marylsommers: Unions agree to pensions deal

Minister says 'heads of agreement' have been reached with most unions that should lead to savings of 'tens of billions of pounds'

Danny Alexander, the chief secretary to the Treasury, has announced that agreements have been provisionally reached for each public sector pension scheme that will save taxpayers "tens of billions of pounds in decades to come".

Alexander told MPs in a Commons statement that negotiations on the "heads of agreement" had been concluded on the respective pension schemes with a commitment secured from "most unions to suspend any further industrial action" while the final details are resolved and unions consult their members.

He told MPs that unions agreed with the government it was the "best outcome" that could be achieved through negotiation and that ministers would bring forward legislation in due course.

"I am pleased to report that heads of agreement have now been established with most unions in the local government, health, civil service and teachers' schemes," he said. "It will now, of course, be for union executives and memberships to decide their response."

But while the consensus view seemed to dismiss the prospect of another mass day of action involving unions representing between them 2.6 million workers, some unions warned that further waves of industrial unrest could be on the cards.

Alexander said the heads of agreement had been reached within the end-of-year deadline set by the government and despite "some unnecessary disruptions" ? a provocative reference to the mass walkout on 30 November which saw well over a million public sector workers take part in a one-day strike over proposed changes to pensions.

The Liberal Democrat minister said the provisional deals had been reached without additional money being made available but in a "configuration" preferred by the unions.

Pension ages for public sector workers in future would match the state pension age and be on a career-average basis, he said.

In comments likely to provoke anger among public sector unions who have claimed that the reforms were being introduced to make it easier for the private sector to compete, Alexander said that the changes would allow the government to "forge ahead" with its "ambitious plans" for public sector reforms, since the new pension arrangements would be "substantially more affordable" to alternative providers in the private and voluntary sector bidding for public sector contracts.

"While most workers will still have to work longer and pay more, most low and middle earners working a full career will receive pension benefits at least as good, if not better, than they get now," he said.

The minister told MPs "most unions" would be asking their executives to lift the threat of further strike action while work is done to conclude the final agreement. "I hope that the remaining unions do the same," he said.

He said the provisional agreements showed it was possible to reach an agreement "in good faith, based on clear objectives". This was the "right way" to approach relations between the government and the unions, he said. "In these difficult times, it is important to show that people can come together to achieve genuine reform, preserving the best of the past, but recognising the realities of the future."

Alexander said it was "disappointing" that the Public and Commercial Services union (PCS) had "walked away from the talks" ? a claim strongly denied by the union.

A furious Mark Serwotka, the PCS general secretary, accused the government of "unacceptable bullying" and insisted it was the Cabinet Office that had "unilaterally" announced that the PCS would no longer be invited to negotiations over pensions, even though the union believes the government has a legal obligation to do so.

Serwotka dampened ministers' hopes that the wave of industrial unrest over the changes that saw a strike by four unions in June, and 29 unions in November, was now at an end.

He said the union would assess the scale of opposition among fellow unions and then consider longer walkouts or targeted strikes in protest at the proposals. "We are certainly not ruling out industrial action in the new year. But it would be irresponsible of us to announce now that there will be strikes when we have not fully assessed where we are. One of the things we have to look at is which unions are still materially opposed to this."

He acknowledged that tactics would have to change if there were no prospect of a repeat of the million-strong 30 November walkouts. "The calculation is: can we take harder-hitting action if there are fewer unions involved?"

Prospect, one of the moderate unions representing civil servants, said the November strike in which its members had taken part had been "crucial to getting the government back to the negotiating table" .

The Prospect deputy general secretary, Dai Hudd, said: "To walk away at this point would be detrimental to our members, for whom a key demand throughout has been for negotiations and a proper offer."

But he went on to warn: "While we have agreed to suspend industrial action to allow the talks to continue on the new scheme ? and over the imposition of contribution increases ? our members reserve the right to take further action if negotiations break down. We have stressed that members will be consulted by ballot on any final proposals."

Details across the schemes vary and were published on Tuesday by the relevant government departments.

Accrual rates ? the rate at which pension benefits are built up ? have been approved across the schemes, but Alexander told MPs that this was offset by a lower revaluation linked to prices rather than earnings.

The first year of increased employee contributions to pensions, which is expected to deliver an overall rise averaging 3.2 percentage points phased in over three years, has been "tiered by income" to protect lower-paid workers. The government has agreed to review the impact of the first year phase before taking final decisions on how future increases will be delivered, he said.

"These agreements deliver the government's key objectives in full, and do so with no new money since our November offer," said Alexander.

"These reforms will save the taxpayer tens of billions of pounds over the next few decades and significantly improve the long-term fiscal sustainability of this country. This is a fair deal for public service workers, an affordable deal for the taxpayer and a good deal for the country."

He said the agreements included a cap on taxpayer costs at 2% "above or below" the scheme evaluation, which would see employers benefit if costs fall, though Alexander stressed it was only expected to be used if "extraordinary, unpredictable events occur".

He also announced that the government had agreed to keep in place the "fair deal" provision which ensures staff transferring out of the public sector as a result of outsourcing would have their pension rights protected.

Alexander said the new pensions would be "substantially more affordable to alternate providers". He said: "Because we have agreed to establish new schemes on a career-average basis, I can tell the house that we have agreed to retain the fair deal provision and extend access for transferring staff. The new pensions will be substantially more affordable to alternative providers and it is right that we offer workers continued access to them.

"In addition, the government will consider what practical options might be available to reform the terms of access to the NHS pension scheme, in particular for NHS staff who move to a non-NHS 'any qualified provider' delivering NHS services.

"At the same time, by offering transferred staff the right to remain members of the public service scheme, we are no longer requiring private, voluntary and social enterprise providers to take on the risks of defined benefit that deter many from bidding for contracts in the first place."

Alexander said discussions on police, armed forces, judiciary and fire service pension schemes had been a separate process from the start, and proposals would be brought forward "in due course".

He confirmed that members of the armed forces would continue to make "no contributions" towards their pensions, and be exempt from the increases announced at the spending review.

The agreement on the local government scheme was almost scuppered at the 11th hour following a letter sent by Eric Pickles's department on the "new conditions".

The GMB said it was reconsidering its position in light of the letter.

But Alexander told a press conference that the letter had been withdrawn. "It is not a position that has been agreed. A replacement letter will be issued."

H�l�ne Mulholland

Dan Milmo