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Stats Show UK Pensions Bill 'Is Affordable'

Stats Show UK Pensions Bill 'Is Affordable'

6:05pm 30th June 2011
(Updated 8:05pm 30th June 2011)

The Government is on thin ice when it makes the claim that public sector pensions are unaffordable, according to Sky's business presenter Jeff Randall.

Cabinet Office minister Francis Maude has told Sky News that the Government cannot continue to foot the pensions bill.

"The cost to the taxpayer of public sector pensions has risen by a third in recent years," he said.

"All of those who say these pensions are affordable need to say which hospitals they'd close down, which doctors, nurses and teachers they'd make redundant in order to pay for continuing subsidies to public sector pensions."

Treasury figures show public service schemes paid out £32bn in 2008-09.

However, looking forward, the most recent forecasts from the Office for Budget Responsibility suggest this figure will have risen just slightly to £33.2bn by 2016/16.

And a chart in the Government-commissioned Hutton report shows public service pension payouts will actually fall as a percentage of GDP over the coming decades.

"Is this affordable? Clearly it is because we're affording it right now," Randall said.

"And what about the changes to pensions? Francis Maude told me they would save £3bn a year - but that's less than half of one percent of the Chancellor's total payout."

He went on: "The Government is on very thin ice here if it's going to go down the affordability route."

The TUC's general secretary Brendan Barber stressed the issue of the cost to the Government of public sector pensions in his address to striking workers in Exeter.

"They are not unsustainable or unaffordable. Big changes were accepted only five years ago to reduce the cost," he said.

"As the National Audit Office, the Public Accounts Committee, and even Lord Hutton in his report have shown the costs - as a share of our national wealth - are actually set to fall over coming decades - not to increase."

Danny Alexander, chief secretary to the Treasury, said the reason why the report's figures made it look as though future pensions were affordable was that they had already factored in projected reforms, some of which are being resisted by the unions.

"Those figures assume that reform takes place," he told Sky News.

"They have built into them already the change of uprating of pensions from RPI to CPI which the unions are opposing.

"(The unions) are relying on figures that assume reform, which rather implies that they accept those reforms, or they wouldn't be championing those figures.

"If that is the case I welcome it but I think it's perhaps more likely that the figures have simply been misunderstood."

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