These strikes were irresponsible and untimely and won’t create a single job
Negotiations between the Government and the unions on public sector pensions are ongoing. Meetings took place on Tuesday; there will be more today and tomorrow. So I deeply regret the actions of union leaders in organising yesterday’s strikes. In my view they were inappropriate, untimely and irresponsible.
The strikes will not create single job in Northern Ireland or attract a single investor. Yet they will cost the UK over half a billion pounds at a time when we are trying to reduce the deficit and rebuild the economy following Labour’s disastrous boom and bust.
Let us just consider a few basic facts. Today, the average 60 year old is living ten years longer than in the 1970s; a civil servant retiring at 60 can expect to draw on a pension for 30 years.
Over the past ten years public sector pension costs have gone up by a third in real terms. The bill now totals £32 billion. That is more than the UK Government spends on the police, prisons and the courts combined.
Public sector workers are on average paid more than those in the private sector. As the Belfast Telegraph reported last week, in Northern Ireland public sector workers can expect to make over 41 per cent more than those in the private sector. Yet many people in the private sector are paying more towards public sector pensions than they are their own.
For somebody in the private sector to receive an equivalent pension to someone in the public sector they would have to contribute over a third of their salary each year. So, under the Government’s offer, a teacher earning £32,000 a year could receive a pension of £20,000 a year. To receive the same pension a private sector worker would have to pay in 38 per cent of their salary.
That’s why the Government asked the former Labour Work and Pensions Secretary, John Hutton, to conduct a review. He concluded that the current situation is untenable and that reform is needed.
The Government has listened to the concerns of public sector workers. We have responded with an offer, based upon the Hutton Report, which is generous, fair and affordable. Let me give you five reasons why.
First, public sector pensions will remain among the best available. There will be a guaranteed level of pension which will be inflation proofed. Only one in ten private sector workers will have access to similar schemes.
Second, most people will see no reduction in the pension income they receive at retirement. In fact many low and middle income earners will receive a larger pension.
Third, people earning less than £15,000 a year, many of whom are women, will not have to make an increased contribution. Another million workers across the UK earning up to £21,000 will have their increase limited to 1.5 per cent over three years.
Fourth, the pension pot that people have built up so far will be protected. They will have a guaranteed benefit in retirement free from market fluctuations or fees. Again, very few people in the private sector will have such guarantees.
Fifth, nobody within ten years of retirement will see any change, either in the age at which they retire or in the amount of pension they will receive on retirement.
Public sector workers play a crucial role in delivering vital services to all parts of our community. The Government greatly values what they do. Here in Northern Ireland I am acutely aware of the contribution that public servants made to maintaining the fabric of society during the troubles.
Yet everyone has to recognise that people are living longer and the cost of public sector pensions is rising significantly. At the same time we are living through a global debt storm in which the UK is having to tackle the biggest deficit in our peacetime history. We have no choice but to reform.
I would now urge those union leaders and their political supporters to end this deeply damaging and irresponsible action. The negotiations are continuing. We hope the union leaders will now behave in a meaningful and constructive manner rather than hitting many hard-working people simply trying to get on with their lives.