We must cut public sector pension bill or risk going bust
THE public sector pensions bill is now larger than the entire UK economy for the first time in its history – soaring past an eyewatering £2.6trillion. Pensions for NHS workers alone climbed above £1trillion, while the combined gold-plated pensions for civil servants, doctors and teachers ballooned to £2.64trillion in the 2021-22 financial year.
It is frankly a burden taxpayers cannot keep supporting and the next government will have to focus on cutting back or face going bankrupt.
In the private sector, very few workers still receive Defined Benefit pension schemes based on a final salary because of their enormous cost, but millions of public sector workers still receive DB pensions. And with generous salaries on which to base this retirement income, it is no surprise that the annual cost of Civil Service pensions leapt from £339billion to £377billion in 2021-22.
With little prospect of national economic growth this decade, the demands on the taxpayer will only grow, taking money away from providing vital services. The Office for Budget Responsibility estimates that the net cost of providing these pensions will amount to £4.6billion this financial year.
IT’S not as though we’re getting better value from the public sector, either. Last year, it was announced that public sector output was 5.7 per cent lower than in pre-pandemic times compared with private sector output, which was 1.3 per cent higher. Yet, unbelievably, public sector unions are constantly asking for their members to work four days a week for the same pay – and pensions.
A recent survey revealed that most civil servants want to spend just 2.1 days in their offices per week – only workers in telecoms polled lower from a wide range of industries – despite the Government pushing for them to be back at their desks 60 per cent of the time.
The cost of enabling penpushers to work remotely is enormous, with Whitehall lawyers benefiting from £4million to pay for new home-based laptops and mobile phones.
The Public and Commercial Services union is pushing for strike action over attempts to get civil servants back to their offices.They claim the flexibility of working from home is part of the perks of joining the civil service – as if guaranteed wage rises and high pensions were not enough.
This is all part of a pattern of middle-class professionals employed by the Government flexing their muscles to demand ever higher wages and maintain their lavish pensions.The recent waves of doctors’ strikes is just one of many attempts by a privileged elite, who are paid way above the average wage, to extort yet more money from the taxpayer, whatever the costs to patients in longer waiting lists and cancelled operations.
All of us in the private sector have had our wages reduced by the impact of inflation, which has also whittled away at our savings intended for retirement. Yet public sector staff expect to be cushioned from this reality and instead have their wages increased at our cost.
They are living in a fantasy land, where every fashionable whim is indulged. The number of woke non-jobs in councils – otherwise known as equality, diversity and inclusion officers – has rocketed to 717 in the last fiscal year at a cost of £22.8million, plus their future pension payments. In my home city of Bath, the council has spent £1.8million on recruiting dozens of new equality, diversity and inclusion roles, with council tax going up by an average
£350 per household to help pay for this indulgence.
The future is stark. “There is no actual fund of money set aside to pay these pensions and the costs will fall on each successive generation of taxpayers,” says Sir Steve Webb, former pensions’ minister.
WITH a shrinking working population expected to pay for an ever-expanding older generation, the room for manoeuvre is tight and the only solution will be higher taxes – unless future governments can reduce the size of the state and introduce more realistic pensions.
How much longer can the comfortable public sector expect to live off hard-pressed private sector workers?
An incoming Labour government does not seem the best instrument to tackle this but the Tories have so far failed to grasp the nettle, overseeing an increase in public sector numbers.
If Labour want to improve public sector services, they must ensure that any more taxpayers’ money is matched by pension reform. Otherwise a low growth UK will simply run out of money and go bust.
‘Most civil servants want to spend 2.1 days in their offices’