David Cameron and his Lib Dem allies keep telling us that public sector pensions are “unaffordable”. A pity then that the cross-party Public Accounts Committee (PAC), but Coalition MPs are in a majority, seems to think this is nonsense. In a report issued last month, the say the public sector pensions problem has already been stabilised:
“Government projections suggest that the 2007-08 changes are likely to reduce costs to taxpayers of the pension schemes by £67 billion over 50 years, with costs stabilising at around 1% of Gross Domestic Product (GDP) or 2% of public expenditure. This would be a significant achievement.”
This morning the influential Institute for Fiscal Studies also said that the total cost of public pensions was set to stabilise or even decline as a proportion of national wealth.
So much for “unsustainable” – what the Coalition clearly means is that they don’t like them, which is rather different.
The government is apparently about to refute the PAC conclusion, although whether they are going to disagree with the facts or simply say that stabilising at 1% of GDP or 2% of public spending is still too high is unclear. What is already clear is that their policy suggests that what they are really after is “rolling back” state employees pensions along with the rest of public spending. Whether they will be honest enough to say so remains to be seen.
The PAC report went on to say:
“We would … encourage the Treasury to publish a clear measure or benchmark of affordability which indicates the level of spending on public service pensions it considers sustainable. Officials appeared to define affordability on the basis of public perception rather than judgement on the cost in relation to either GDP or total public spending.”
For ‘public perception’ read ‘Tory-supporting tabloid headlines’.