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Darling hints at pension cut for the public sector
Paul Waugh29.04.09
Chancellor Alistair Darling defended his Budget predictions but signalled he could slash public sector pensions to squeeze state spending.
In a surprise move, Mr Darling told businessmen that he wanted to look at all areas for savings, including future pension payouts.
Speaking at the Institute of Directors, he also insisted it was fair to impose the 50p income tax rate, but hinted once again that it may be a temporary move just for the recession.
Before his expected grilling by the Treasury select committee, Mr Darling faced severe criticism of his new 50p rate for those earning more than £150,000 a year, as he answered questions at the IoD's annual convention.
He said he had no choice because of tumbling tax revenues caused by the near-collapse of the banking sector and the recession generally.
When asked about concern among businessmen that their private pensions were being slashed while the public sector was getting generous terms, Mr Darling suggested reforms were being lined up.
He signalled that although current teachers, nurses and police would hold onto their pension deals, future employees may be a target for cuts to make the country's books balance.
“There has to be equity where people are employed in the public or private sector,” he said.
“It comes down to a sense of fairness. You have also got to be fair to existing scheme members whether you are in the private or public sector — people build up an expectation — you've got to have regard to that.
“But as I said, looking ahead over the next few years, we have to make sure that we live within our means.
“You do need to take sensible decisions, whether it's pensions or anything else. You just need to be fair when you do these things.”
Although some changes have been made to public sector pensions, any move to unveil radical reform is sure to meet angry protests from trade unions.
Mr Darling stood by his growth forecasts and added: “In relation to income tax, I don't think it is unreasonable to say to people who have seen quite large increases in their incomes over the last 10 to 15 years, that they have to shoulder some of the burden as well. I try to be fair about it.
“But equally it must be right in the longer term that our ambition is to keep tax levels as low as possible.
“I don't think there is any theological attachment to any particular rate of tax.”
Reader views (6)
When he says "Live within our means" - the electorate have no other choice but to do so, but politicians have the added bonus which allows them to claim £24,000 p.a. for "second homes" and thousands of pounds for everything in those homes from bath plugs to the kitchen sink (and pornographic films to watch in their spare time). What are the chances of MP's pensions being cut?
- R.F., Yorks, UK
Anyone know how to organise a public vote CANCELLING MP pensions? I mean, never in the history of mankind, has anything less deserving ever been awarded.
- Marianne, SW France
And what about a pension cut for MP's?
Yes, their pensions are being 'reviewed', but state contributions for MPs are more than four times higher than the average paid out by companies for final-salary schemes.
- John, Dorset, UK
What rank hypocrisy
1)“There has to be equity where people are employed in the public or private sector,” - this government has had over 10years to address this issue but has ignored it. Why the change of heart - wouldn't be something to do with an election year would it?
2) “It comes down to a sense of fairness. You have also got to be fair to existing scheme members whether you are in the private or public sector — people build up an expectation — you've got to have regard to that" - this government (especially Gordon Brown) destroyed fibnal salary pensions in his very first budget. Ever since this government has deserted the millions of private sector employees whose pension funds have been closed or destroyed by companies going bust, and totally ignored the "expectation" of a decent pension they'd built up.
More spin from a chancellor & a Government in desperation. Absolutely NOTHING will happen about Public sector pensions before the election in 2010
- Malcolm, London
All hot air and catchy cathy tune for the coming election.
- K Lee, Cheshunt, UK
'Live within our means'.........now thats a quote from an MP...who's he trying to kid, he's as bad as the rest of them.
- Rosie, watford
