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Rachel Reeves MP, Labour's Shadow Chief Secretary to the Treasury,  has told the House of Commons that the Government must leave no stone unturned in public sector pensions negotiations for a genuinely sustainable agreement that is fair to public sector workers, fair to taxpayers and avoids a strike this autumn.

Speaking in the House of Commons, Rachel Reeves said:

"I thank the Rt Hon Gentleman for his statement, and for the advance notice of it.

"And let me start by welcoming today’s signal that the Government is now willing to enter into proper discussions.  

"It is a welcome change from the months of Treasury and Cabinet Office intransigence which have come before.

"Mr Speaker, too often in recent months it has appeared that the Government has not understood that strikes are a sign of failure on both sides. 

"And let us be clear: it was this Government’s decision to rip up the framework established by the last Labour Government and to go much further, much faster.

"In particular, it was the Chancellor’s decision to pre-empt Lord Hutton and impose a 3 per cent surcharge for all employees - announced in the spending review last year, before negotiations had even begun.  

"This decision suggested that rather than negotiating in good faith the Government was intent on acting unilaterally and so provoking confrontation. 

"And so Mr Speaker, it is good news that the Government has at last made a constructive move to begin proper discussions.

 "And let me be clear, no-one wants to see strike action. The Government and the unions have a duty to show that they have exhausted every possible avenue.

"Our focus is with those people who rely on services who would be affected by strikes – from parents who will have to take the day off work to those who rely on home help. 

"But public sector workers, nurses and teachers and dinner ladies, also care too much about the people they serve day in day out, to consider strike action as anything other than a last resort.  

"And yet those who work in front line public services are also desperately worried about their future and whether they will be able to afford retirement.

"So it is for the Government to ensure that change is agreed and delivered in a way that brings the nurses, teachers, home helps and dinner ladies affected by these changes with them. 

"It is welcome that the Government has now recognised that announcing tactical offers on the airwaves rather than constructive proposals in proper negotiations is not the right way to proceed.

"Mr Speaker, let me suggest three key tests for a fair agreement.

 

  • First, on affordability: Do the changes deliver a fair deal for taxpayers - when times are tight and taxes are rising and spending is being cut.
  • Second, on fairness: Do they deliver a fair deal for public sector workers on low and middle incomes whose pensions are far from gold plated and who have given a great deal to the services in which they work.
  • And third, on sustainability: Do the changes deliver a workable settlement for the long-term which does not undermine the sustainability of existing schemes and which can be flexible in the face of rising life expectancy.

"This is how we will judge the outcome.

"To meet these tests it has always been clear that public sector workers will need to accept higher contributions on average and, as people live longer, an increase in the retirement age too. 

"That was fundamental for the arrangements we put in place for capping the contribution of government – put in place by the last government – and then negotiating on how, as costs rose, to increase contributions for workers or change entitlements. 

"But equally the Government has to accept that for many low paid staff - their pension is their only means of security in retirement, and in a time of pay freezes, sharp increases in contributions risk both hardship today and increased levels of opt outs pushing up pensioner poverty in the future. 

"Which is why we have been critical of the confrontational stance taken by the Government and of the rush to early industrial action in June.

"Mr Speaker, we will see in the coming days whether these moves are sufficient to restore the much needed trust in these discussions that could ensure that even at this late stage there is still time for both sides to step back from the brink. 

"We will all study the detail of what is now on the table. 

"But let me ask the Chief Secretary

On affordability:

 

  • Can he set out the cost to the public purse of these concessions?
  • And as he rightly sets out the transitional protections for workers in their fifties and tapering arrangements for those in their late forties, can he say whether both these additional costs will have to be made by savings elsewhere in the system? 

On fairness:

 

  • Can he confirm that the proposed increase in contributions if applied across the board would still mean an increase in contributions for low paid, part-time workers earning less than £15,000 a year?
  • And has the Government assessed the impact of the pay freeze on opt out rates from public sector pension schemes to date? 

And on sustainability:

 

  • Has any assessment been made of the impact of the three per cent increase in contributions from April, and whether increased drop out rates could affect the viability of funded schemes such as the local government scheme?  
  • And is it his intention that those affected as a result of this settlement will have the certainty of knowing that there will not be further changes for 25 years?  How will he deliver on that commitment?
  • And can the Chief Secretary give the House a timetable for discussions over the next eight weeks given his aim to secure agreement by the end of the year?

"Mr Speaker, I hope that the Chief Secretary is able to reassure taxpayers and public sector workers – teachers, the police and home helps & others – on these points. 

"The Government must leave no stone unturned in its negotiations in seeking a genuinely sustainable agreement that is fair to public sector workers, fair to taxpayers and avoids a strike this autumn."

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