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Press Release

Budget 2011: LGA budget response on pay and pension issues

23 March 2011

Responding to measures announced in today's Budget on public sector pensions and a one per cent increase in employer National Insurance Contributions, Baroness Margaret Eaton, Chairman of the LGA, said:

“The Hutton Review provides a broadly sensible approach to public sector pensions and proposes a workable balance between what is fair to staff and affordable to the taxpayer. We are pleased the Chancellor plans to use its findings as the basis for future negotiations. However, his plan to push ahead with a compulsory three per cent increase in pension contributions for public sector workers fails to recognise the significant differences between the funded Local Government Pension Scheme and the unfunded schemes in other parts of the public sector.

“With inflation high and public sector wages frozen, such a compulsory increase will hit workers hard. It is likely that the LGPS opt-out rate will rise as a result. We would seriously counsel against pushing ahead with plans which might undermine the future viability of a highly effective scheme which helps its 4.3 million members save towards a reasonable retirement and reduces reliance on state means-tested benefits.

“The one per cent increase in employer National Insurance Contributions will add an estimated £81 million to the local government pay bill. That's enough to pay the salaries of more than 3,500 frontline staff on median wage. It comes as an unwelcome added expense at a time when councils are working extremely hard to save money in order to reduce job losses and protect frontline services in the wake of the biggest reduction to their budgets in living memory. We would much prefer to have seen this increase put off until after councils had the chance to implement more of the measures needed to reduce the impact of the cuts on their residents and workforce.”



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