Labour Councils Are 'sitting On Billions' As They Axe Crucial Services

[scrappycocco]

So labour sit on our cash in the bad times and spend it in the good times.

[SHERWICK]

So labour sit on our cash in the bad times and spend it in the good times.

and cut services not because they have to, but to make people vote out the 'evil tories'.

[efdemin]

Saw this story earlier today. In the one I read, in the Telegraph I think, the Labour councils claimed the majority of the cash sitting in the bank had already been earmarked for schools, etc.

Smells like political FUD to me (both the article and the councils explanation), but then both sides are equally bad so who to believe?

[Milton]

According to The UK Pensions Crisis Report, [the work of the TaxPayers' Alliance and Terry Arthur, a fellow of the Institute of Actuaries.]

It says Mr Brown's decision in 1997, when he was Chancellor, to axe tax relief on dividends paid to pension funds has cost private occupational schemes £175billion.

This amounts to £16,600 for each of the 10.5million retirement pots of current workers.

Mr Brown's decision forced companies to make up massive shortfalls and began the decline of final salary schemes.

The growing gulf between private and public sectors has become an increasing source of bitterness over recent years and this is particularly acute in the current economic crisis.

1.] The average private sector worker retires with a pension pot worth £25,100 - enough to pay them about £1,700 a year.

2.] The average public sector worker will retire with a pot of £427,275 - worth £17,091 a year.

Private sector workers pay £14billion a year into their own retirement funds, but contribute around £21billion through their taxes for the pensions of retired public sector workers.

The TaxPayers' Alliance discovered that 17,150 public sector workers have already retired with pension pots worth more than £1million by 2008.

They include 10,500 NHS workers, 3,680 civil servants, 1,800 teachers and 815 judges.

The total would be even higher but the BBC and the Parliamentary Pensions Fund refused to give figures.

The figures will outrage millions of people who have seen the value of their private pensions fall by a quarter in 2008, as the credit crunch hit, and face having to work until they are 68 to reach the retirement income they had expected.

Edited April 18, 2011 by Dan1

[Democorruptcy]

Saving it for First Buy deposits and anything left over for end of year bonuses?

[happy_renting]

According to The UK Pensions Crisis Report, [the work of the TaxPayers' Alliance and Terry Arthur, a fellow of the Institute of Actuaries.]

It says Mr Brown's decision in 1997, when he was Chancellor, to axe tax relief on dividends paid to pension funds has cost private occupational schemes £175billion.

This amounts to £16,600 for each of the 10.5million retirement pots of current workers.

Mr Brown's decision forced companies to make up massive shortfalls and began the decline of final salary schemes.

The growing gulf between private and public sectors has become an increasing source of bitterness over recent years and this is particularly acute in the current economic crisis.

1.] The average private sector worker retires with a pension pot worth £25,100 - enough to pay them about £1,700 a year.

2.] The average public sector worker will retire with a pot of £427,275 - worth £17,091 a year.

Private sector workers pay £14billion a year into their own retirement funds, but contribute around £21billion through their taxes for the pensions of retired public sector workers.

The TaxPayers' Alliance discovered that 17,150 public sector workers have already retired with pension pots worth more than £1million by 2008.

They include 10,500 NHS workers, 3,680 civil servants, 1,800 teachers and 815 judges.

The total would be even higher but the BBC and the Parliamentary Pensions Fund refused to give figures.

The figures will outrage millions of people who have seen the value of their private pensions fall by a quarter in 2008, as the credit crunch hit, and face having to work until they are 68 to reach the retirement income they had expected.

Most public sector pensions do not have a 'pot' at all. We're the pot. So I find those figures very questionable.

[Reck B]

So labour sit on our cash in the bad times and spend it in the good times.

Such was the total economic failure of their time in Government, I often think that the Labour party exist simply to try the opposite of what, generally speaking, works best.

[happy_renting]

The story behind the OP could be read in other ways.

Such as, the Labour council is, at last, cutting waste, rather than waste it's reserves.

Which begs the question: Why wasn't it done before? Still doesn't make Labout councils look good.

[Brave New World]

Surely with things looking so bad the UK will get to the position where it has to withdraw these pensions? Then again Bovine UK private sector workers aren't bothered about this type of inbalance. X Factor will be in in the Autumn.

[efdemin]

The story behind the OP could be read in other ways.

Such as, the Labour council is, at last, cutting waste, rather than waste it's reserves.

Which begs the question: Why wasn't it done before? Still doesn't make Labout councils look good.

And that's the point of this article I suppose - to make the other side look bad.

One thing the article doesn't mention is what, if any, surplus the Conservative or Lib Dem run councils are sitting on?

[Tired of Waiting]

and cut services not because they have to, but to make people vote out the 'evil tories'.

+ 1

[Jadoube]

http://www.dailymail.co.uk/news/article-1377969/Labour-councils-sitting-billions-axe-crucial-services.html

'Labour councils are today accused of slashing services while sitting on billions of pounds.

The Government claims many authorities are refusing to touch contingency funds meant to cushion them in difficult financial times.

Local government minister Grant Shapps said some were even increasing their reserves while attacking front-line services.

‘It is totally unacceptable for Labour councils to make political cuts while sitting on cash reserves of billions,’ he said.

‘Sensible financial planning is about putting cash away when the sun is shining so you have some cover during the rainy days. Thanks to Labour’s deficit, it is now pouring.'

realise there's politics involved but it does seem to reinforce the view that parts of the public sector exist in order to sustain themselves.

Agree there's politics involved (including by Mr Shapps) but at first glance this does seem sensible behaviour by councils (albeit belatedly) . Foolish to throw away all of the contingency money in one go. Does anyone seriously predict the sun will shine on local govt finances next year?

People expect it to rain even harder next year Mr Shapps. The govt demand so and people believe it, with unavoidable (if politically unwelcome) consequences. Don't complain if people or councils save for that rainy day

[billybong]

It looks like in some places they've been replacing entire sections of some roads as an excuse to put in a few more parking meter places under the guise of repairing pot holed road sections - just to rake in a bit more pension money.

Probably using up obligatory end of year budgets (effectively free money to spend) as well. No thrift there.

In the meantime huge swathes of roads remain with their potholes.

Edited April 18, 2011 by billybong

[Timak]

I'm confused.

I worked for a Tory run council about 10 years ago who had massive financial reserves from land sales.

They then charged £0 for council tax (district charge which is usually about £80 per household) for the next 10 years until the reserves ran out.

The bill then went up to normal levels.

All the benefits of those reserves built up over generations were used up on one tax cut nobody noticed anyway.

Surely they'd have been better to sit on the reserves and invest them carefully to subsidise the costs in the long run?

It would be like the UK government discovering large oil reserves in the North Sea and rather than investing it for the good of the nation simply giving it away to one generation - of course that would be foolish.....

[Tired of Waiting]

I'm confused. (...)

I think the cause is to confuse our tax money with:

(...) It would be like the UK government discovering large oil reserves in the North Sea (...)

The public employees did the right thing, not taking even more of our money if they still had some of it there.

[roadtoruin]

According to The UK Pensions Crisis Report, [the work of the TaxPayers' Alliance and Terry Arthur, a fellow of the Institute of Actuaries.]

It says Mr Brown's decision in 1997, when he was Chancellor, to axe tax relief on dividends paid to pension funds has cost private occupational schemes £175billion.

This amounts to £16,600 for each of the 10.5million retirement pots of current workers.

Mr Brown's decision forced companies to make up massive shortfalls and began the decline of final salary schemes.

The growing gulf between private and public sectors has become an increasing source of bitterness over recent years and this is particularly acute in the current economic crisis.

1.] The average private sector worker retires with a pension pot worth £25,100 - enough to pay them about £1,700 a year.

2.] The average public sector worker will retire with a pot of £427,275 - worth £17,091 a year.

Private sector workers pay £14billion a year into their own retirement funds, but contribute around £21billion through their taxes for the pensions of retired public sector workers.

The TaxPayers' Alliance discovered that 17,150 public sector workers have already retired with pension pots worth more than £1million by 2008.

They include 10,500 NHS workers, 3,680 civil servants, 1,800 teachers and 815 judges.

The total would be even higher but the BBC and the Parliamentary Pensions Fund refused to give figures.

The figures will outrage millions of people who have seen the value of their private pensions fall by a quarter in 2008, as the credit crunch hit, and face having to work until they are 68 to reach the retirement income they had expected.

I do think public service pensions have been underfunded by members contributions, but average £17K a year ?? More like £5K from what I've read. A substantial proportion don't even make £17K full salary, and their pension is based on 1/80th per year. So work for 40 years at 20K salary and you get £10K pension. Most don't earn 20K or have 40 years service. Might be skewed by some high salaries, therefore we need to know what the median pension received is.

[Timak]

I think the cause is to confuse our tax money with:

The public employees did the right thing, not taking even more of our money if they still had some of it there.

But we seem to operate Keynsian spending when in defecit but demand all surpluses are returned to tax payers.

Pick one option!

[Milton]

Most public sector pensions do not have a 'pot' at all. We're the pot. So I find those figures very questionable.

EVERY private pension... as value of cushy public sector schemes soars to £1trillion

Gordon Brown's tax raid on pension funds has snatched £17,000 from every worker's retirement pot, research says today.

Yet the value of public sector schemes - funded by taxpayers - has soared to an astonishing £1trillion.

Opposition MPs, business chiefs and campaigners demanded an investigation into the growing 'pensions apartheid'.

Gordon Brown's decision in 1997 to axe tax relief on dividends paid to pension funds has cost each worker nearly £17,000, a report says

The report, The UK Pensions Crisis, is the work of the TaxPayers' Alliance and Terry Arthur, a fellow of the Institute of Actuaries.

It says Mr Brown's decision in 1997, when he was Chancellor, to axe tax relief on dividends paid to pension funds has cost private occupational schemes £175billion.

This amounts to £16,600 for each of the 10.5million retirement pots of current workers. If the pensions being paid to retired staff are taken into account, it is still an average deficit of £6,000.

Mr Brown's decision forced companies to make up massive shortfalls and began the decline of final salary schemes.

The number of members of private sector schemes has fallen from 6.1million in 1995 to 3.6million last year. At that rate, says the report, there will be no paying-in members of occupational schemes within 12 years.

The growing gulf between private and public sectors has become an increasing source of bitterness over recent years and this is particularly acute in the current economic crisis.

The average private sector worker retires with a pension pot worth £25,100 - enough to pay them about £1,700 a year. The average public sector worker will retire with a pot of £427,275 - worth £17,091 a year.

Private sector workers pay £14billion a year into their own retirement funds, but contribute around £21billion through their taxes for the pensions of retired public sector workers.

The cost of unfunded public sector pensions liabilities - what the bill would be if all workers were paid out today - has soared past £1trillion.

The TaxPayers' Alliance also discovered that 17,150 public sector workers have already retired with pension pots worth more than £1million. They include 10,500 NHS workers, 3,680 civil servants, 1,800 teachers and 815 judges.

The total would be even higher but the BBC and the Parliamentary Pensions Fund refused to give figures.

The figures will outrage millions of people who have seen the value of their pensions fall by a quarter this year, as the credit crunch hit, and face having to work until they are 68 to reach the retirement income they had expected.

Mr Arthur said last night: 'Political management of the UK pensions system has failed to provide a decent retirement income for many people and has been a painful lesson on the limitations of government.'

Opposition MPs, business chiefs and campaigners are demanding an investigation into the growing 'pensions apartheid' (posed by models)

Corin Taylor, research director at the TaxPayers' Alliance, said: 'The infamous tax raid on pension funds has been a major factor in the collapse of occupational pension provision in the private sector, while gold-plated public sector pensions have remained immune from necessary changes.

'It is not right for taxpayers to be subsidising million-pound retirement benefits for the public sector elite while seeing the value of their own pensions plummet, or in many cases not having a pension at all.'

Tory spokesman Chris Grayling said: 'In 1997 we had the strongest pension system in Europe. What Gordon Brown did, not just through his extraordinarily ill-judged tax raids but also with a raft of red tape regulating pension funds, was to substantially destroy this.'

Ros Altmann, a former pensions adviser to Tony Blair, said: 'Public sector pensions are being propped up by Alice in Wonderland economics. This administration will go down in history as decimating our once-great private pensions provision.'

The Treasury called the report misleading, saying it 'conveniently ignored' cuts in corporation tax to help companies.

The research was released as BT was reported to be overhauling its pension scheme to cut costs.

The telecoms group - whose 69,000-member company pension scheme is the largest in the UK - is understood to be considering increasing the retirement age from 60 to 65, raising employee contributions and axing its final salary scheme.

Read more: http://www.dailymail...l#ixzz1JsxdyYeJ

If those red figures are correct. There should be civil F@ing War in this country.

Edited April 18, 2011 by Dan1

[roadtoruin]

If those red figures are correct. There should be civil F@ing War in this country.

Those red figures placed together imply that comparisons are valid, which they simply can't be. For starters, many private sector workers have several pensions, public sector more likely to be one job for a long period. The 25K for private sector is risibly low. I know money-purchase schemes are crap, but if you paid in for even 10 years at £200pm you'd have far more than 25K in there.

[Timak]

Those red figures placed together imply that comparisons are valid, which they simply can't be. For starters, many private sector workers have several pensions, public sector more likely to be one job for a long period. The 25K for private sector is risibly low. I know money-purchase schemes are crap, but if you paid in for even 10 years at £200pm you'd have far more than 25K in there.

The public sector figures are wrong.

My dad has about that as a pension and did 40 years of service as a senior teacher. There is no way that is the average, likely to be about 3 times smaller.

[scrappycocco]

If those figures are correct the labour party should be frigging withdrawn as a political party from this country.

[Milton]

Also from the Mail:

Last year, a Sunday Times Rich List showed the public sector had no fewer than 22,999 pension pots of a £1million or more. The list included 3,680 former civil servants and 2,658 teachers, along with some 400 retired staff from Glasgow City Council and 223 from Kent County Council.

Top of the public sector pension league was Bank of England Governor Mervyn King, who by June 2009 had £5.4million in his retirement fund.

Most public sector schemes still operate a retirement age of 60 whereas the rest of us have to soldier on to 65 to get our reward.

Public sector pensions are also not just salary-linked but index-linked to keep pace with inflation.

As the size of the public sector has ballooned under New Labour by up to one million workers, so the number of active members of these final-salary schemes has soared - from 4.2million in 1995 to 5.2million in 2007.

In 2006, the Institute for Economic Affairs estimated public sector pension liabilities at more than £40,000 for every household in the country. In March 2010, pension experts Towers Watson put the figure at £47,000.

The Institute of Directors describes this mismatch in pension provision between those working for government and those in the entrepreneurial sector of the economy as nothing short of 'apartheid'.

And it is potentially dangerous as well as unfair.

'If private sector workers rebel against paying other people's pensions, we are heading for strife,' warns pensions expert Ros Altmann. 'I'm not saying that public sector workers don't deserve generous pensions. They do. But so does everybody else.'

But the Government continues to duck the issue, not least because many state jobs are located in Labour heartlands such as the North-West, the North-East and Scotland, and messing with benefits could have electoral repercussions.

Official data shows that, since the credit crunch, pay in the public sector is now higher than in the private sector for all but the top 25per cent of the work force.

The public sector also enjoys more job security and longer holidays than most people in the wealth-creating part of the economy.

Sustaining a system in which, almost uniquely, nearly all of the country's public sector workers can look forward to an index-linked pension based on the salary that they are earning at the point when they retire has become the economics of the madhouse. Such gold-plated pensions have survived not because they have been better managed than private-sector pensions, but only because they are subsidised by taxpayers.

That bill continues to rise inexorably

Overall, the pension picture in Britain after 13 years of a Labour Government is diabolical. For 56 per cent of the population, there is no provision at all other than a mean and rotten state pension supported by humiliating and complex means-testing.

As for the other half who have tried to save for a comfortable old age, those in the private sector have seen their pensions plundered, while those in the public sector, though feather-bedded for the moment, have a system that is ruinously expensive, unsustainable and can no longer be defended.

Last year, the OECD placed Britain at the bottom of an international pension league table for those yet to retire. It's a ghastly legacy that betrays the founders of the welfare state memory and all that was good about Britain's post-World War II social settlement.

New Labour should hang its head in shame.

Edited April 18, 2011 by Dan1

[Tired of Waiting]

But we seem to operate Keynsian spending when in defecit but demand all surpluses are returned to tax payers.

Pick one option!

Sure, fine, but that was not my point. The main problem was to confuse tax-payers money with a "natural resource".

I bet that is a common view in the public sector.

[billybong]

The public sector also enjoys more job security and longer holidays than most people in the wealth-creating part of the economy.

I suppose it would be wealth creating - given a chance.

At the moment the UK relies on £trillions of debt so it's a bit tongue in cheek by the Mail although they likely don't realise it.

edit to add: Almost identical articles were written by the Mail and several other newspapers around 1980 and so on after the last Labour period of playing Wreck The Country. Where's the UK now - back to square one and all with the other main parties and the media etc having effectively connived in it.

Edited April 18, 2011 by billybong

[Timak]

Sure, fine, but that was not my point. The main problem was to confuse tax-payers money with a "natural resource".

I bet that is a common view in the public sector.

Well if land owned by the tax payers via the council is sold who should the money go to?

One generation of tax payers getting 100% subsidised services for 10 years

All subsequent generations of tax payers getting a 5% subsidy for ever

It seems the article is arguing that by not spending all the money saved by generations on a one off subsidy is wrong.