University of Warwick