Friday, March 12, 2010

Public Sector Pensions Costs

Going up

The National Audit Office has been taking a look at those gold-plated, but entirely unfunded, public sector pension schemes (Unfunded? It means there is absolutely no money - no money at all - set aside to pay the future pensions. So all of it will have to come on a pay-as-you-go basis from taxpayers, either directly or indirectly via contributions from future employees on the public payroll).

The chart above shows how the cost of pension payments will soar over the next half century. In constant 2008-09 prices, total payments will more than treble, from £25bn pa to nearly £80bn pa.

Now according to the government, this won't be a problem because the economy will grow. So as a percentage of GDP, the cost remains close to its current level of 1.7%.

But according to the NAO that is grossly misleading.

To start with, the government assumes that the UK's productivity grows by 2% pa. Which would be a good trick if they could do it, but they can't. Over the last ten years productivity has averaged just 1% pa, a total collapse from the 1.7% pa Labour inherited - and scoffed at - in 1997.

And on top of that, it turns out that the government's projection ludicrously assumes that, whereas the overall labour force will grow by 20% - thus boosting GDP - the number of public employees will be frozen. And that from a Labour government that has increased public sector employment more than any government since... well, since the last Labour government. 

As the Major keeps saying, this lying bunch of incompetents are leaving us with more UXBs than the Luftwaffe. And we're still digging them up 70 years later.


And talking of historic parallels, WTF is the BBC giving an entire series of party political broadcasts to Labour's Simon Schama? As I understand it, Schama will be given free rein to deploy his considerable powers of persuasion to promote his left-wing political views. Who's getting the right to reply?

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