Alice Hood

Today seems like a good day to debunk some public service pension myths…

Myth 1: Public service pensions are gold-plated

The Commission firmly rejected the claim that current public service pensions are ‘gold plated.’
Final Hutton Report (p26).

Half of public sector pensions in payment are less than £5,600 a year. In local government half of pensioners get less than £3,000.

A YouGov poll of 2,500 people in February 2011 asked what the average public sector pension should be. The average across all responses was £17,088. Forty-four per cent said it should be more than £15,000. Almost half (49%) of respondents believed the average public sector pension is more than £10,000, and only 23% believe it is less than £10,000.

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Richard Exell

There’s more bad news today about the prospects for household spending. Firstly, the GfK NOP Consumer Confidence Index fell 4 points this month to -25 . There was a fall in all five measures that go to make up the Index, including a 6 point drop in people’s evaluation of the “general economic situation over the last 12 months”, which now stands at minus 50.

There is a little relief for the government in the comparatively moderate minus 18 score for the “general economic situation over the next 12 months” – but this is down 3 points on the month and 6 points on the year. In addition, its worth remembering that last month the Index rose ten points – which GfK NOP put down to the combination of the royal wedding and extra holidays – and the fall back still leaves the index 6 points higher than it was in April – but 6 points below the level it was at in June 2010. This is worrying: as Consumer Trends reminded us earlier this week, household spending accounts for about 60% of GDP.

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Nigel Stanley

London Mayor Boris Johnson has renewed his call for industrial action ballots only to be valid if the turn-out is more than 50%.

Superficially that might sound just a bit democratic, but the reality is that it is simply about erecting a hurdle that will make official strike action extremely hard to achieve.

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In a break from our normal programming of authoritative policy commentary here’s the new video from Captain Ska:

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Nicola Smith

TUC analysis, published today, shows that by this time next year (if the Government’s proposed pension contribution increases go ahead) workers across the public sector will find they are experiencing a living standards drop of up to 10%.

The livelihoods squeeze is absolutely not a public sector only phenomenon: workers across the private sector are also experiencing below inflation pay rises with average private sector settlements currently running at 3%, while RPI is 5.2. But the public sector – where pay is currently frozen and where, contrary to what the Prime Minister may claim, remuneration is not generally higher than for private sector workers – is really set to feel the pain.

With just under 6 million workers across the UK (once the employees of nationalised banks are excluded) employed by the state and our analysis suggesting that a 9% fall in their living standards by 2012/13 will not be uncommon, the individual and economic impacts are set to be significant.

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Nigel Stanley

Update: I have a more general post on public sector pensions at False Economy

David Cameron’s speech to the Local Government Association on public sector pension reform has been endorsed by Channel 4 News’s generally admirable Fact Check blog. Yet they only test one statement:

I can look you in the eye and say public service pensions will remain among the very best… much better, indeed, than for many private sector workers. ”

This is simply a statement of the bleeding obvious. Fully two out of three private sector workers get no pension help  from their employer. Any pension will be much better than that enjoyed by someone with no pension at all.

But there are two statements that do not stand up to a fact-check. Nicola has already looked at his claim on pay. But what about this statement?

the pension system is in danger of going broke.”

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Nicola Smith

This afternoon the Prime Minister stated that:

…according to the Office for National Statistics, the average gross pay in the public sector is now higher than in the private sector

The implication is that overly generous pay justifies the pay freeze, increased pension contributions and heightened risks of redundancy that workers across the public sector are currently being asked to bear. But as I have previously argued (and TUC analysis has previously shown) to claim that pay across the public sector is outstripping private sector earnings is simply wrong. If there is a premium, then it’s only in the lowest paid occupations that public sector workers may be paid more.

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Richard Exell

Today’s Quarterly National Accounts confirmed that the preliminary estimate of 0.5% GDP growth in the first quarter of the year was correct. GDP is still 3.5% lower than it was at the start of the recession in the second quarter of 2008. Twelve quarters after the start of the 1980s recession, GDP was 1.0% higher; twelve quarters after the start of the 1990s recession, GDP was 1.3% higher.

Growth year-on-year is just 1.7% – this is a very feeble recovery.

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Richard Exell

The squeeze on families’ spending is still biting, with today’s Quarterly National Accounts showing that in the first quarter of 2011 there was a 0.8% fall in “household disposable income” – that is, the money we have for spending and saving.  Compared with the first quarter of 2010, the fall was 2.7%, the worst since the third quarter of 1977.

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• Work Programme staff transfers break employment law, says SCVO
  The Scottish Council for Voluntary Organisations says that 14 former SCVO staff transferred to Igneus and Working Links under the Work Programme have had their TUPE rights ignored. Some have been told they must take a pay cut, others that there is no job for them and two that they were immediately being made redundant.

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