Critical talks between ministers and the unions over public-sector pension reform have a 50-50 chance of being cancelled, senior negotiators have warned as the Government reiterated a new hardline approach to a deal. Union leaders said they were close to pulling out of a meeting with ministers next week to hammer out a broad agreement for ongoing discussions.
If the talks collapse it makes the prospect of widespread strike action amongst more moderate unions in the autumn much more likely. Such strikes could involve more than two million public-sector workers. Ministers had hoped to reach agreement with some of the less confrontational unions such as the GMB, Unite and Unison on the broad principles of reform next Monday.
These would then be subject to detailed discussions on individual public-sector pension schemes in the autumn. While that would not have averted the planned day of strike action on 30 June, they hoped it would stall further mass walkouts by many more workers later in the year.
But comments by the Chief Secretary to the Treasury, Danny Alexander, in a speech on Friday – and repeated in interviews yesterday – have made mass walkouts much more likely. Mr Alexander outlined detailed plans to raise contributions, increase retirement ages and switch workers from final-salary schemes to ones based on average earnings.
The unions said these points had still been under discussion at a meeting just a few days before and that ministers – including Mr Alexander – had told them the Government had not committed to any particular course of action.
"We were absolutely gobsmacked when we first heard about the speech," said one member of the union's negotiating team. "I had been sitting opposite Danny Alexander just a few days before and it was never mentioned. Then we get this speech and it appears the Government has already made up its mind."
Brian Strutton, national secretary for public services at the GMB who was also in the talks, said that, such was the anger at the Government, talks could collapse. "Given the confusion that has been created over the Government's commitment to genuine negotiations I would say there is a 50-50 chance that the 27 June meeting won't take place," he said.
"If it does it will now need to be used to restore confidence in the negotiating process and I suspect that at least one or two further meetings will be required to get past that." Mr Strutton said this would have a knock-on effect on the Government's timetable to enact reform.
Sources close to Mr Alexander suggested that his speech had been an attempt to put the Government's position into the public domain.
Ministers were concerned that the announcement of strikes in previous days made them look like they were on the back foot. They were concerned that they could lose public sympathy for the reforms in the face of widespread and very public opposition. Mr Alexander's speech was an attempt to make them seem reasonable and to shift the debate in favour of the Coalition.
However it appears to have backfired – marginalising the less confrontational unions who had staked their credibility on doing a deal and winning concessions from ministers.
"This is the final straw," Unison's general secretary, Dave Prentis, told Sky News. "We wanted to negotiate all the way through. But if we're going to be treated with disdain, then we will move to an industrial action ballot."
Meanwhile Mr Alexander did little to reassure unions that the Government was keen on compromising. He insisted that ministers wanted a "constructive dialogue" – but indicated that this would be restricted to the detail of how the changes would be implemented.
"They are the basis on which we want to go forward and reform public-service pensions, but of course in these discussions we need to look at the detail of how that works, about how these things are implemented," he said.
Mr Alexander repeated his warning that it would be a "colossal mistake" for the unions to go ahead with the strike on 30 June while negotiations were still continuing.
Meanwhile, Lord Hutton, whose paper on pension reform has provided the basis of the Government's proposals, said the unions should not go on strike on 30 June. "There are still negotiations going on, and those negotiations should continue. I don't believe that ministers want to provoke a confrontation with the trade unions – quite the opposite.
"I think they're trying to find an agreement, and I very much hope that, on the basis of the proposals I've put forward – which do try to strike a balance between the natural desire of the taxpayers to have some certainty about cost, and the natural desire of public-sector workers to have good-quality pensions – we can reach an agreement."
But the shadow Chancellor, Ed Balls, said that George Osborne was "desperate" for a confrontation with the trade unions over pension reforms.
"This is not a political decision from the unions – this is actually their members feeling very upset. George Osborne is desperate to have that confrontation – he's been saying it for months. The trade unions must not walk into the trap of giving Osborne the confrontation he wants to divert attention from the failing economy.
"We should make sure we make this about fairness and negotiate – that's the best way forward."
Battle continues over women's retirement age
* The Government is to press ahead with its timetable to raise the age at which women can claim a state pension despite the threat of a revolt by Conservative and Liberal Democrat backbenchers. MPs of all parties have urged ministers to rethink plans to speed up the equalisation of the pension age for women and men amid warnings that hundreds of thousands of women have not had time to plan for their retirement. However, the Department for Work and Pensions insisted that the changes would go ahead as planned, warning that any delay would cost the taxpayer £10bn.
Under the Pensions Bill, the state pension age for women will go up from 60 to 65 in 2018, rising to 66 in 2020. However, the move has provoked intense cross-party opposition, with MPs warning that it discriminates unfairly against women in their late 50s.
Lorely Burt, the chair of the Liberal Democrat parliamentary party, said up to 500,000 women would be hit.
Labour's shadow Pensions minister, Rachel Reeves, said that ministers should bow to public pressure and rethink their proposals. "It is simply wrong to punish women by moving the goal posts at this late stage," she said.
But the Work and Pensions Secretary, Iain Duncan Smith, will say at the second reading of the Pensions Bill today that the Government's position will not change.
Strike action: what happens next?
Unison, Britain's largest public sector union, begins its annual conference. Votes are expected on plans to coordinate official national industrial action in defence of pensions.
Crucial meeting between ministers and union leaders set up to agree the broad principles of pension reform. This meeting may now be cancelled.
Members of the RMT union plan another strike on the London Underground over the dismissal of a union activist.
More than a quarter of a million civil servants will join teachers represented by the National Union of Teachers (NUT), the Association of Teachers and Lecturers (ATL) and the University and College Union (UCU) in going on strike. The total walk out could include as many as 750,000 people. Widespead disruption at schools, Job Centres, airports and among police services are expected.
Late summer 2011
Unison has said it will move to ballot around 1.2 million workers for strike action unless a broad deal is agreed with the Government before the summer recess. Unite, the GMB and other public sector unions are likely to follow suit.
TUC Congress, to be held in London. The meeting will bring together leaders of all the main public sector unions to discuss co-ordinated action if talks with the Government have collapsed by this stage.
The most likely time for coordinated strikes involving upwards of two million public sector workers - given the length of time needed to consult and ballot members. This is the timescale the Government is working to in drawing up contingency plans to keep hospitals, prisons, schools and other essential services running.
The deadline the Government has set to implement public sector pension reform. Agreement or no agreement, changes in benefits are likely to be imposed from this date.