Steve Richards: An issue that can no longer be avoided

The bankers still collect their mind-boggling bonuses while relatively low-paid workers take a pay cut
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The Independent Online

There are the strikes, and then there is the political fallout. The issues around the strikes planned for this week and the autumn are relatively straightforward. The fallout is explosively unpredictable.

In terms of the strikes, the unions' arguments are unconvincing. Indeed they have a much less powerful case than the striking miners in the 1980s, a cause that was almost doomed from the start. Behind the destructive posturing that shaped the miners' strike, there were two subtle and balanced debates, one about our future energy supply and the second on how local mining communities would survive. For all his crusading egotism, Arthur Scargill had a case in arguing that in some cases a so-called uneconomic pit was more economic than it seemed. Now union leaders, more self-effacing than the miners' leader, do not have an equivalent forceful argument.

Instead the counter-argument is overwhelming. We are living longer. We will have to pay for that somehow or other. Parts of the public sector have enjoyed pensions that seemed unsustainable in an economic boom and certainly are so now. A few years ago I gave some talks on a cruise. To my surprise it was crammed with retired public-sector employees, some of whom had been drawing a generous pension since their mid-50s and going on what seemed like a never-ending cruise, as quite a few booked their next holiday while on the boat. Briefly I felt like the Daily Mail's columnist Richard Littlejohn, and realised how easy it must be to write with reactionary fury.

Of course most public-sector workers are not as privileged. Many retire on puny pensions reflecting the size of their meagre salaries. But no employee at any level of the public sector can escape the great sleeping issue of our era: how we meet the substantial costs of living longer. Taxpayers in the private sector should not subsidise the pensions of those in the public sector, which is what will happen if public-sector contributions don't rise and the retirement age does not go up. Even for teachers, where pensions are paid from a well-resourced teaching pension fund, the issue is urgent. The fund will become increasingly less well-resourced as retired teachers live longer.

In other fields earners adapt. If holidays become more expensive, savings are made or no vacation is taken. If we live longer, even more ruthless planning is unavoidable. The Government has commissioned a report from the shrewd former head of the Institute for Fiscal Studies, Andrew Dilnott, which will state the obvious in forensic detail. We need to save for care of any quality. When this government, or a future one, dares to take the political risk, current earners will have to put aside more rather than less.

No doubt ministers have not handled this issue especially well. They rushed in, as they sped into every policy area last year, like an out-of-control racehorse. There will be anomalies and details that have not been thought through. It is significant that the former Labour minister John Hutton, the author of the pensions' review, has warned about the dangers of acting in haste. But on the whole the Hutton Report was widely regarded as being fair and, in the view of some Treasury insiders, as too fair. There were obvious political calculations when Cameron/Osborne appointed another Blairite to their cause, but Hutton acted independently and, in doing so, becomes an emblematic figure. Pension reform crosses party boundaries even if the method of implementation tests the consensus.

The potential political fallout of threatened strikes is more evenly balanced, almost the opposite of the 1980s, when from the beginning it was clear that the miners' strike was a nightmare for Neil Kinnock and a confrontation that ultimately a post-Falklands Thatcher would "win". Victory in this case is less tangible. Everyone from the unions to Miliband and on to senior ministers agree that policies for pensions require an overhaul. The issue is one of timing, pace and detail, less vividly dramatic than Thatcher's confrontation. The context is also very different from the 1980s. Before the election George Osborne coined what seemed like a unifying conciliatory slogan. Revealingly it is the only slogan of the Cameron era so far that has become famous. In the Conservatives' pre-election conference Osborne declared, "We are all in this together".

The problem with these comforting words is that they are evidently not true. The bankers still collect their mind-boggling bonuses while relatively low-paid workers take a pay cut. Even the Governor of the Bank, Mervyn King, expressed surprise earlier this year that people were not angrier. Now some are.

The broader context is also more nuanced. The Business Secretary, Vince Cable, is not alone in urging caution over introducing more anti-strike legislation. The unlikely figure of Norman Tebbit has also argued against a precipitate move, pointing out that, after three decades, his legislation has been effective. For the Coalition this is a moment to keep fingers crossed rather than one in which a straightforward "victory" is guaranteed.

Conversely the dilemmas for Miliband, though not insignificant, are not as acute as they were for Kinnock. The son of a miner, he was opposed to Thatcher's indiscriminate desire to close most pits and yet painfully aware that Scargill was leading the miners to a terrible defeat while a powerful section of his party supported them. Miliband has made clear that this week's strike is a mistake. Like the Government, he has a powerful case. The main victims will be users of public services, often on low pay and with the prospect of poor pensions.

But while it is not inevitable that Miliband will suffer, he could do so. Some shadow Cabinet members are convinced that the Coalition has chosen to pick a fight for political purposes and are much more sympathetic to the unions. The former shadow Chancellor Alan Johnson, broadly articulated this view last week in public. Not for the first time a Labour leader faces possible division and ambiguity over the unions. Almost as dangerous for Miliband, he plans to announce major internal reforms during his party conference speech this September, a much more substantial package than he has signalled so far. The changes have been long planned and could define him, but they risk becoming conflated with industrial turbulence and appear only as a defensive reaction to the storm.

Politically there are weird contortions. Miliband hopes to blame the incompetence of the Government for the strikes, even though he agrees a major reform of pensions is necessary. Ministers hope Miliband suffers politically even though the relevant teaching unions making waves this week have no links with Labour. In a curious way both are united in their wariness, seeking early resolution, unsure which leader will suffer perhaps fatal damage if next year is punctuated by widespread disruption. Their fearful unity is the ultimate contortion as Britain prepares for divisive strikes over an issue everyone agrees cannot be avoided any longer.