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RETREATING ON PENSIONS

Last Updated: Friday, November 4th, 2011

Buried beneath the continuing Greek tragedy was the news that the Government has made concession and a renewed offer to the trade unions in negotiations over public sector pensions. According to an expert at the Centre for Policy Studies the concessions “verge on an unconditional surrender to the unions, perhaps on a scale unprecedented in the history of public sector labour negotiations.” “By agreeing to exclude those within ten years of retirement from any deal,” wrote Michael Johnson (http://conho.me/uPNkls) as well as increasing the pensions accrual rate, the Coalition has wiped out, for the next ten years, any scope for meaningful cost savings. The only remaining benefit, within that timeframe, will be additional employee contributions, a mere trickle when compared to the burgeoning cost of meeting pensions in payment.” Even TUC leader Brendan Barber admitted that the concessions were “material”. There was always a danger that the reputation for U-turnery that the Coalition started to build a few months ago (following shifts of position on the NHS and prison sentencing in particular) would be interpreted as weakness. The unions have played aggressively at the negotiating table. They have threatened strike action and balloted on it. Afraid to provoke the unions the Coalition chose not to take the advice of the CBI and Boris Johnson and legislate for minimum thresholds for strike action to be legitimate. The unions and their members will now have to make a decision; bag the concessions already won or if they smell real fear as they sit opposite Francis Maude and Danny Alexander see what more they can get.

 

FEW FRIENDS ON FLEET STREET

The Sun has already given its verdict on the Coalition’s negotiating position. It accused ministers of “losing its bottle”. Earlier in the week it had painted David Cameron as Neville Chamberlain because of its alleged weakness on Europe. The previous week it had repeatedly attacked Ken Clarke on crime. Cameron can’t blame an unhappy Rupert Murdoch for the Sun’s constant attacks on him. The Mail, Express and Telegraph are at least as unhappy. The Sun and Mail have forged an informal alliance to campaign with MigrationWatch to toughen up the government’s immigration policy. The Mail this week ran a front page story accusing the government of betrayal on family policy. Whether it’s the Express on Europe or The Telegraph on planning reform the Government is facing opposition from its traditional supporters on an unprecedented number of fronts.

 

CHOOSING GRANNY OVER THE GREENS

One policy area where the Coalition might finally be moving towards the majority view is on energy and climate change policy. Osborne signaled that the ground was moving at the Manchester Party Conference when he said that he didn’t see the point in handicapping UK manufacturers and householders with expensive but green energy bills if China and the like continued to increase their carbon footprints. This week has seen big cuts in the Feed-in Tariffs for solar installations. Homeowners had been attracted to install solar panels because of massive government subsidies – subsidies that are financed by ordinary energy consumers. Defending the change the minister responsible, Greg Barker, sounded like his climate change critics when he said Labour’s opposition placed them “on the side of the solar power lobby and against hard-pressed families struggling to pay their bills”. Barker’s colleague Charles Hendry has struck much more positive noises about exploiting Britain’s shale gas reserves. There is even talk of following the lead of John Boehner, the US Republican Speaker, who has offered a deal in which energy companies get the green light to exploit new resources and in return they help finance improvements in infrastructure.

By Tim Montgomerie

 

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Ten reasons why the Tory backbenches are difficult to whip including… “Paul Goodman recently calculated that “as few as three male backbenchers may become Ministers at the next reshuffle”. Backbenchers have done the same maths. Given the huge 2010 intake and the reduced number of ministerial posts in Cameron’s gift (because of the Coalition) they have calculated that it is unlikely they’ll get on to the frontbench. The numbers making this calculation will grow once Cameron has completed his first big reshuffle and that will only add to Cameron’s party management problems.” More via http://conservativehome.blogs.com/thetorydiary/2011/11/the-era-of-the-supercharged-tory-backbencher-has-arrived-and-ten-reasons-why-its-likely-to-stay.html

Focusing on repatriation of employment laws won’t help the Eurosceptic cause: “Labour’s response to an attempt to regain control over our own employment laws would be: “The Tories want to put your job at risk” – potentially a powerful appeal at a time when growth is scanty and the economic outlook bleak.  This helps to explain why Marc Glendenning of the People’s Pledge has argued on the site that such a move would be “a strategic disaster from an anti-EU perspective because the social chapter has obviously been popular amongst those on the left”.” More via http://conservativehome.blogs.com/thetorydiary/2011/11/by-paul-goodman-migration-watchs-immigration-e-petition-calling-on-the-government-to-stabilise-our-population-as-close-to-th.html

Arguments against a Tobin Tax from the Adam Smith Institute: “There’s a good chance that a Financial Transaction Tax would increase volatility rather than reduce it. Take derivatives as an example – at the moment, exchanges tend to be rapid, high volume and low margin. This means that new real world information is constantly being incorporated into asset prices, which are continually fine-tuned. But a Financial Transaction Tax would make many of these trades uneconomic: traders would save up trades, and only buy and sell in response to large price movements. That means more volatile markets.” More via http://conho.me/tLOCiq

Mike Freer MP makes the case for a real free market in universities: “By removing the cap on fees, we would allow our world-class universities the freedom to expand.  If a degree can be shown to deliver a high-earning career, let the university charge what they believe it is worth in the market. Those who are bright, but may be reluctant to take on the obligation of fees, can be cross subsidised, as they are in Harvard where 60% of undergraduates pay less than full fees.” More via http://conservativehome.blogs.com/platform/2011/11/mike-freer-mp-the-state-must-stop-distorting-the-market-and-allow-world-class-universities-the-freed.html

Ruth Porter of the Institute for Economic Affairs offers some ideas on growth: “The Comprehensive Spending Review was a million miles away from being comprehensive, with a mess of salami slicing and ring-fencing only just closing the deficit (and with slowing growth even that low target will not be hit). Latest projections still have the government spending more than 40% of GDP in 2015. Getting our debts under control requires proper public sector reform, substantial cuts and growth.” More via http://conservativehome.blogs.com/platform/2011/11/ruth-porter-ideas-for-growth-are-staring-cameron-in-the-face-when-will-he-get-serious-about-them.html

£500 million extra for school places: “The Government has allocated an extra £500 million to more than 100 councils to provide extra school places. The money is coming from efficiency savings in the Building Schools for the Future schemes that are still proceeding. The money has been saved by renegotiating with contractors to reduce extravagance. Projections show a particular shortage of primary school places yet Labour’s BSF programme only applied to secondary schools and much of the spending was not about proving extra places.” More via http://conservativehome.blogs.com/localgovernment/2011/11/extra-500-million-for-councils-to-finance-more-school-places.html

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