Lord Hutton Warns Pension Reforms Are Not Enough

Posted: Updated:
LORD HUTTON
Lord Hutton has issued a pensions warning | PA

The Government's controversial reforms to public sector pensions may not be enough to bring costs under control, former work and pensions secretary Lord Hutton has warned.

The Labour peer, who conducted a review of the system for the coalition, said his findings looked "too optimistic" after UK growth forecasts were drastically downgraded.

He described the Government's proposals for increasing contribution rates and pushing back retirement ages as "credible", and urged ministers and unions to thrash out details quickly.

Hundreds of thousands of public sector workers - including teachers, nurses and civil servants - staged a strike last Wednesday in protest at the changes.

But in an interview with BBC Radio 4's World This Weekend, Lord Hutton insisted the problems were even greater following dire economic predictions by the Office for Budget Responsibility (OBR).

"What we've seen is how very quickly the assumptions which underpinned my assessments of the long-term sustainability of public service pensions have been shown to be too optimistic," the peer said.

"Growth is slower, we know that by 2016 on the latest projections the economy is going to be about 3.5% smaller than we thought it would be. That is going to affect the sustainability of public sector pensions in a negative way."

He added: "The ground underneath those estimates has changed radically and I'm afraid in the wrong direction so we cannot be sure that the costs will fall over time and that we get to a more sustainable balance."

Lord Hutton said there had to be scope for "further negotiation and discussion" with specific issues raised by unions.

"I think there is a genuine issue between the unions and ministers about the pension contributions which I hope is the subject of further discussion because I don't think you can build long-term reform on forcing people out of saving for pensions, that is a crazy way to do it," he said.

Around the Web

Lord Hutton - Wikipedia, the free encyclopedia

Hutton Inquiry - Wikipedia, the free encyclopedia

BBC News - Lord Hutton sees "urgency" for public sector pension deal

Independent Public Service Pensions Commission:

Lord Hutton: 'Pensions change is about fairness, not saving money ...