TPA – Public Pension Porkie

As predictable as night following day, the so-called Taxpayers’ Alliance (TPA) has brought out yet more “research”, getting its message past the more gullible editors and setting the agenda, while few hacks and pundits see the elephant in this particular room: it’s all based on a false and utterly impossible assumption (my thanks to the folks at UNISON for confirming this).

More guff from Tufton Street

“£54 billion black hole in council pension schemes revealed” is the headline, but at the outset the figures do not do the TPA’s bidding: the pension deficit of all UK local authorities has been estimated at £54 billion for 2010-11, but had decreased from £91 billion the year before. So the amount is in decline. Is this a one-off or part of a trend? If the TPA can’t answer this question, their analysis is meaningless.

The headline numbers are then followed by a blatant whopper, as it is asserted that “the equivalent of £1 in every £5 of Council Tax was spent on employer contributions to the [scheme]”. Heck, 20% of Council Tax goes on pension payments ... er, no it doesn’t. Just 25% of local Government spending comes from Council Tax, so that percentage is 25% of 20%, which makes just 5%.

Inconvenient detail from the Hutton report

And for employers to make that kind of contribution to an occupational pension scheme is no big deal. Added to this is the result of recent research (in the Hutton report) that shows that the proportion of GDP paid out in benefits from public sector pension schemes will fall from current levels over time, and that this will most likely decline to below Year 2000 levels in the longer term.

So the TPA is just re-hashing a scare story, and the false assumption that really takes the biscuit is where the suggestion is made that the population at large is on the hook for well north of £1,000 per head as a result of pension provision for the folks who teach their children and clean their hospitals. And that assumption is that everyone in those pension schemes retires on the same day.

That is a truly rank whopper, even by the TPA’s low standards, but it is characteristic: after all, their “report” on speed cameras, quite apart from inferring that fatal road accidents would end sometime in the next few years if only cameras had never been deployed, relies on the assumption that all those cameras were installed at the same time – which, of course, they were not.

The basic engaging of brain before taking the TPA on trust, however, has not been performed by the Express (complete with characteristically gruesome photo of Matthew Sinclair), the reliably conservative Yorkshire Post, the Maily Telegraph (confirming its descent from paper of record), the Birmingham Mail, and to its shame, the Huffington Post UK.

Thus the public are misinformed once again. That’s not good enough.