Labour 'could pay price for pensions crisis

Britain's pension crisis could turn into an electoral liability for Labour unless the government demonstrates its ability to tackle the issue, the TUC general secretary, Brendan Barber, warned yesterday.

He put Britain's employers on notice that they could face industrial action unless they showed they were prepared to play their part in ensuring employees get a fair deal.

Speaking before the TUC's annual conference in Brighton Mr Barber said: "If Labour communicates a sense they really do have plans to tackle the severity of that crisis, that would be electorally enormously important."

But he warned the prime minister, Tony Blair, and new work and pensions minister, Alan Johnson, that while Labour could benefit at the ballot box by taking a positive approach to the pensions issue, "the reverse is true".

If the electorate detected what he called "a sense of drift" then there would be "an electoral price to pay".

However Mr Barber argued that responsibility for tackling the crisis did not lie with the government alone. "Employers have to be part of the solution. They have to accept their responsibilities. It is simply not acceptable to look to government to solve the problem."

Asked if workers would be prepared to strike on this, he said pensions ranked alongside pay. If employers responded in a "negative way, you are going see, potentially, a strong reaction from workers".

Almost half the working population would depend on state benefits in retirement, with most seeing cuts in their standard of living. "They will be relying on the future generosity of governments - unwise when both major parties want to reduce the proportion of pensions paid."

Another quarter of the working population were "pension gamblers", dependent on big savings, stock market performance and good annuity rates for retirement, he said.

He attacked calls from the employers' organisation, the CBI, to raise the retirement age to 70. This would be at the expense of the poor because a higher social class had longer life expectancy, he said.

Mr Barber urged the government to recognise the depth of the crisis, re-establish the link between pay and pensions, force employers to pay their share and set up an equality audit on pensions.