Tuesday, February 24, 2009

Pensions for Posties and British Investment for British Workers

As a member nominated rep on a pension scheme I can understand why the Chair of the Post Office Pension scheme trustees “supported” the partial privatisation (or “partnership” according to Lord Mandelson) of the Post Office.

Since in return the Government would guarantee the scheme. So it is a “no brainer” for trustees since their absolute legal duty is to beneficiaries. If the government offered to guarantee any trust based pension scheme then you can understand why they would support this. Regardless of what the trustees themselves may feel about privatisation (or “partnership”).

I think that the Government should step in and guarantee the existing scheme. A major reason for any deficit is the contribution holidays taken under the Tories in the past by the Post Office when it was very clearly a public sector organisation. The scheme itself has been radically changed to make it much cheaper but there are rather daft accounting rules for such long term public sector schemes which base liability deficits on the barmy assumption on what would happen if everyone retired or died - tomorrow. The oft quoted £8-9 billion “deficit” is just a nonsensical and meaningless calculation. It is accepted that the Scheme does have funding problems but not to the extent suggested.

Leaving aside the pension question then of course the government should fund major investment into Post Office modernisation. Such “quantitative easing” is what the economy is crying out for. Investments in intensive capital programmes which actually improve efficiencies in the economy while also pumping money into it are desperately needed to avoid the threat of depression and deflation.

This is not a fight the Government should be having at this time with some of their core supporters. It is a distraction and potentially an own goal. There are other more important issues to pick fights over.

Whatever happened to joined up thinking?


Charlie Marks said...

The government will guarantee the scheme - there's no way a private investor is looking to bail out a pensions scheme!

Damage was done to Royal Mail in implementing the EU directive that all nationalised industries should be run on commercial lines and the directive that opened the postal market to (unfair, as it happens) competition.

But just as EU leaders are signalling a return to the social model, and just as Thatcher's privatisation mania haunts us (former building societies going bust) New Labour is pressing ahead with more corporate welfare payments.

I can't help but feel that Mandelson sees it as his mission to carry out an assisted suicide of the government so that the Tories can get in ASAP. God knows, he'd probably be welcomed into the Tory party along with Purnell, Hutton, and the rest...

StevieB said...

Hardly a "no-brainer" given that the details of the scheme haven't been published. are you suggesting that members trustees who haven't supported the Chair are in breach of their legal duty?

Whether Royal Mail is privatised or not, the pension deficit has to be addressed. It is a result of a 13 year pensions holiday be the employer (ie government) - so there is a moral obligation to fix this anyway.

Manedlson wants to nationalise the debt and privatise the profit.

Anonymous said...


I think you may possibly be right - in the present crisis some kind of National Government, to keep the lid on any dissent, is not impossible, as happened in the 1930s (though of course history never repeats itself precisely). If that happens then the socialist left in the Labour Party and outside must keep their nerve. In the 30s it fragmented and the ILP - the left party that split from Labour - had only limited success.

But in the meantime lets lobby MPs to make sure they vote down the privatisation in Parliament. If it gets through with Tory and LibDem support agaist a large section of the PLP then that is a real crisis for the government - entirely of their own making.

Anonymous said...

Why should the tax payer pick up the bill for their pensions? Labour has F****** up all our pensions in the last ten years..oh except for the MP's and people in local Government!

Charlie Marks said...

Anonymous 2 - you seem to be making the argument for all pension schemes to be, in effect, nationalised...

John Gray said...

Hi Charlie
Interesting stuff as usual but you lost it in the end! Purnell and Hutton may not be your cup of tea but they are not Tories. You usually have a go at me for being divisive! The Party is a broad camp of progressives. It is not a free for all. But while this broad base may sometimes be a weakness, in reality, it is our greatest strength. Since if we get our act together we can win and retain political power.

Hi StevieB
Nope – I could imagine legitimate arguments by Trustees for not agreeing with the Chairs statement. I don’t think (but I don’t fully know) that lack of detail is the problem. It is of course the whole principal of the privatisation of public services and natural monopolies.

I fully oppose the privatisation of the Post office (and I would have thought that my post made this very clear – apologies if it did not) but the real issue I think is if I was a Post office pension trustee I would be very concerned to sort things out before the next general election.

Now I am pretty confident that Labour will win. But if the Tories win then the post office is totally stuffed and the pension scheme will be utterly dismantled. Let us not fool anyone on this. I think the trustees are politically wrong but I fully understand their concerns and so should every trade unionist.

Hi Anon 1
I’m not that sure of the relevance of your point? The post office issue is important to us but it is not going to be a decisive issue in the wider economy.

Anon 2
Charlie is right but you of course are wrong. The Government hasn’t totally messed up pensions, that has been carried out gleefully by selfish City interests. The greatest danger to local government finance is the abolition of the LGPS. It would cost more to replace it and councils will be going bankrupt left, right and centre if they had to get rid of it.

Charlie Marks said...

I didn't say that Hutton and Purnell were closet Tories: I said that the Tories would welcome them into their party. Recall Cameron's "heir to Blair" comments and talk of "progressive conservatism".

Hutton and Purnell have reputations, perhaps unjustified, of being out of touch with the labour movement. (Hutton's desire to see Labour become the "natural party of business" and his alleged negative remarks on unions are the cause of this.) There's nothing that the Tories would love more than another SDP and they are sure to work hard to exploit differences within Labour - for the truth is, a landslide for them is far from certain.

And John, sorry to be pedantic but the question is not the privatisation of the Post Office - but of Royal Mail. They became two separate entities by virtue (!) of the EU law on running postal services commercially rather than as public services.

I'm sure you are for the full public ownership of both institutions, anyway. Bring back the postmaster general, I say!

Anonymous said...

My comment was in answer to Charlie's about Mandelson - carrying out an assisted suicide of the government, as he put it.

Anonymous said...

Brown screwed all our pensions

Anonymous said...

"If the Tories win the Post office is totally stuffed"..says John? When are you going to wake up and smell the coffee comrade? Ten years ..yes TEN YEARS of Labour and what have they done to support the post office? Nothing! Hundreds of Post offices have been shut and now we face privatisation - under a LABOUR Government. Stop bleating on about what the Tories will or will not do and face up to what is happening now. Why are we paying the political levy to these tossers?

John Gray said...

Hi Charlie
Sorry for not responding sooner. I think we are being unfair to the centre right of the Labour Party. I do think that you have overstepped the mark on this for a change (which makes me feel much better since it is usually you who is the voice of moderation in debate)
Hi Anon 1
Yes, I can see that now – apologies. Not sure that I agree.
Hi Anon 18.06
You are angry - fair enough – but I do not want the Tories in power and I will do practically anything to stop them. My job was transferred to the private sector under Labour.

However there is no repeat no alternative to Labour. Cutting your nose to spite your face just isn’t an option.