Hopes that the threat of public sector strikes in early 2012 will be headed off by peace talks are in the balance after trade unions reacted angrily to the government's decision to impose pension contribution increases on teachers and civil servants.
With talks to prevent walkouts at a crucial stage, the Department for Education and the Cabinet Office have confirmed their plans to push ahead with raising the amount of pay that goes into an employee's pension on 1 April, as part of a drive to increase contributions by £2.8bn by 2014/2015.
Trade unions oppose the move, which was first announced by George Osborne last year, because they view it as a "tax" to whittle down the deficit with no impact on the long-term sustainability of pensions.
In a development that has added further tension to talks over reforms to public sector pensions, the Cabinet Office has told unions that they will be locked out of negotiations if they do not sign up to a formal offer by 10am on Monday.
A letter to civil service unions outlining the deal said: "If you feel unable to provide such written confirmation, we will conclude that you have rejected agreement on pension reform and you will no longer be part of these discussions."
Discussions over long-term pension changes, which include switching millions of state employees to new pensions, have reached a critical stage as the government seeks a deal on four schemes: education, civil service, health and local government.
Ministers have demanded that negotiating teams for the four different schemes reach framework agreements by Tuesday at the latest, in a move that appears to bring forward the end-of-December deadline set by Francis Maude, the Cabinet Office minister, and Danny Alexander, the chief secretary to the Treasury.
A senior trade union source warned that the imposition of pension contribution increases would destabilise talks. "It is not a helpful move to announce this and it is somewhat destabilising to the negotiations. However, intensive talks are continuing across the [pension] schemes and are likely to go into next week. Unions will then consider what they have been able to achieve."
The largest teachers' union, NASUWT, said imposing a contributions hike, which takes effect on 1 April next year, was "another chapter in the sorry saga of pension changes".
Chris Keates, NASUWT general secretary, said: "Choosing to announce the increase in contributions in the final hours before the national discussions on pension changes have concluded is unnecessarily provocative but regrettably such ill-timed announcements have been a feature of this sorry saga."
The contributions increase will raise £314m next year, raising contributions by 1.2 percentage points to 7.6% of salary for four out of ten teachers – who earn between £32,000 and £40,000 per year. Those in the highest earning bracket will see their contributions rise by 2.4 percentage points, to 8.8%.
Mark Serwotka, head of the Public and Commercial Services union, which represents civil servants, said the offer letter setting a Monday deadline was "totally unacceptable" and warned that more strikes could be on the way. "These changes are neither necessary nor fair and we will continue to oppose them, and we believe further industrial action will be needed if the government refuses to negotiate on the key issues of paying more and working longer for less."
The 12-page letter to civil service unions offers a pension based on a career average rather than final salary basis, confirms that the pension age will be pegged to the state pension age and adds that benefits will increase in line with the CPI rate of inflation rather than the more buoyant RPI rate. Those changes are also being sought in the three remaining schemes.
The GMB national officer Rehana Azam said: "While talks are continuing on scheme reform, the Cabinet Office announcement of increases to member contributions from April is deeply unhelpful to the ongoing discussions – which are still under way." The Cabinet Office reacted furiously to the leak. A spokesperson said: "It is hugely disappointing and irresponsible that details of intensive and private discussions that have been taking place in good faith have been leaked. These discussions have now been going on for ten months and the Government has been totally committed to them."
Dave Prentis, general secretary of the largest public sector union, Unison, has already warned that new strike dates could be announced in the runup to 1 April when the first contribution increases are due. Prentis told the Guardian last month that fresh industrial action might not follow the pattern of the 30 November strike, when more than one million workers took part, but could take the form of a "rolling programme" that would take place on a region-by-region or sector-by-sector basis.
Representatives from 24 unions that took part in mass public sector walkouts on 30 November decided against announcing new strike dates after meeting at the Trades Union Congress this week, amid "serious engagement" in talks on pension reform. Trade unions representing local government workers have thrashed out a negotiating framework with council bosses and are now awaiting approval from ministers. Talks are taking place on Friday on the health and education schemes and are scheduled to continue on Monday.
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