Thursday, 30 June 2011

Why Public Sector Workers deserve our support and how we should do it.

As we batten down our collective hatches for a day’s ‘Industrial Action’ - a classic oxymoron, the irony of which has always tickled me - I find myself compelled to put pen to paper once more.

I have to confess to having great sympathies for many of the public service workers and the glaring uncertainties they face when looking forward. The realisation that your future is not necessarily going to be as good as that which has been enjoyed by those who came before is an unpleasant and unwelcomed shock. Pay that has been squeezed while temporarily uncontrollable inflation takes hold in the world around us leaves these people already stretching their incomes to support their families and save for the future, so a call for them to pay more into their diminishing retirement planning must seem the ultimate inconvenience.

However, the point that strikes me as being blindingly obvious is that none of the difficulties listed above are in any way unique to either Teachers or the broader selection of Public Sector Workers. In fact they are the new reality for us all. The only difference is that these unfortunate people are being led by the nose into this misguided and ultimately pointless action by their cynical Union leadership that has chosen to ‘take a stand’ on their behalf, while the rest of us just get on with trying to make a living.

The truly breath-taking advances that we have seen in longevity over the past three decades has meant that the prospects of surviving long into retirement are now much more real than ever they were until quite recently and yet the funding model for these incredibly generous retirement schemes has for the most part gone unchanged. There is a guarantee of income that is driven only by your final salary and the number of years that you have worked. This income is then paid for life, usually with generous inflation-linking and widows/widowers benefits to boot. The expensive bit is that it is guaranteed and makes no allowance whatsoever for changes to the circumstances that may prevail when these people retire. In other words, if investment performance has been poor (or worse) and interest rates have collapsed then the massive increase in the cost of those benefits is simply met by the pension scheme (that’s you and me by the way).

When you contrast those guarantees to the total lack of any certainty that the rest of us face with our own future planning then you see a most unfair situation. We have to adjust our funding to overcome all the same obstacles and pitfalls that I have described above, but we do so whilst paying an ever increasing share of our income to support the cast-iron guarantees afforded to Public Sector schemes. This situation simply cannot go on – it has been true for years that workers in the private sector have been over-taxed in order that the Public Sector pension differential should be maintained and this is something that we should have tackled properly years ago. It is never nice to have something taken away from you, but when it is something that is simply no longer appropriate to the modern age then it is time to wake up and smell the coffee.

I have heard countless interviews where the main thrust goes along the lines of “I am being asked to work for longer, pay in more and get less back at the end”. Clearly I am expected to be sympathetic to this plight, but I am afraid I am not, for the simple reason that this is precisely the situation that we all of us face. The only difference between myself and those shouting this message presently is that I pay for my entire retirement funding and always have. I have no benevolent employer who decides to secure my future with tax-payers’ money, leaving me to balance my future with the costs of running my family for the present. Thus I am only too well acquainted with the true cost of planning for the future.

The truth behind this is that times have changed immeasurably and the concept at the heart of of the kind of schemes that are being fought over today is out-dated and unaffordable. We are told that the (Public Sector) pensions bill alone will be almost £10BN a year by 2015. This is not at all something that has crept up on us in the past couple of years. It is an imbalance that has been growing for decades and full marks to the current Government for having the guts to begin to seek at least the beginnings of a reform.

For intelligent people, the Teachers have allowed themselves to be wound up and filled with fury over something that is an absolute inevitability in the modern age. I have much time for these people and the sterling work they do for us every day of life. In my opinion the true villains in this piece are the Union leaders purporting to represent their members. They should for years have been counselling Teachers and other public servants on the reality that they all face and negotiating on their behalf for a fair evolution of the ‘gold-plated’ and unsustainable benefits they are still fortunate enough to enjoy.

I am sure that today’s action will not be the last, as there are many who would like this to become a full-blown and rolling movement like the ‘Poll-Tax Riots’ we saw twenty years ago. Next time you see someone like Mr Serwotka telling us of the iniquities that his members face, just listen carefully to see if there is any constructive alternative being put forward - other than our continuing to pay from our taxes for a scheme that is massively more generous than ever we could afford for our own retirement planning. To pretend that the current situation is a fair one and thus that his argument is a just one is at best misguided. We should all support our Public Sector workers by helping them understand that the proposed changes are a necessary evil in the modern world, that the reforms will still leave them with a very generous and expensive pension and above all not to be taken in by those who want to make political mischief from their plight.

These are of course my own personal views. For a full regulatory statement of my status etc etc please see my website (link above)