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Leading article: All in this together, except the rich

Sunday 27 November 2011 01:00 GMT
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Once again, when George Osborne, the Chancellor, sets out in his Autumn Statement on Tuesday his plans for the economy, he is likely to try to suggest that "we are all in this together". He would be unwise actually to use the phrase, however, which rings ever more hollow.

That is why we understand the anger of public-sector workers who intend to strike on Wednesday. They are being asked to make sacrifices when it does not appear that the rich in the private sector, and especially in finance, which was responsible for the crisis, are being asked to meet the same obligations. And it is understandable that public servants, many of whom are not paid much, are upset that part of their pension, for which they were entitled to plan for many years, is to be taken away.

So we share the "huge sympathy" that Ed Balls, the Shadow Chancellor, expresses for the strikers in his interview with The Independent on Sunday today. The public tends to feel the same: in our ComRes poll last week we found that 48 per cent agreed that, "in most cases, I have sympathy for people going on strike against public spending cuts", and 38 per cent disagreed. But sympathy is not the point. The question is whether it is right to cut public-sector pensions, however difficult. Mr Balls implies that the cuts are wrong and that a Labour government would not have made them. We disagree on both points.

In our opinion, the pension cuts are right, but there are two arguments for them that are unconvincing. One is that the scale of government borrowing requires emergency action. Yet the savings from the changes to public-sector pensions will not come through for many years. The other, rather different argument, is that Britain faces a long-term crisis of sustainability, as a dwindling workforce finds itself crushed by the burden of supporting an expanding cohort of the expensively senile. That is mistaken alarmism, too. If the Victorians had had accurate forecasts for life expectancy over the next century, they might simply have given up, discouraged, but technological advance more than paid for the vast increase in the number of older people retiring from the labour market.

The reason why the cuts are needed is less apocalyptic. Whatever the state of next year's borrowing requirement, which Mr Osborne will address on Tuesday, we face a medium- to long-term problem of the public finances. For the next two decades at least, public spending is going to be under the kind of pressure with which we were happily unfamiliar from 1999 to 2008. Choices therefore have to be made and priorities decided; and it is fair that the relatively generous future pension rights of public-sector staff take some of the strain.

The Government's case is stronger because the plan was drawn up by Lord Hutton, who, as John Hutton, was Labour defence secretary – and whom Lord Prescott, the former deputy prime minister, called a "collaborator". He was no such thing. Lord Hutton rightly accepted the basic case for savings, and tried to design them to protect the low-paid as much as possible.

Since then, the Government has moved a long way to meet the unions' objections, notably by reducing the cuts for those nearing retirement. The deal is now one that the unions should accept.

It is important, although less relevant to the underlying argument, that Wednesday's planned disruption will affect the working poor most severely. Whereas taking your child to work is a bit of a lark for some middle-class professionals and prime ministers, this generally isn't an option for low-paid private-sector workers who face expensive childcare costs.

However, the Government is the union leaders' best ally. By standing by while City fat cats are rewarded for failure; and by allowing boardroom pay to race ahead, David Cameron and Mr Osborne have failed to convince most people that they are genuinely "all in this together". More than anything else, this is what mobilises support for this strike.

Mr Osborne's task on Tuesday, therefore, is clear. He should consider ideas such as those of the Archbishop of York for disclosure of tax returns and a ban on honours to "those who have already rewarded themselves most handsomely"; he should do more about tax avoidance; and look at a "Robin Hood tax" on financial transactions. Instead of criticising the strikers, he needs finally to ensure that the bankers and the rich are in "this", too.

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