Fundamental attacks on civil service workers are coming thick and fast. We are entering a very different period compared to anything that has gone before.
A two-year public sector pay freeze for everybody except those earning less than £21,000 has a concession to the latter of a pay rise of “at least” £250. But no-one in our union, the PCS, is expecting many such members, if any, to get more than the stipulated sum and that will represent an increase significantly below the rate of inflation.
The pay freeze coincides with large VAT increases, the freezing of child benefits, and other attacks that will eat into real living standards.
Ex-Labour minister John Hutton has been appointed chairperson of the Government’s “independent” Public Sector Pensions Commission. He was chosen because he argues that the public sector cannot remain immune from major demographic changes. He emphasises “affordability and believes that private sector final salary pension schemes have been abandoned as “too great for most employers to handle”, contrasting that with the expansion in membership of such schemes in the public sector.
If, as seems inevitable, Hutton recommends, for example, a greater worker contribution to public sector pension schemes, then the pay freeze will turn into a serious cash cut in wages and not “just” a real terms pay cut in which inflation erodes value.
In the meantime the Government has said the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) will be the measure of inflation used for uprating public sector pensions. CPI excludes housing costs from inflation calculations and is lower than RPI. In the long run this will lead to lower pension values than pension scheme members would anticipate.
On 7 July Francis Maude, Minister for the Civil Service, announced that compulsory redundancy terms in the civil service will be capped at one year’s salary (he also wants to stipulate a maximum figure that can be paid). Voluntary redundancies will be capped at 15 months as the Government seeks to frighten people into volunteering to leave. Maude intends to change the relevant pensions legislation so that the agreement of trade unions to this change is no longer legally required.
Maude has invited unions to “negotiate” a new scheme, stressing that the one year maximum is unlikely to change(!) but promising additional protection for the low paid. The definition of low paid could be £18,000 or under and the “additional protection” will be nowhere near as good as the current terms.
Severance cuts are the prelude to a culling of civil service jobs. Government reports suggest 600,000 public sector job losses by 2014-2015 and an associated loss of between 600,000 and 700,000 private sector jobs.
Civil Service Departments have been asked to show how they would cut running costs by between 33% and 50% over the next four years. Running costs include money for salaries, buildings, etc. (These projected cuts are entirely separate from the Treasury instruction to Departments to plan for cuts to service budgets of between 35% and 40%).
Even if the 33-50% figures are a pretence, designed to make us feel grateful for lower cuts, Departments are still likely to be hit by running cost cuts of around 25% over four years. It is a recipe for job loss, bullying (as staff are told to shape up or ship out), and stress (far fewer staff doing the same work). Already closures and job cuts have started to happen. The Government Office for London is being abolished and will be closed by the end of the year.
The PCS now needs to move very fast to build membership confidence to fight because there is no way this range and depth of attack will be stopped by smart negotiations. The Tory-Liberal regime obviously feels the same way: it has been openly touting further restrictions on the right to strike to undermine any fight back by any union.
A workers’ answer to the crisis needs to be developed, to present positive alternatives to the cuts and combat a sense of fatalism — that cuts are inevitable..
In a very small way PCS has begun to do that with Tax Justice Campaign, focussing on tax evasion, tax avoidance, and the need for a more progressive taxation system. Members readily grip the nonsense of a government cutting staff in tax enforcement while saying that cuts are needed to pay of the “public” debt.
But without running ahead of members the PCS leadership must step up the public campaigning, step up the political answers, explain the need for action, develop a strategy that can win, and challenge other unions to fight in a common front.