Responding to a question in the House of Lords from Conservative peer Baroness O’Cathain last week, City minister Lord Myners said the Labour Party had not completed a deal with the unions akin to the Warwick Agreements. These handed the unions a series of concessions ahead of the 2005 general election and a package of pledges on workers’ rights in July last year.
The government has repeatedly refused to support calls for an independent review of public sector pension costs, and last year shunned the Liberal Democrats’ proposal for an independent reivew of the issue.
“There is no agreement of which I am aware about the postponement of public sector pension reform,” said Myners.
He said the government reforms had already saved between £1.25bn to £1.5bn a year after negotiations with the NHS, teachers and civil servants.
Conservative peer Lord Blackwell asked Myners if he agreed with the Institute of Economic Affairs that public sector pension liabilities were close to £1trn and increasing at a rate of £100bn a year.
“The most important factor to recognise is that the total cost of public sector pension provision is currently around 1.5% of public expenditure a year, and is not projected to rise above 2% in the next 50 years,” said Myners.
Conservative Treasury spokesperson Baroness Noakes said the public sector employed 20% of the workforce, yet more than five million public sector employees have defined benefit pensions, and fewer than a million private schemes are still open to new entrants.
Myners said: “The so-called burden, when expressed as a percentage of total public expenditure, is much lower than most people believe.
“I believe that the core issue of the question from Baroness Noakes should be seen from another perspective: it is the deplorably small number of people in the private sector, particularly those on low and moderate incomes, who have any pension provision at all.”
