Downing Street Says » Public Sector Pensions

» Wednesday, October 19, 2005

Public Sector Pensions

Asked if the deal on public sector pensions was not a "bit beer and sandwiches", and why did the Prime Minister allow his capitulation just before Adair Turner made the private sector work for longer, the PMOS said that without agreeing to any of the pejorative elements of the question, he would try and answer factually. The Government, of course, consulted unions, the CBI and the Chamber of Commerce, and we were doing so equally over the issue of paternity pay. It was sensible to hold proper discussions, and as a result of those discussions, the public purse would have saved £13 billion by 2050. That was a considerable saving, and that was why the negotiation made sense.

Put to the PMOS that that was a notional saving on an ever-escalating figure, the PMOS said that it was a very real saving in which the unions had agreed to extend the retirement age for new civil servants to 65. That was a real change in conditions for civil servants who were joining, and it did result in a saving of £13 billion.

Asked that as a general principle, did the Prime Minister acknowledge it would be wrong to say that a private sector employee should have inferior pensions arrangements compared to Government employees who were funded by the tax payers, the PMOS replied that there were changed in the private sector that this deal mirrored. What should not be ignored was that there would be a change in the terms and conditions for new civil servants which would result in real savings. The PMOS was sure that people would not want to ignore those real facts.

Put to the PMOS that given the notional £13 billion saving, were people not right in thinking that the other £13 billion in the package was going to be re-invested to the extent that it looked after the pensioners of today in the public sector, at the expense of the pensioners of tomorrow, the PMOS said that the approach to this had been mirrored by what had been the practice in negotiations and deals in the private sector. The PMOS suggested that people spoke to the DTI for more clarification.

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