Pension climbdown has a sting in its tail

February 21, 1997

YOU CAN tell how serious a government is about staying in office by the pace of its pre-election activities. If they are frenetic, ill conceived, subject to little or no consultation and, generally, have all the character of breaking the furniture in the rush to get out of the room - the government will get long odds on its survival.

Take the great pension scandal. Having announced its intention to make new universities, colleges and schools pay the cost of early pensions from April 1, the Government was surprised at the rush of fiftysomethings to get out quick. Its response to having stimulated exactly what it wanted to avoid, that is, more early retirements, was to try to stem the flood by making new rules which, when challenged in court, turned out not to be rules but advice and advice which could be withdrawn. An unseemly climbdown.

Just as the egg was drying on that issue the Government found another egg to throw at itself - the great demand-led element (DLE) scandal. This time there was not going to be any forewarning. Instead the millions of pounds colleges were expecting would be cut.

Diligent work by David Melville, new chief executive at the Further Education Funding Council has forced a reprieve. The damage will be postponed. Another climbdown?

There is another interpretation. The "new" pension rules, which turned out to be advice, and the DLE reduction for the current year might just be stalking horses. The system is allowed to win on these points in the hope that the ultimate disaster will not be so bad after all.

But the disaster is bad. If the pension changes occur some universities, colleges and schools will be severely restricted in managing workforce reductions. If the DLE changes occur the cuts needed could be staggering. Governors and managers are between the rock and the hard place. The pensions issue is the worse one because, from the individuals' point of view, it is a blow of Maxwellian proportions. No insurance company would get away with cancelling a term in a policy which gave coverage against redundancy if it occurred after 50.

One has to feel a little sorry for the Government for, on both the pension and the DLE issue, one can see its point - early retirement has been exploited and is "unaffordable" on the present basis, whoever pays for it. Similarly DLE must be the only uncapped pool accessible to the public sector.

Neither suits the Government's ideology. But that is not the point. The question is how do you make change? Proper government would involve reasonable notice, real consultation and the demonstration that all the work done by lay governors is valued and that they are treated therefore in a proper manner. But seized with the realisation that one thing this Government does not have is time, the attempt to make change is at breakneck speed.

Two climbdowns in little more than two months is hardly good for the poll image. On the other hand it might be us who are the mugs. By threatening catastrophe and pulling back from it to a small degree, the Government is likely to achieve disaster. When Disraeli was asked the difference he said it would be a disaster if Mr Gladstone fell in the Thames and a catastrophe if anyone pulled him out.

With the threat of DLE cutbacks this year and restraint on early retirements even before March 31, we faced a catastrophe. Transferring the DLE mess to next year and introducing the pension changes in April will only be a disaster. It is funny how life can feel better even when it is worse!

Keith Scribbins is chair of governors at the City of Bristol College.

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