When the last Conservative government commenced in 1979, it did so against a backdrop of militant trade union activity when strikes were called in even the most spurious contexts. The greatest acheivement of Margaret Thatcher was the crushing of the trade union movement. She saved the country millions in both money and jobs. As we enter the first tentative days of this, the latest Conservative administration, the challenge facing the country is rather similar. Today, the last remaining union of any relevant power or size is threatening to bring British Airways to its knees. It is imperative that Willy Walsh holds his nerve and stands firm against them. If he does not stand firm, they will bankrupt his company with their unrealistic demands. If he holds firm, the outcome may be the same, only in spite of them rather than because of them.
On a national level, George Osborne and his colleagues in the treasury know that they must face up to the looming battle with the public sector. I observed with interest yesterday that one of his first strategies is to include the effect of public sector pensions on the balance sheet for the national debt. And about time too. Let us start to see the whole picture rather than the doctored version to which we have been subjected for the past thirteen years. It is high time that people realised the full extent of our behemoth of public services on the state of our national finances.
Of course, what is already accepted is the need to make cuts in the number of people currently employed by the public sector. We need to be able to properly evaluate what we get back for every job currently being financed. Without question, many of these jobs are absolutely vital. The rest need to be held to account and ditched in the absence of sufficient evidence of their worth.
However, the real challenge facing Mr. Osborne and his colleagues is to address the way that public sector pensions are currently financed. A member of the public retiring today with a money purchase scheme has to scour the market for the best available annuity deal. Currently, the best deal doesn't even top 2%. Public sector pensions by contrast are final salary schemes so are completely recession, inflation and interest rate proof. Given that the latter make up by far the greatest proportion of those retiring, it is now time to have another look. The current model by common consent is absolutely unsustainable. Also, the age old argument that public sector employees sacrificed greater salaries for the later security of a safe pension no longer hold true. While there are still some public sector employees on the lower eschelons of the earning ladder, the vast majority are much better off than they were twenty years ago and the gap between salaries in the public and private sectors has been steadily narrowing for a number of years now. Also, let us not forget the very damaging advent of the minimum wage which will now be here to stay - another unmeasured guarantee bestowed by the squander politics of "New" Labour.
This is a battle which has to be fought and will pale into insignificance the current union battle with British Airways. The trouble is, if you leave groups of people in clover for too long, they sart to expect it as a given right. It is not a given right but quite how George Osborne will sell this will be very interesting to watch. Not least because the very economic future of this country is dependent on the outcome.
On his side is the news today that John Cruddas, the only viable left wing contender for the Labour party leadership, has declared that he will not run. This means that the only declared candidates are the centre ground Millibands with the expected declarations from the like minded Burnham and Balls. It is quite likely that the capacity of the Labour Party for in fighting will leave them squabbling with each-other for the next three or four years. More than enough time to set in motion the real, pertinent and pressing reforms of the public sector. Hold your nerve George and get ready for a bumpy ride.
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