Today's editorial in the Financial Times thinks highly of the government's stand against the civil service. Is it a "flash of steel" or a good old-fashioned trouncing of the unions?
The UK government has shown a flash of steel. A court ruled that the state was not allowed to alter redundancy terms for civil servants without the agreement of a truculent trade union. So the administration announced on Tuesday it would simply change the law. This is the first concrete step in the government’s welcome push to cut the cost of the civil service. Many civil servants are now entitled to three years’ pay if they are made redundant. Some are even eligible for six-and-a-half years of income. The new legislation will limit compulsory redundancy payments to a maximum of 12 months’ earnings.
This is a hard-line position: civil servants accrue the rights to their generous redundancy terms with years of service. But it is not customary in the UK to treat redundancy rights with the same gravity as pension rights, and the current terms are too generous. Earlier governments should have reformed the system. The administration is tackling the problem as drastic redundancies loom. The Office for Budget Responsibility foresees 500,000 public jobs vanishing in this parliament because of the coming fiscal consolidation.
These public sector cuts will keep the trades unions on the political frontline. The terms of 68 per cent of government jobs are influenced by collective bargains. For their members’ sakes, union bosses must be flexible. If the unions are intransigent on pay, the government will be forced to sack more people. This would be bad for the public services, bad for state employees and, ultimately, bad for organised labour. A smaller public workforce will mean fewer unionised workers.
The government is also planning to allow greater regional variations in civil service pay – another welcome step. Rigid countrywide pay deals make public pay too high in poor areas and too low in rich ones. But a truly radical government would abolish national pay bargaining across the state sector, allowing local providers to set pay as they wish. The government should also press ahead with long overdue reform of the over-generous public sector pension system. A review of the issue led by John Hutton, the former pensions secretary, will surely recommend cuts.
The unions will not like any of this. But they cannot expect an exemption from the austerity drive. The government will want agreement with the unions. But, as this week’s announcement has proved, it does not always need their agreement.
