Unions 'should accept pension deal'

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Danny Alexander has told union leaders to accept the government's offer on public sector pensions.

The chief secretary to the Treasury told the Commons that the latest offer should be "sufficient for an agreement to be reached with the unions".

He called on the unions to accept the conditional offer instead of threatening to strike. A day of strike action has been planned by the unions for November 30.

In a statement to MPs after meeting with union leaders, Alexander said that "no public sector worker" needed to fear for entitlements already accrued through their employment.

"Final salary means just that," he said.

"No public sector worker needs to have anything to fear at all for any of the entitlements they have already built up."

Outlining the deal, Alexander said that he has revised the government's offer after discussions with union leaders and cabinet colleagues.

"Cabinet discussed these matters yesterday and I met the TUC this morning to discuss the terms of our new offer. It is an offer that increases the cost ceiling, provides for generous transitional arrangement for those closest to retirement.

"Our objective is to put in place new schemes that are affordable, sustainable and fair to taxpayers and public service workers, and to put in place schemes that can be sustained for decades to come.

"It’s not easy but it’s the right thing to do, and I recognise that this is a contentious area. Public service workers deserve a good pension in retirement as a fair reward for a lifetime spent service the public."

He added that there were "two aims" he felt needed to be reached.

"First, for most low and middle income earners the new schemes will generate an income at the time at least as good as the amount they receive now.

"Second, that the taxpayer needs to be properly protected from the future risks associated with further increases with life expectancy."

The chief secretary said that the changes were necessary as people were living longer, "which means that people are living in retirement longer and claiming their pension for longer".

"As a result the cost of public service pensions has risen to £32bn a year, an increase of a third in the last ten years."

Rachel Reeves, shadow chief secretary to the Treasury, said that she welcomed the government's move to "enter into proper discussions", saying it was a "welcome change".

She said that no one wanted the potential strike action to take place, and that the government and unions had a duty to negotiate.

"Our focus is with those people who rely on services who would be affected by strikes – from parents who will have to take the day off work to those who rely on home help," she told the Commons.

"But public sector workers, nurses and teachers and dinner ladies, also care too much about the people they serve day in day out, to consider strike action as anything other than a last resort."

Reeves said that there were "three tests" she saw for a fair deal on pensions.

"First, on affordability: Do the changes deliver a fair deal for taxpayers - when times are tight and taxes are rising and spending is being cut. Second, on fairness?

"Do they deliver a fair deal for public sector workers on low and middle incomes whose pensions are far from gold plated and who have given a great deal to the services in which they work?

"And third, on sustainability: Do the changes deliver a workable settlement for the long-term which does not undermine the sustainability of existing schemes and which can be flexible in the face of rising life expectancy?"

She also called on the government to accept that for many low-paid staff, pensions were their only security.

"In a time of pay freezes, sharp increases in contributions risk both hardship today and increased levels of opt outs pushing up pensioner poverty in the future.

"Which is why we have been critical of the confrontational stance taken by the government and of the rush to early industrial action in June."

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