[A-List] UK labour militancy & public order

["Michael Keaney" <michael.keaney@xxxxxx>]

Union wants £5bn in pension crisis
KEITH SINCLAIR
The Herald, 19 November 2002

FIREFIGHTERS warned yesterday that the government must make up for a huge
shortfall in their pension funds if a crisis threatening services throughout
the country is to be averted.

The Fire Brigades Union said central government must provide a substantial
cash injection, possibly as much as £5bn, to allow the setting up of a
funded pension scheme where contributions are invested in equities and
bonds.

With more than 2000 firefighters in Scotland due to retire in the next eight
years, the firefighters pension scheme (FPS), which is not invested, is
estimated to be more than £220m short in Scotland.

The Scottish Executive has allocated £5m of taxpayers' money to help the
eight council-funded fire boards this year, but that amount will not make up
the current £11m shortfall.

The FBU in Scotland warned yesterday that, with the amount of money needed
to pay firefighters due to retire outstripping the sums being paid into the
fund, the government's plans to reform the fire service and reduce staff
numbers - an issue being discussed at negotiations to end the firefighters'
pay dispute - will only exacerbate the situation.

The extra liability has arisen after an increase in recruitment in 1974,
with these members now becoming eligible for retirement.

Roddy Robertson, regional chairman of the FBU in Scotland, said: "We have
had a serious problem with pensions where brigades have had shortfalls in
the amount of money they have had to deal with pensions and retirements.

"The problem is that pension payments have to come out of the money
allocated to the local authorities and, if you are paying pension money,
that is putting pressure on other parts of the service.

Mr Robertson added that because the FPS was unfunded and contributions were
not invested, reducing the number of firefighters would worsen the problem.
"Cutting the number of staff would reduce the bills for pensions but the
absurdity of that is that you would have less people contributing to the
pension scheme, which would mean you don't have the money coming in to go
out.

"The answer is that we move towards a funded scheme and that would require a
large injection of cash from central government to set it up. I believe it
would need about £5bn, but the government has to bite the bullet soon - the
longer they leave it, the more it is costing."

The executive, which has set up a working group to consider how to further
fund the FPS, said yesterday that it was "very aware" of the pension
situation.

It said fire service expenditure for 2001-02 was 8.3% higher than in the
previous year and that the increase over the next three years would be 19%.
A spokesman said: "This should provide scope for all pressures on the
service to be met, including the anticipated sharp rise in pension costs."
Retirement Deal
Firefighters pay 11% of their average £21,500 salary into the final salary
scheme.

Employers, the local authorities, pay the equivalent of 25% of the
firefighters' salary.

Most firefighters retire at 55 and receive a lump sum of about £50,000 and a
pension of two-thirds of their final salary - about £14,000.

-----

Brown douses hopes of large fire pay deal
CATHERINE MacLEOD
The Herald, 19 November 2002

GORDON Brown squashed firefighters' expectations of an "excessive" pay
demand yesterday hours after their leaders said they had "very constructive"
talks with John Prescott, the deputy prime minister.

The chancellor told MPs he would not retreat from a "tough and disciplined"
regime of economic stability to surrender to firefighters' demands for a 40%
pay rise.

In the Queen's Speech debate on the economy, he said: "There will be no risk
taken with inflation, there will be no attempt at the old, quick fixes and
just as we must have continued discipline on pay in the private sector it is
essential we have continued discipline in the way we approach public sector
pay."

Warning of the prospect of an "uncertain and unstable" economic outlook, he
added: "This is exactly the wrong time, with exactly the wrong claim,
pursuing the wrong methods to demand wage rises so much higher than
inflation. That would mean, if repeated across the public sector, a rise in
the wage bill that no prudent and responsible government could be expected
to pronounce."

The Fire Brigades' Union, however, appears likely to delay the start of the
eight-day strike planned for the end of this week, but last night it was
saying little before today's meeting with employers.

Mr Prescott held emergency talks in Whitehall yesterday with Andy Gilchrist,
the firefighters' leader, and it is thought that the union may have
signalled its willingness to negotiate at around the 16% mark.

While the government will not be prepared to meet even the reduced demands
without reform, there may be a formula negotiated for an exceptional pay
deal over three years.

Mr Gilchrist, who believes a larger offer was on the table in the summer,
urged the government to allow the union and the employers to negotiate
without interference and then "there could possibly be an end to this
dispute before any further strike action".

Tony Blair, on ITV1's Blair on the Spot, repeated the government's
determination to ensure any pay rise was linked to modernisation of working
practices.

Support for the firefighters has risen since the first strike, with 53% of
1000 people questioned for a Guardian/ICM poll saying the action was
justified. On October 27, ahead of the strike, it was only 47%.