8th May 2009
By David Scott
The public sector must grasp the nettle and consider changing policies on pensions and pay sooner rather than later, business leaders have told MSPs.
David Lonsdale, assistant director of CBI Scotland, told the Scottish Parliament finance committee on May 5 that there was an urgent need for new approaches including reviewing the public sector’s ‘no compulsory redundancies’ rule.
He warned that the ‘golden period’ of ever-rising funding for Scotland’s public sector was now ‘well and truly over’.
The current funding crisis, coupled with pressures resulting from a shrinking working-age population and rising public sector costs, made changes in spending priorities and public service reform even more critical.
In a submission to the committee, which is conducting an inquiry into the Scottish budget, Lonsdale said private firms had made huge additional contributions to their pension schemes as well as taking tough choices to change the shape of their pensions provision to keep costs manageable.
He added: ‘The public sector needs to grasp the nettle sooner rather than later. Similarly, the “no compulsory redundancy policy” needs to be reviewed to see whether it is sustainable.’
He denied charges from Labour MSP David Whitton that his organisation wanted to privatise the public sector as much as possible.
Lonsdale said: ‘The challenge for you as politicians is that you’re about to enter a far leaner period in terms of finance than you’ve had before. We’re here today to put forward some suggestions you might look at in going forward and one of them is spending restraint.’
He added: ‘One of the largest elements of the devolved government’s budget is pay, pensions and associated costs so therefore the total envelope is going to have to be looked at.’
