| Lord Hutton: why public sector workers must pay more for pensions Labour peer says he is asking public sector workers to save more for retirement, not pay off the nation's debtsLord Hutton, the former Labour cabinet minister, has defended his blueprint for shaking up public sector pensions, saying he is asking people to "save more for their retirement, not contribute to paying off [the national] debt".In a report commissioned by the coalition government, the Labour peer said 6 million public sector workers would have to pay more towards their pensions and accept that in retirement their benefits would not be based on their final salary.In an interview with the Guardian, Hutton anwered attacks from the trade unions and Labour MPs by saying it was "unsustainable" for public sector workers to retire at 60 when people were "living to 88 today and will be living longer in the future"."Look, it's not right that my kids will be expected to work way past that age while I will go at 60. You have to be fair between generations as well as between taxpayers and workers."He said that there was little room to reduce benefit levels and that trade unions – who he said had blocked reforms three years ago and were threatening industrial unrest in response to his report – had to "look around at what's happening in the world"."I am asking people to save more for their retirement, not contributing to fiscal retrenchment or paying off debt. Trade unions have to accept that there are some extraordinary deals in the public sector."For example, in the civil service, for paying just 1.5% in [wage] contributions you can get a final salary pension. That is an extraordinary deal because it costs the taxpayer an awful lot more to provide it."To critics in the Labour party who claimed he was "collaborating" with the enemy, Hutton said the issue went beyond "party politics". As work and pensions secretary under Tony Blair he had attempted but failed to push through radical pension changes. His efforts were frustrated by those inside the Labour party and labour movement.He agreed that for him this was "unfinished business". "For me, this issue is one where I put country first, party second," he said. "There are plenty of sensible people in the Labour party who would agree."Unless reformed, the shortfall in public sector pensions would only get bigger, he said. The taxpayers' contribution was forecast to rise to more than £10bn by 2016 from £4bn this year. The only way to prevent this was to get public sector workers to pay more themselves."I understand that people out there are facing not getting a pay rise this year and are worried about their jobs. The government must protect lower paid workers but I am not asking people to pay more [for their pensions] for ideological reasons. I am looking at the facts."Hutton says in his report that "a one percentage point rise in contributions for all active public service members could raise around £1bn per year across the unfunded schemes".He said the gap between public and private sector provision was not "something that could carry on", especially if the government wanted to retain the "innovation and expertise of charities, mutuals, the voluntary and private sector".This did not mean a "race to the bottom" to match public pensions with the worst in the private sector. "I have always taken the view that opening public services to new providers, mutuals, the private sector and charities was a way of reforming them. But many charities and third sector bodies tell me that they are not interested in public sector contracts if that means taking on expensive public sector pension liabilities."Although final salary schemes were "fundamentally unfair", Hutton said he did not agree that public service pensions were "gold-plated" because half of the government servants who retired got less than £5,600 a year.The peer said that whatever changes he decided to recommend, they would protect low-paid staff. Hutton said he would be reviewing other methods of calculating benefits, including those based on average earnings, before his final report out next year.Public sector pensionsPublic sector payPublic sector cutsPublic sector careersPublic services policyPensionsJohn HuttonTrade unionsRandeep Rameshguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
Sick Thatcher cancels No 10 visit Baroness Thatcher pulls out of a visit to Downing Street to mark her 85th birthday because she is suffering from flu. bbc.co.uk |
Spending review anchored in 'fairness' says Osborne. Critics beg to differ Economists, family groups and those representing benefit claimants insist vulnerable will be hardest hitGeorge Osborne's claim that his spending review is anchored in "fairness" was undermined tonight as economists, family groups and those representing benefit claimants insisted it would hit the most vulnerable the hardest.Osborne, who was stung by charges that his emergency budget in June had been regressive, went out of his way to show that this time those with the highest earnings would pay most towards reducing the deficit.To highlight his assertion that "we are all in it together", he told MPs that even the Queen had agreed to a 14% cut in royal household spending in 2012-13 and a one-year cash freeze in the civil list for next year.The Treasury also published the first ever "distributional impact analysis" in an attempt to demonstrate the effect of cuts on different income groups.One graph published by Osborne appeared to show that the rich would lose a far higher proportion of the public services they have access to, relative to the poor.But critics immediately questioned the methodology. The thinktank Demos pointed out that the rich use far fewer public services so a small drop for them is equivalent to a large proportion.Sonia Sodha, head of the public finance programme at Demos, said: "George Osborne claimed that the impact of today's spending review is progressive, with the richest being hardest hit."But the Treasury's own analysis shows the second poorest fifth of households are going to feel exactly the same pinch in public service cuts as the richest fifth in cash terms: £520 a year."And the Institute for Fiscal Studies, which led criticism of the June budget as regressive, described the spending review as "clearly not progressive" on the Treasury's own analysis, unless measures announced by the previous government were included.Tim Horton, research director of the Fabian Society, said: "George Osborne claims the spending review is progressive, but the Treasury's own analysis shows that the benefit reforms announced yesterday will hit the poorest harder than the richest."What is more, the only way that the overall package of tax and benefit reforms can be described as progressive is if you include all of the policies the government inherited from Labour."Alan Downey, Head of Public Sector at accountants KPMG, said that at first glance the cuts seemed reassuring because the level of benefits was being maintained.But this disguised the fact that the government was tightening eligibility rules for claiming benefits."The rationale for these changes is clear: pay benefits at a reasonable level for those who need them, but restrict access for those who are not judged to be really needy."Many people will see that as a fair balance, but it represents a significant shift in welfare policy, and it will undoubtedly impose hardship on the families and individuals who find themselves worse off."Osborne's confirmation that 490,000 public sector workers are expected to lose their jobs added to a sense that middle income as well as lower earners will be hard hit.Disability groups said the decision to save £2bn by limiting to one year the time people can spend on the contributory element of employment support allowance (ESA), the successor to incapacity benefit, could result in "dire consequences" for many families.In a letter to Liberal Democrats, Nick Clegg argued that he had fought to ensure that fairness was at the heart of the spending review."We are not taking the decisions today because they are easy or because we want to see a smaller state, we are taking them because they are right. We have a hard road to recovery ahead, but we are determined to ensure it is a road that leads to fairness too."But anti-poverty campaigners were not convinced.Rhian Beynon, spokesperson for the End Child Poverty campaign of more than 150 member organisations, said the spending review would "almost certainly increase child poverty and increase the economic costs faced by any society with high levels of poverty, inequality and social exclusion".Neal Lawson, chair of the Compass pressure group said: "Fairness should be judged according to who was responsible for the crisis, and who can afford to pay to resolve it. This points to the bankers and the richest in our society who are least in need of public services and not the poor, who aren't to blame and will now suffer horribly."Spending review 2010George OsborneTax and spendingWelfareEconomic policyNick CleggPovertySocial exclusionState benefitsToby Helmguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
James Bond's Aston Martin for sale James Bond's gadget-packed 1964 Aston Martin DB5 - the one from Goldfinger and Thunderball - is expected to fetch millions of pounds at a lavish car auction in London on Wednesday. bbc.co.uk |
Small business hit by "extortionate costs" of pension enrollment Small businesses will be hit by "extortionate costs" as the Government introduces its auto-enrollment pension rules, industry leaders have warned. telegraph.co.uk |