'Major gap' remains over pensions

27 June 2011 Last updated at 17:20 GMT Mark Serwotka, PCS union: "Our action has to continue"

There is still "a major gap" between the government and unions over plans to overhaul public sector pensions, TUC leader Brendan Barber has said.

Speaking after talks, he said there was "the possibility of agreement" in some areas, but key divisions remain.

Civil servants' union leader Mark Serwotka said "not one jot of progress" had been made on demands for staff to work longer and contribute more.

Up to 750,000 teachers and civil servants are set to strike on Thursday.

That action will still go ahead, involving members of the National Union of Teachers (NUT), the Association of Teachers and Lecturers (ATL), the University and College Union and the Public and Commercial Services (PCS) union.

The walk-out, in England and Wales, is expected to disrupt thousands of schools.

Mr Serwotka - whose PCS union represents 300,000 civil servants, including coastguards, tax officials and court and job centre staff - said the government had shown "no interest in actually negotiating on any of the key principles at the heart of this dispute".

'Some movement'

Mr Barber agreed there were still major divisions between unions and the government over three key proposals - to raise the pension age, to increase workers' contributions and to link pension values to the generally lower consumer prices index (CPI) rather than the retail prices index (RPI).

The government has, however, said it will enter into separate discussions over the local government pension scheme, after unions warned that many members could opt out altogether if made to contribute much more - putting the whole existence of the scheme potentially at risk.

Continue reading the main story Norman Smith Chief political correspondent, BBC Radio 4

For all Mr Gove's tough talk - and dire warnings from some union leaders of a repeat of the 1926 General Strike - there's little desire on either side for a showdown.

Instead, though Thursday's strikes will go ahead, there is a clear preference to keep talking.

From the union perspective, they are acutely aware of the difficulty in sustaining any prolonged strike action at a time when many members are already struggling with pay cuts and high food and fuel costs.

On the government side, while some Tories would relish a symbolic "victory", the predominant view appears to be that ministers have more pressing issues.

Strikes are at their lowest level for a generation and ministers acknowledge the industrial landscape is different to that faced by Mrs Thatcher in the 1980s. The unions are no longer seen as a significant problem.

Both sides therefore have a strong incentive - for the time being - to keep on talking.

Mr Barber welcomed this development and said that, more broadly, ministers had indicated "some movement in their thinking on some issues".

"They are trying to look at ways of giving greater assurance that the value of people's pensions will be maintained," he said.

He added that more talks would talk place in July and the TUC was committed to taking part in them to try to reach an agreement.

The public sector union Unison - which represents more than 1.2 million workers - had warned that it would ballot its members for strike action if the talks proved unsatisfactory.

But Unison's leader Dave Prentis said that while "a massive cavern" remained between the two sides, no ballot would be called.

"I think we found today the government were willing to treat the negotiations seriously," he said.

"We thought that today may be the last day and we would be moving into conflict this evening, [but] they've agreed to two further meetings in July and we hope to negotiate through July.

"We'll make a decision based on the outcome of those negotiations."

Cabinet Office Minister Francis Maude described the talks as "constructive".

"This is a genuine consultation to which we are committed in order to try and agree a way forward with the unions, including on how to implement the changes on contributions set out in the spending review," he said.

On the local government scheme, Mr Maude said: "We recognise that the funding basis for the local government pension scheme is different.

"There are important implications for how the contributions and benefits interact... On that basis, we have agreed to have a more in-depth discussion with local government unions and the TUC about how we take these factors into account."

'Duty' to keep schools open

The government has insisted it has contingency plans in place to prevent any major disruption to essential services on 30 June.

But Education Secretary Michael Gove has been criticised after suggesting that parents should go into schools to help keep them running.

The prime minister's spokesman has since tried to clarify the matter: "Michael Gove simply said schools should make every effort to stay open to minimise inconvenience.

"This is not something we are doing from Whitehall - schools themselves should look at every option for staying open."

Mr Gove has also warned that the teaching profession is risking its reputation by striking and last week, he wrote to head teachers saying they had a "strong moral duty" to keep schools open during the strike.

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PM agrees major NHS concessions

14 June 2011 Last updated at 16:36 GMT The Prime Minister set out five main points in which he said patients would benefit from the reforms

David Cameron has agreed to make major concessions on his plans for the NHS in England, but insisted the government had not made "a humiliating U-turn".

Ministers have accepted all the changes suggested by a panel of experts, including more controls on competition and a slower pace of change.

Labour said the original proposals had been "demolished", but Mr Cameron said the "fundamentals" had been retained.

Doctors' groups have broadly welcomed the revisions.

The NHS bill will now go back to the committee stage in the House of Commons to be scrutinised again by MPs before going through its House of Lords stages.

The prime minister's official spokesman said he expected that to happen before the summer recess begins in July, and the bill to be on the statute book by the end of the current Parliamentary session.

That gives ministers until May 2012 to make it law.

Ageing population

On Monday - following a 10-week "listening exercise" - a panel of experts called the NHS Future Forum gave its recommendations on the changes needed to the bill.

They include:

Reinstating the legal responsibility of the health secretary for the overall performance of the NHSScrapping the primary role of the regulator, Monitor, to promote competition - and focusing on improving patient choice insteadRelaxing the 2013 deadline for new GP commissioning arrangements to be introduced - a National Commissioning Board, based in Leeds, will control budgets until GP groups are "able and willing" to take overStrengthening the power of health and well-being boards, which are being set up by councils, to oversee commissioning and giving patients a greater role on themRetaining a lead role for GPs in decision-making, but boosting the role of other professionals such as hospital doctors and nurses alongside themContinue reading the main story Ben Geoghegan BBC Political correspondent

After criticism from medics and complaints from rebellious MPs, the Coalition will be hoping the dust will now settle over its NHS reforms.

If politics is the art of persuasion, then the test for Messrs Cameron, Clegg and Lansley is whether or not they have convinced people that the listening process has been, as the prime minister claimed, a sign of strength.

Or does it, as Labour have been saying today, demonstrate incompetence, the result of a bureaucratic shake-up which nobody voted for?

The debate may now go quiet.

But remember that these reforms were introduced after record levels of public satisfaction in the NHS.

So, if waiting times go up, if the NHS ends up needing an extra bail-out, if patients notice things are changing for the worse, then the government's powers of persuasion may face an even bigger test.

The government and many health professionals believe changes to the NHS are necessary to deal with the demands of the ageing population, cost of new drugs and lifestyle changes such as obesity.

But the issue has led to rifts within the coalition, which have deepened since the Lib Dems overwhelmingly rejected the original reforms at their spring conference.

Mr Clegg had vowed to block any proposals he was unhappy with - and on Monday night he was reportedly cheered by his MPs when he told them their demands had been "very, very handsomely met".

However, at a joint press conference with the prime minister and Health Secretary Andrew Lansley, Mr Clegg said he believed the government now had a plan "we can all get behind".

"Change will happen, but it will happen at the right pace and that is why the arbitrary deadlines have gone," he said, adding that ministers made "no apology" for pausing to "get things right".

Mr Cameron said those who described the reworking of the plans as "a humiliating U-turn", or the listening exercise as "a big PR stunt", were both wrong.

"The fundamentals of our plans - more control to patients, more power to doctors and nurses, less bureaucracy in the NHS - they are as strong today as they've ever been," the PM said.

"But the shape of our plans, the detail of how we're going to make all this work, that really has changed as a direct result of this consultation. "

'Wasting billions'

Mr Lansley admitted he had got some of the proposals wrong, but said he still believed the reworked plan could deliver his ambition of an NHS with a quality of service and level of results that was "the envy of the world".

The health secretary has faced personal criticism for his inability to garner widespread support for the original bill, but the prime minister said he accepted full responsibility for what had happened.

"I am every bit as responsible as Andrew Lansley for the fact that we actually decided we could improve on what we already put forward," Mr Cameron said.

But Labour leader Ed Miliband singled out the prime minister personally for criticism, saying: "David Cameron should never have rushed into reforms that weren't properly thought through and didn't command the confidence of the medical profession.

"The problem now is that he's still going ahead with a bureaucratic reorganisation that's going to waste billions of pounds."

The British Medical Association said it was pleased the government had accepted the Future Forum's recommendations and addressed many of doctors' concerns.

But it said more detail was needed on how commissioning of care would work in future and there must be "robust safeguards" to prevent competition of any kind destabilising the health service.

The Chartered Society of Physiotherapy said it remained "deeply concerned" at the government's determination to increase competition and diversity of providers in the NHS.

But Lib Dem health minister Paul Burstow told the BBC competition would not be "an end in itself" and would only be used to improve patient choice.

"I think what people should be pleased about is that we have put competition back in its box with regards to this bill," he added.

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UK banking faces major shake-up

15 June 2011 Last updated at 13:26 GMT Ralph Silva from SRN Research says a ring-fence would make banking 'more expensive'

Chancellor George Osborne is backing proposals to force banks to ring-fence retail from investment banking.

In a speech on Wednesday he will say banks must be set up so that their High Street branches and savings and loans would not be damaged if their trading arms ran into trouble.

The legal separation of the functions of big banks was recommended by the Independent Commission on Banking.

He will also announce the privatisation of Northern Rock.

The former mutual was nationalised in February 2008, in the early stages of the financial crisis.

The BBC's business editor, Robert Peston, said the changes would represent "the most significant reform to our banking system since Big Bang in 1986 made it much easier for our giant banks to buy stock brokers and become huge in investment banking".

More protection

In his annual Mansion House speech, Mr Osborne will also say that banks should have to hold more capital to protect themselves against future losses than the new international minimum of 7% of their risky assets.

He will not put a figure on what minimum he will impose, but Treasury sources said that 10% would be "the right ballpark".

Continue reading the main story

The idea is not to make it impossible for banks to collapse - but to prevent their failures putting an unsustainable burden on taxpayers and the wider economy”

End Quote Robert Peston Business editor, BBC News The 10% minimum was another recommendation of the Independent Commission on Banking (ICB) in its interim report in April.

At the time, Mr Osborne welcomed the report, but he has not previously endorsed its findings.

The shadow chancellor, Ed Balls, has also given the commission his backing.

"To protect customers and taxpayers we need tough accountability and transparency and clear, workable and robust firewalls," he said.

The commission's final report, which is expected to give details of how banks' firewalls will work, is due to be published on 12 September.

The chancellor will announce in his speech how he plans to relinquish state control of Northern Rock.

The former mutual has been split into a "good bank", containing customers' savings and about 70 branches, and a "bad bank" containing the more toxic loans.

The former is set to be sold, while the latter will continue to be owned by the Treasury.

However, Mr Balls called for Northern Rock to be mutualised rather than sold off, and accused Mr Osborne of failing to give the option serious consideration.

Disagreement

According to Robert Peston, the purpose of ring-fencing is to ensure that in a major crisis "a retail bank could be hived off and saved by the Bank of England at less cost to taxpayers, because the investment banking part of the same bank would be allowed to fail".

"The minutiae of how retail banking operations are to be insulated from investment banking are yet to be worked out. The practical and legal challenges are formidable."

Angela Knight of the British Bankers' Association conceded that the banks had different views on how this should be done.

"There's a lot of issues and a lot of details that needs to be thought through and discussed," she said.

Stephen Hester, chief executive of the semi-nationalised Royal Bank of Scotland, told MPs last week that putting retail banks into separate subsidiaries could increase the riskiness of the banking system and put up costs for banks and their customers.

But the boss of HSBC, Doug Flint, told the same committee hearing that ring-fencing was a good idea.

Continue reading the main story

Bottom line - the price of the products is going to go up for everyone in the UK”

End Quote Ralph Silva Banking analyst, SRN Research Some commentators have said the government should go further, and completely separate investment banks from retail banking altogether, instead of allowing them to remain as ring-fenced businesses within the same company.

"While [ring-fencing] is intellectually a sound move, the problem is that in practice, with the pressures of the real world, the ring fence will not be completely... watertight," said Lord Lawson, who was Chancellor of the Exchequer under Margaret Thatcher.

"I'm quite sure the banks would like them to be permeable."

Speaking to BBC Radio 4's Today programme, he said there would need to be two totally different cultures - "prudence and caution" in retail banking, and a "go-go" culture in investment banking.

"If investment bankers make a mistake, they should go bust," he said, and it was "absolutely intolerable" that they could be bailed out along with the retail banks.

Subsidy removed

The reforms are not expected to make the UK banking system completely risk free, according to Alistair Milne of the Cass Business School.

"I don't think anybody on the Vickers Commission thinks [ring-fencing] is a magic solution that will make all potential banking problems go away," he told the BBC, although he said it would make High Street banking safer.

Instead, Mr Milne said it was about "removing the clear subsidy that has existed in the past" that enabled banks to "borrow cheaply on the basis of having all their retail activities, and use that for quite risky business".

However, removing this subsidy will not be cost-free for banks' customers, according to banking analyst Ralph Silva of SRN Research.

"Bottom line - the price of the products is going to go up for everyone in the UK," he told the BBC, estimating that the increase in cost for customers would be 10-15%.

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