Pensions strike could be biggest walkout since 1926

LONDON BRIEFING:About 2.6 million union members in the UK are stopping work over pensions changes

AS YOU read this, Britain and Northern Ireland are likely to be in lockdown, with thousands of schools closed, airports in chaos, operations cancelled at hospitals, some cities without rubbish collection or funerals, and libraries, leisure centres and even parts of the British Museum staying shut.

The public workers’ strike over changes to pensions has threatened to be the biggest mass walkout since the general strike of 1926. There are 33 unions with 2.6 million members preparing to strike, including some unions that have not walked out for decades.

This has been a testing week for British chancellor George Osborne. The Organisation for Economic Co-operation and Development on Monday warned that Britain would face a double-dip recession this winter, and that unemployment could reach 9.1 per cent next year, outstripping previous estimates.

The Office for Budget Responsibility, set up by the coalition to produce economic forecasts independent of the Treasury, downgraded its projections on growth and warned Britain has suffered a more permanent hit from the financial crisis than previously recognised.

Osborne has been forced to admit his austerity programme will stretch beyond the current parliament. But he wasn’t in conciliatory mood yesterday during his autumn statement.

The headline-grabbing announcement was a 1 per cent pay cap on public sector salary increases for 2013 and 2014, which follows a freeze for all public sector workers in both 2011 and 2012.

The chancellor also said that he had asked the independent pay review body to look at the feasibility of local pay bargaining, to break up national settlements and make national strikes less likely, which further infuriated the unions.

Among the proposed changes to public pensions, workers are being asked to retire later, contribute an average 3 per cent more of their salaries and move from final-salary schemes to less generous career-average schemes.

Ahead of the strikes, both sides had been escalating the rhetoric. The government has warned that a slightly improved deal might be withdrawn if the strike goes ahead. Dave Prentis, leader of Britain’s largest public sector union, Unison, has meanwhile warned of a “rolling programme” of strikes next year.

In the lead-up to the strikes, the government has been keen to point out how low the turnout was in ballots among the unions – only 750,000 voted for action.

The unions, in response, have noted the Conservatives won just 36 per cent of the turnout at the last general election, and whatever mandate the chancellor had is looking increasingly thin.

* * *

Thomas Cook has had a bumpy ride of late. It emerged last week the travel firm had entered urgent talks to raise another £100 million (€117 million) from its lenders, only a month after it had gone to them for a similar sum.

The business, which sends 22.5 million people on holiday each year, blamed weakening consumer confidence and unrest in North Africa. The company’s value plunged by 75 per cent in a single day.

It was imperative that Thomas Cook arranged a new finance deal quickly.

Customers need confidence the company will still be around when they take their summer break, and it would have been easy to imagine a vicious circle as nervous holidaymakers held off booking.

Unusually, even the prime minister stepped in.

David Cameron described Thomas Cook as “an important and iconic British brand” and confirmed he had asked the Department for Business for a report on the crisis.

This was possibly a shot across the bows of two of the lenders, Lloyds and RBS, both rescued by the taxpayer during the financial crisis.

A deal was hurriedly done with the banks to put in place a new £200 million facility during a three-hour long meeting on Friday night, ensuring it was in place and announced on the 10pm news bulletins ahead of the weekend.

Thomas Cook still has a significant debt pile, which is likely to rise to £1.5 billion by the end of the year.

Frank Meysman, who takes over as chairman tomorrow has ordered a review that could cost around 1,000 jobs and close 200 shops.

The traditional package holiday is going into decline and the company critically needs to rethink its future.

– (Guardian service)