Belfast Telegraph

Wednesday 3 September 2014

Eamonn McCann: When your back's against the wall you just have to stand up

Eamonn McCann, Belfast Telegraph

When John Hutton (55) stepped down from public sector employment last May, he collected a lump sum of £64,766 and a pension entitlement of £37,000-a-year.

Five months later, Lord Hutton, as he now is, has published his review calling for public sector pensions to be slashed and the retirement age raised.

Workers in future should draw on their savings and assets, not depend solely on pensions, the former New Labour defence minister recommended in a report commissioned by the Con-Dem government.

Hutton himself will be able to eke out his pension with undisclosed earnings from membership of the board of US nuclear power company Hyperion Power Generation, which he joined in June.

He also operates as a consultant on 'public affairs and strategic communications' for PR firm Apco Worldwide. And he chairs the defence think-tank, the Royal United Services Institute.

None of his additional earnings affects his MP's pension. Likewise for the £300 tax-free allowance he pockets each day he turns up at the Lords. That's for attendance: he's not required actually to do anything.

There was a hullabaloo of praise for Hutton's review a fortnight ago. These gold-plated public sector pensions were no longer sustainable.

The average public sector pension falls short of £5,000-a-year - less than a seventh of Hutton's. A quarter of civil service workers qualify for under £2,000-a-year. Women local government workers pick up, on average, £1,600-a-year.

Some of the most vital public sector workers - school-meals staff, domestic carers, social workers, librarians - are among the lowest-paid and already contribute an average of 6.4% of wages towards their pensions. National Health Service workers pay in an average of 6.6%.

Then there's the war on 'benefit scroungers'! A picture has been painted of work-shy chancers living high off the hog, doing the double, organising dole-drops, diddling the DLA etc. (How many west Belfast welfare fraudsters would it take to make as deep a dent in public finances as Philip Green, whose Top Shop company has so far funnelled dividends of £1,200,000,000 into the tax-free Monaco account of his wife, Christina? That's 'spending tsar' Green, regular star of this column and top Government adviser on bridging the gap between tax receipts and public expenditure.)

Benefits payable to people of working age with no other income range from £65.45-a-week (Job Seekers Allowance or Income Support) to £96.85 (Employment Support Allowance).

The most basic benefit, then, for a single person capable of work who doesn't have a job, provides £65.45 to cover everything apart from housing - food, clothes, heating, light, travel and newspapers to read of Philip Green's determination to end this unsustainable drain on the public coffers.

In spite of strident howls giving the impression that benefit recipients taking a part-time job to make ends meet are dragging the country down, the combined cost of income replacement benefits (£20.2bn) and DLA (£6.6bn) accounts for only 13.8% of the social security and tax credit bill. This represents 3.8% of public spending, 2.7% of disposable household income. (Figures from the Joseph Rowntree Foundation.)

The reason people on benefits are singled out for these assaults is not that they are claiming an unfair or unsustainable share of public resources - when compared with the sums lost through tax evaded, avoided or otherwise uncollected, for example - but because the decision-makers reckon that the people at the bottom are least able to fight back. We shall see. In Guildhall Square last week, I met an old friend at her wits' end. She'd just received a letter telling that her mortgage assistance was being slashed. "It said that I was now legally entitled to £114.45-a-week - £65.45 for me, £49 for interest on the mortgage.

"Back in January 2007, the law said I needed £162.13 a week - £62.92 for me, £99.21 for interest."

The amount she has been receiving "for herself" had inched imperceptibly upwards. But her mortgage assistance has plummeted. So her overall income is down £47.68. That's a reduction of almost 30% over three-and-a-half years - from a 'high' of £162-a-week.

And she's going to continue to lose out as mortgage assistance is pegged to the Bank of England's base rate - rather than to the higher commercial rate which actually applies. Her prospect for the future is of continuing increasing intolerable pressure.

What can public sector pensioners, welfare recipients and people facing the loss of their homes do about the dire prospect ahead?

Individually, nothing. Collectively, a lot. The place to be is outside Belfast City Hall for the ICTU demo next Saturday. We can take it from there.

When your back's to the wall, you have to stand up.

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