John Hutton’s report on public sector pensions is a step in the right direction – but he needs to go much further

Yesterday we had the widely-trailed report on reforming public sector pensions. It has been put to me, including on Radio 5 Live, that now is not the time to reform these schemes. This is true. As the old proverb goes, the best time to plant a tree was 20 years ago. Nevertheless, the second best time to reform public sector pension schemes is definitely now.

It is interesting how quickly the climate of opinion has turned on this issue. It is just four years since the IEA first made waves by publishing Sir Humphrey’s Legacy. The IEA’s role is to change the climate of opinion by trying to make a big difference over a generation rather than a small difference to policy today. However, in this case, ideas turned rapidly into government action. Neil Record’s argument was so convincing that other think tanks – and also trade bodies – that are closer to the practical policy scene followed it with their own excellent analysis and proposals. Policy Exchange, the CBI and the Institute of Directors have all made important contributions to keep this subject on the map. Then, over the summer, an independent Public Sector Pensions Commission published its findings to some acclaim.

In the end, even politicians could not resist the tide of opinion – though it was the Liberal Democrats who responded to the intellectual arguments before the Conservative Party.

Read the rest of the article on the ConservativeHome website.

It must have been tempting for a short-termist politician like Alan Johnson to funk doing anything about public sector pensions when he had the chance three or four years ago. It does sound as if John Hutton is providing some sensible advice, but (as Thatcher said) ‘advisers advise, ministers decide’. It’s hard to be confident that, when it comes to it, government ministers will in fact take the radical decisions on public sector pensions that are so desirable and so much overdue. As Philip says, proper accounting, here as elsewhere, is extremely important. (Lack of it was a noticeable feature of the six government project disasters I wrote about in ‘They Meant Well’.)

Now that Johnson has been appointed to be Shadow Chancellor, I imagine we can expect a continuation of the spineless approach towards the government’s financial mess that members of the last government have shown since being kicked out.

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