Pension change condemned in Parliament

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A heated debate took place in Parliament today (Thursday) after an e-petition triggered a full Parliamentary debate on the issue of a pension uprating switch from RPI to CPI that will mean smaller pensions for millions of workers. The petition is one of only seven to have attracted more than 100,000 signatures and achieve a Commons debate.

The decision to move from RPI (Retail Prices Index) to CPI (Consumer Prices Index) for the payment of benefits and indexation of pensions was announced by George Osborne in his June 2010 emergency budget. CPI has risen by a smaller amount over the past two years than RPI, and doesn't contain certain costs such as council tax, mortgage interest, house depreciation, TV and road fund licences.

John McDonnell, MP for Hayes and Harlington, led the argument making a passionate case for RPI to be reinstated. He pointed to the 'anger felt by so many' at what they felt to be a 'betrayal of the promises they were given before the election' and referred to 'the millions who will suffer so much from the switch'.

Mr McDonnell paid tribute to Jim Singer of the PCS union who launched the petition and thanked all those who had signed it. He went on to explain that CPI was deeply flawed as a measure of inflation and did not include key costs, such as housing. Calculations proved irrefutably that many people could lose twenty to thirty thousands of pounds over the life of their pension.

Mr McDonnell, and other Labour speakers, pointed out that the move from RPI to CPI would also be a false economy and was very short-termist, as it could make people question whether to stay in a pension scheme or join it at all. The Exchequer would then end up paying out more money in the long run.

The Government motivation was clear though: pensioners were being made to 'pay for the economic crisis by cuts to their pensions,' said Mr McDonnell, and the real reason for the move was 'to cut public expenditure'. Those who were least well off would suffer most.

There was another way to address the deficit and debt of the UK, Mr McDonnell said: "There is a straightforward, fair and equitable solution - make those who caused the crisis pay for it," and he went on to spell out exactly how 'the polluter should pay': by tackling tax avoidance and evasion (amounting to more than 120 billion) and by 'a tax on the assets of those who benefited most in the boom'.

Harriet Baldwin MP, speaking for the Government, seemed to be doing Mr McDonnell's job for him when she stood up to speak. She admitted that, hypocritically, the Bank of England pension scheme was not being moved to CPI and said it would be 'wise' for them to do so; she pointed out that Britain was a 'woefully under-pensioned country', and she admitted that inflation was the 'absolute enemy of the pension'. She acknowledged that though food inflation was 'largely downwards', fuel was 'rising sharply'.

David Crausby, MP for Bolton North East, had heard enough, he said: "The reality is that CPI will be less. They've done it to cut costs and are transferring money from poor pensioners to the Government or private schemes."

The debate continued. In the end the vote was lost by 232 votes to 33.

Commenting on the debate, CWU general secretary Billy Hayes said: "The vote may have been lost but the moral argument is beyond debate. This is a shameful and cynical attempt to downgrade the pensions of millions of hardworking people whose pensions are part of their pay, and should not be interfered with by the Government to attempt to solve an economic crisis largely created by irresponsible bankers."

The CWU is one of a number of unions and pensioner groups challenging the Government's pension changes at the Court of Appeal.