Brown hints at changing pensions deal

Gordon Brown has hinted that he might be prepared to backtrack on last month's deal allowing public sector workers to retire at 60.

Speaking to the CBI annual conference in London, the chancellor said there was "a lot of work still to do" on the agreement, brokered by trade and industry secretary Alan Johnson.

The government is coming under mounting pressure to scrap the deal, which would allow existing public sector workers to retire on a full state pension at the age of 60, ahead of the publication of a key report into pensions on Wednesday.

Adair Turner's pension commission is expected to recommend that the pension age be increased from 65 to 67, to pay for a more generous state pension, and reports this weekend suggested that Mr Brown would use this as an excuse to backtrack on the public sector deal.

Today CBI president John Sunderland told business leaders that was "totally unacceptable" that private sector workers should subsidise public sector pensions.

"Government must treat everyone equally and fairly - it cannot expect private sector employees to work until 67 to finance the pensions and early retirement of public sector employees who retire on inflation-proofed final salary pensions at 60", he said.

But unions said this was "hypocrisy", citing a TUC report published last week revealing that eight out of ten of the UK's leading companies have pension schemes allowing directors to retire at 60 on a full pension.

Mr Brown today called for a long-term consensus on what changes to the pensions system were needed, arguing: "The issue is not reform versus the status quo. There must be reform.

"The debate ahead will show that the issue is how best we achieve the right reforms, reforms which are sustainable, fair and affordable."

But in a question and answer session afterwards, he said the issue of public sector pensions would be part of this wider debate - taken as a sign that he is prepared to compromise.

However, this would put the chancellor at direct odds with the prime minister, whose official spokesman this morning rejected suggestions that the government was planning to "tear up" the deal.

"We reached agreement a month ago and the government's view is that it's better to stick to agreements you have reached, rather than tear them up within a month," he said.

Mark Serwotka, secretary general of the Public and Commercial Services (PCS) union, said: "As far as we are concerned, the agreement on pensions is a done deal. It was a deal agreed with the cabinet and costing was agreed by the Treasury."

A spokesman for Unison told "We reached an agreement through the public sector forum and we see absolutely no reason why it should not be implemented."

Meanwhile, a YouGov poll for The Daily Telegraph today finds that more than a third of people believe public sector workers under the age of 50 should have their retirement age raised to 65. This figure increases to nearly 48 per cent among private sector workers.


Politics @ Lunch

Friday lunchtime. Your Inbox. It's a date.