Monday, 4 July 2011

Ed Milliband - “reckless and provocative"

Ed Milliband has perhaps, perhaps not, been slightly embarrassed to be filmed repeating the same sound bite 5 times in one short interview.    I think we can be sure that Ed Milliband wants to get the message across that the Government has behaved in a  "reckless and provocative manner" in trying to reform public sector pensions.    In political terms it might be quite popular.   Someone will have calculated that the peoplee Ed has to appeal to to win the general election will be exactly the sort of people who aren't taking sides in the strike but just wish it would go away.

Supporters of the strikes were unimpressed that Mr Milliband did not support the strikes.  Supporters of the Government will be unimpressed by his failure to back them.  But, many people will be inclined to give Mr Milliband the benefit of the doubt.  It sounds like he is agreeing with them.  In politics it is called reflecting - you ask voters usually by opinion poll or focus groups what they think, then you agree with them.  Of course one thing polls and focus groups show is that electors don't like politicians who do this - so politicians have to learn to project conviction.

All of which is good fun,  in an shallow way, we had a laugh at Ed looking silly and sort of let him off the hook as, well, that's what politicians have to do, to get their sound bites across.

But, what has been over looked in all the froth is the actual answer he gave doesn't really mean much.  I mean, even I can agree with it, sort of.

What would Mr Milliband do if he was Prime Minister ?  Act in a "cautious and conciliatory manner ? What would that mean ?   The Unions are complaining that people will have to work longer, pay more and get less, they are right.  That is fairly unavoidable for some people.  An alternative would be to  work less, pay less and get more ?  I don't think that works. 

So having put Ed on the spot - what would I do, I hear you cry ?  Lets be honest, very few of us have any understanding of pensions and we glaze over when people start talking about % contributions, defined benefits, with profits, career average schemes etc.  What seems to be the case is that some public sector workers (not a majority) get generous pensions compared to what they contribute.

Well I believe that the public sector should not be in the position of providing massive pensions to people.  Take teachers for example. Teachers themselves pay 6.4% of their yearly salary into a pension pit and the employers pay a further 14.1% of salary. So if a teacher is paid £50,000 a year, 20.5% of that, i.e. just over £10,000 a year is put into a pension pot. (£3000 paid by the teacher £7000 by the taxpayer)  But what if they are a "superhead" on £150,000 - The taxpayers contribution goes up to £21,000  a year - and that doesn't even cover the cost of a final salary pension.

So my proposal would be to cap the level of pension contribution by public sector employers at around £50,000.  Any highly paid public sector worker who wants a bigger pension ought to pay for it themselves, not rely on the taxpayer to fund it.    I am all in favour of the low earners and medium earners being provided with  a living income pension, but do we need Chief Executives of £240,000  a year getting £50,000 paid into a pension fund by the taxpayer each year ? 

Perhaps we need a far flatter rate pension for public sector workers so those on the lower end of the pay scales get £10,000 a year (more than the £6,000 that is typical now) and those at the top get no more than £20,000.

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