Another

General Strike?

So is the Government heading for a mighty showdown with the unions? Something akin to the General Strike of 1926 or perhaps the misery of the late 70s?

One of the greatest causes for potential conflict is public sector pension reform with the Government pressing ahead on the basis of the report by Labour's former Work and Pensions Secretary, Lord Hutton.

He accepts that current public sector pension arrangements are untenable. Why? Firstly, because we are thankfully all living longer — if you are 60 now you can expect to live ten years longer than a person of 60 did in the 1970s.

Secondly, the balance between the proportion of those retired compared with those working (and paying the taxes for pensions) is radically changing. In 1926 there were ten people working for every person retired, today there are three, by 2050 there will be two.

Thirdly, most public sector pensions are unfunded, meaning that their payouts are not covered by investments in pension funds but through the taxpayer, resulting in many in the private sector contributing to public sector pensions whilst facing far less generous pension arrangements themselves.

Among Hutton's recommendations is that the retirement age is increased to 66 for both men and women by 2020. It also recommends an increase in contributions by public sector employees and that final salary pensions should be replaced by average salary schemes.

Two important points to add – the Government plans to ensure that those on £15,000 or less will not see any increase in their contributions and all those with existing pensions will have the benefits built up under the present pension arrangements honoured in full.

Negotiations with the unions are continuing and let's hope that sensible settlements are reached — 1926 and all that would be in nobody's interest.