Public Sector Pensions Dispute: A Catalyst?

This is written as plans for mass strikes on June 30th reach the national news, and as the general secretary of Unison, Dave Prentis, tells Polly Curtis of The Guardian (18th June, 2011) that unless the Conservative-Liberal Democrat coalition government drops its pensions policy, we will see 'the most sustained campaign of strike action the country has seen since the general strike of 1926'. There is already talk of a 'Hot Autumn', and much general public anger about the governments austerity measures. However it remains to be seen whether this will act as a catalyst for widespread mass social protest; and also what effect this will have on the relationship between the British Labour Party and the British labour movement.

The government's pensions policy, which is based on the recommendations of the Hutton Report – i.e. Lord John Hutton, not to be confused with the Judge Brian Hutton who presided over the infamous Iraq inquiry – seeks to raise the retirement age alongside the sum that workers must contribute towards their pensions. It comes as many public sector workers have already accepted pay freezes and redundancies, and as inflation continues to rise (for further discussion of this last point, see: Richard Exell, “More unprecedented bad news as wages fall and prices rise”). It falls against the backdrop of the wider financial crisis that has been ongoing since the banking collapse of 2008, and in the midst of a far reaching government program of austerity measures that have been advanced in response to this crisis. Moreover, a raise in the retirement age would hit women and the lowest paid the hardest – although it does exclude the four per cent of public sector workers who earn less than £15,000 a year (figure from: Mark Serwotka, "Letter to the Editor", 23rd June, 2011) – and will also look solicit an extra contribution of three per cent that will not go towards pensions funds, but will instead be used to service government debt.

If this was not enough to ensure controversy, then the government has done its best to further inflame tensions. Danny Alexander (Lib-Dem), chief secretary of the Treasury, went public with the governments plans to raise the retirement age – despite negotiations being ongoing. And this comes only a few weeks after the business secretary, Vince Cable (Lib-Dem), warned the GMB conference that trade unions would be reprimanded via further legal restrictions on their rights if they pursued a campaign of sustained strike action against the governments austerity measures. As Dan Hodges (New Statesman, 20th June, 2011) commented of Alexander's approach, he made it clear the government was willing to talk, but not listen. While the warning issued by Cable was even more emphatic: we have the right to strike, but we do not have the right to use this right! The coalition government is quite clear on this issue, and intend to force through their reforms to the pensions system irrespective of the level of public opposition.

However whilst Liberal Democrat coalition ministers may be happy to play the role of public apologist/mouthpiece, it is the Conservative Party that is most seriously spoiling for this fight. Many amongst their faithful are relishing the chance of doing to the public sector unions what was done to the miners' and print unions in the 1980s. History, however, may not be about to repeat itself. And in his interview with The Guardian, Prentis suggests that we can expect 'waves of strike action, with public services shut down on a daily basis, rolling from one region to the next and from sector to sector'. In a direct quotation, he states: '[this] will be the biggest strike since the general strike. It wont be the miners' strike. We are going to win.'

A Populus poll has shown that there is significant public support for union action – fifty-four per cent of respondents think strikes to be a legitimate method for the defence of pay and conditions, with nineteen per cent of respondents 'strongly agreeing' with this, twenty-eight per cent saying they are undecided, and only eighteen per cent disagreeing, a figure which includes the three per cent of people that 'strongly disagreed'. (See: Sunny Hundal, “Against Strikes? Actually, people support unions”). Other polls have confirmed this view, with forty-eight per cent of respondents to an ITV poll saying that they supported union action in defence of pensions – to be compared with the thirty-six per cent who disagreed, and the sixteen per cent who were unsure. (See: Ibid., “More polls show support for union strikes but media ignore them”.) While a YouGov poll has also shown that public opinion is 'narrowly on our side'. (Poll cited in Serwotka's "Letter to the Editor".)

These results are even more impressive once one begins to consider the vitriolic and deliberately misleading media campaign against 'gold-plated pensions' and 'special privileges' which has looked to sow the seeds of division between public and private sector workers. An argument that not only overlooks the modest sums public pension schemes provide – local government workers retire on £3,800, NHS workers on £6,500, and the average state sector pension is about £4,200 a year, which is just £80 per week – but that also ignores the fact that, as Dave Prentis argues, 'the real pensions time bomb is in the private sector', and is made up of the millions of workers that private employers have washed their hands of responsibility towards, and who will therefore be dependent upon public benefits once they retire. (Dave Prentis, "Letter to the Editor", 23rd June, 2011.) Recent figures from the Office for National Statistics have shown that of people in full-time employment earning less than £300 per week only sixteen per cent of men and twenty-seven per cent of women belonged to a pension scheme. In the private sector, whereas in 1997 fifty-two per cent of men and thirty-seven per cent of women belonged to a pensions scheme, as of 2010 only thirty-nine per cent of men and twenty-eight per cent of women now belong to such schemes. To be compared with the 2010 public sector rate, where eighty-seven per cent of men and eighty-two per cent of women currently belong to pension schemes. (Adrian Roberts, Morning Star, 23rd June, 2011.)

These many uninsured workers can look forward to an impoverished retirement; and if this problem is left unaddressed, or worse, if the number of public sector workers who belong to pensions schemes falls to levels close to that of the private sector, then it will present a significant issue for future generations. Furthermore, while the media and government may wish to create 'beggar thy neighbour' envy across sectors; once we factor in the significant numbers of people who are dependent upon the earnings of the six million plus state-sector workers, alongside the potential to link the pensions issue to the wider anti-cuts narrative, and also the obvious and unappealing 'race to the bottom' perspective that appears to inform government policy-makers, then it seems fair to suggest there is much fertile ground on which resistance to the governments measures can be built.

It also appears that the government may have been playing fast and loose with its own figures, and that pensions payments as a proportion of GDP are actually expected to fall. Credit for bringing this to our attention must go to The Yorkshire Ranter (16th March, 2011), who found the chart below on p.23 of the Hutton Report. The chart itself quite clearly shows that benefit payments as a proportion of GDP peak in 2011 and are expected to fall over the next five decades, even once variables have been taken into account. In financial terms then, the public sector pensions system is sustainable. And even if substantial taxpayers contributions were needed, providing people who have worked their whole lives with a decent standard of living once they retire is surely a better use of public resources than is the case with foreign policy spending - the British state's latest imperial adventure in Libya has already cost the taxpayer upwards of £250 million. Even the House of Commons public accounts committee has raised questions about the lack of economic data that the government has provided to justify its arguments for pensions reform. Moreover, with earlier reforms seemingly having already made the system sustainable, the governments attack looks distinctly ideological.


There is growing concern that the attack on pensions is itself a precursor to much wider privatisation of public services: as it stands, private investors would have to honour previous agreements on pensions – however a restructuring of the pension scheme prior to privatisation would serve to make these services much more attractive to outside capital. (This seems to be the base assumption of John Cridland's – deputy director of the CBI – piece on the subject. In, The Guardian, 9th March, 2011.) And it is in this context that public sector workers can legitimately claim to be, in the first instance, defending their pensions, but in the second, defending our public services. However it also needs to be stressed that the conflict must take the form it has, for whilst strikes against general government cuts might have more popular appeal, the UK's proscriptive trade union laws mean that strike action can only be called if employees have a direct grievance with their employers. In other words, they have to be sectoral conflicts over specific issues.

However no issue exists in a political vacuum, and there are obvious reasons to tie this particular dispute into the broader anti-cuts narrative. There is also an obvious basis on which this argument can be won. However overly militant rhetoric from the union heads may not be the answer, and could itself be a cover for a lack of serious leadership and preparation. It was this point that seems to have lied behind TUC national executive Jane Caplan's warning to the recent Unison conference. In her speech, she told members: 'It's not good enough to get angry - we need to be prepared.' (A report from the conference is provided by: John Millington, Morning Star, 23rd June, 2011.) Overly militant rhetoric could also, in turn, lead towards a loss of public support for strike action. As the final words of Sunny Hundal's “How unions could win the public debate on strike action” conclude:

Nevertheless the size of Unison, alongside the funding it has access to, does suggest that it can feel confident that its million strong membership can cause serious economic disruption if it takes strike action. It also seems to be the case that the militant statements of the union leadership are little more than a reflection of the anger of the membership, and that industrial action is more or less a forgone conclusion. (This seems to be the general feeling of the Unison conference, as reported in the Morning Star.) However more to the point, the temerity of the British Labour Party presents a much bigger obstacle, and it appears that the relationship between the Party and the labour movement is at an important conjuncture.

The British Labour Party was, after all, formed as the political arm of the British trade union movement. Sources indicate that the Labour Party still receives the vast majority of its donations from the trade union movement – about eighty-nine per cent of the total according to Rob Marchant (The Centre Left, 22nd June, 2011). Of these, Unison, the largest public sector union in the UK, is a major contributor – to the tune of over four hundred thousand pounds in the last year alone – and it should therefore come as no surprise that they expect to see something for this money. Prentis is of the opinion that the Party's current leader, Ed Miliband, will improve in time, and that we should take into account that he is new to the position. However he also adds that the Labour Party should not stay quiet on the pensions issue, and that he expects its support. (See interview in The Guardian.) As a party in opposition, with a ruling government that is carrying out massive austerity measures which include substantial cuts to public services, alongside the growing worry that this will most seriously harm the poorest and most vulnerable individuals and communities, there have been increasing calls for the Labour Party to provide representation for its traditional and core constituency: the working classes.

Nevertheless the subtitle of Hodges article suggests that 'Ed Miliband needs a summer of discontent like he needs an invitation to go bungee jumping with his brother'. In other words, he needs it like a hole in the head. However Miliband's political career should not be our concern: he is a temporary phenomena, who lacks public appeal, and the Labour Party will not win the next general election with him at the helm. However as Hodges has also noted, unlike Blair, Miliband is in a weak position as Labour Party leader. His success in the leadership contest was dependent upon the support (both financial and political) of the trade unions; and so long as the unions continue to foot the Labour Party's bill, then its leadership will not be able to escape an association with and pressure from the trade union movement. Combined with the widespread expectations of Labour as a party in opposition, this means in Ed Miliband we have a Labour leader who is far more susceptible to mass pressure than were either Blair or Brown. And if Miliband does not come out in support of strike action, then the unions should threaten to take their money elsewhere.

Meanwhile Ed Balls (BBC News, 19th June, 2011), the Labour shadow chancellor, has accepted that the government is driving forward this fight, and indeed he even charges that the chancellor, George Osborne, is 'desperate for confrontation'. However, and whilst also acknowledging that union members have legitimate reasons to strike over their pensions, Balls has also called on the unions to not fall into the government's 'trap' by calling for strike action, and to instead pursue a negotiated settlement. This is a confused and contradictory strategy that, on the one hand, recognises public sector workers are being provoked and attacked, but then at the very same time argues that they should not defend themselves against this. It fails to address the problem of how one is supposed to pursue a negotiated settlement with a party that has no interest in negotiations - the government is happy to demand, but not to concede - and with logic like this, it is no wonder Balls was removed from the post of shadow home secretary. Ball's line does also, it should be said, give some succour to the right-wing denunciations of strike action. And moreover, if its aim was to dissociate the Labour Party from the trade union movement, then it must be seen as an abject failure: as Balls' intervention has only refocused public attention on the relationship between the Labour Party and its main financial backers – the established trade unions.

Outside of the Labour Party, acclaimed journalist Simon Jenkins (The Guardian, 14th June, 2011) goes one step further than Balls, and declares strikes to be a 'primeval weapon' that should not be wielded in the twenty-first century, before then showing a completely superficial understanding of the differences between labour bargaining processes in Britain and Germany – he credits the German works councils for negotiating restructuring schemes with employers, yet fails to notice that an equivalent to these councils does not exist in Britain. Jenkins also overlooks the fact that the government were not interested in negotiations, at least not in a serious sense. Teachers were offered the chance to pay fifty per cent more for their pensions, retire later than before at sixty-eight, and then see these pensions indexed to the lower consumer prices measure of inflation - hardly an enticing offer. (Christine Blower, Morning Star, 23rd June.) Jenkins, like Balls, pleads for unions to negotiate a settlement, which given the coalition governments outlook, is simply a call for public sector workers to put up and shut up. Hodges' response to Jenkins is entirely correct in its suggestion that it is nonsensical to criticise unions for doing what is in their trade description: to defend members interests. However we must also ask whether it is time for the Labour Party to also fulfil its trade description, and defend the interests of its main financial backers. To raise this question is to raise the most fundamental question of the class movement: whether it has organised itself into a distinct political party for its own interests.

A massive campaign of industrial action throughout the summer and continuing into the autumn will bring these questions to the fore, and ultimately the Labour Party will have to decide whether it is a party of government, or a party of labour. It cannot be both: to use Nye Bevan's famous remark, as in fact does Rob Marchant, if you stand in the middle of the road, you will end up getting run over. A cautious Labour Party, which looks to be all things to all people, will end up providing representation to no one in particular, excepts perhaps the cosmopolitan middle – i.e. our acclaimed journalist and his ilk. If it perseveres with this strategy, as a result it will suffer devastating electoral damage at the time of the next general election. Politics favours the bold, those who make choices: and at the present conjuncture, the Labour Party is torn between giving representation to its core political constituency, and its more single-minded desire for electoral power.

What seems clear in all this is that the course industrial action takes over the next six months, in both its relationship with the Labour Party and with the wider public, will have major consequences for the labour movement in the years to come. And there is an important need for socialists and other trade unionists to provide strong political support for industrial action, as without this grassroots support capable of pressurising mainstream dialogues, then the outcome is unlikely to be good. Furthermore, without this, and without engagement with the Labour Party and the trade unions, there is little chance that the industrial unrest of the coming months will act as a catalyst towards a revival of even a social-democratic platform, never mind a socialist one.

This interaction can take many forms, but it needs to take place all the same – and moreover, it must be based upon an attempt to reveal the fundamental class issues that tie the pensions struggle to the wider anti-cuts movement. A 'bread and butter' class program of full employment and social housing, rent restrictions and price control, needs to be advanced, and we must also demand of the Labour Party that it meets its obligations towards its major financial backers. After all, if the Labour Party does not back the trade unions, then surely it is right to question whether they should use their financial reserves to back another horse. However so long as they continue to fund the Labour Party, the Labour Party will remain the party of the working class.

To quote Hal Draper (“Anatomy of the Micro-Sect”, Part IV):

The class movement in Britain remains politically and financially tied to the British Labour Party and the trade union movement, and the coming year will see many of the issues of this movement come to the fore. Yet if socialists stand aloof from this, wrapping their 'sectist approach' up in 'Marxistical rhetoric', then they will fail to provide the kind of leadership they proclaim themselves capable of. Moreover, the historical record will surely judge them very poorly – if it remembers their contribution at all. Most significantly, there will be little chance of providing viable opposition towards the government's cuts, and even less of a chance of advancing a popular program that offers feasible alternatives to neo-liberal austerity measures.

Both the British Labour Party and the British labour movement appear to be at the precipice. How they will evolve is unclear - but nevertheless it seems the coming months of industrial unrest will prove the catalyst of this evolution. The right-wing of the Labour Party cannot be allowed to dictate how this evolution will occur, and in order to prevent this some reference must be made to the Labour Party's traditional roots and obligations. You cannot know in which direction you are going, if you do not know which direction you came from.



For a similar article to this, but written from the perspective of Labour Party insider, see Owen Jones' "The debate shouldn’t be whether to resist, but how to resist".


Bibliography.

BBC News Online, “Ed Balls warns unions over pension strike 'trap'” (19th June, 2011).

John Cridland, “Public Pensions: it's the final countdown – Lord Hutton's report will surely sound the last-rites for final-salary schemes. The private sector points the way”, The Guardian (9th March, 2011).

Polly Curtis, “Biggest strike for 100 years – union chief: Pensions revolt won't be like the miners – because we'll win, says Unison general secretary Dave Prentis”, The Guardian (18th June, 2011).

Hal Draper, “Anatomy of the Micro-Sect” (1973).

Richard Exell, “More unprecedented bad news as wages fall and prices rise”, Liberal Conspiracy (22nd June, 2011).

Dan Hodges, “What are the unions supposed to do? Ed Miliband needs a summer of discontent like he needs an invitation to go bungee jumping with his brother”, New Statesman (20th June, 2011).

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Sunny Hundal, “More polls show support for union strikes but media ignore them”, Liberal Conspiracy (22nd June, 2011).

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The Yorkshire Ranter, “There is no crisis” (16th March, 2011).