Archive for September, 2010

To strike or not to strike…

September 30, 2010

The big news today is the pincer movement on the union strike plans that Mark Thompson launched today. Backed up by the letter from senior BBC journalists, he raised two questions for staff to consider. Was this the right time to strike, when negotiations over CAB2011 are still underway? And was it right to target the Conservative party conference, and George Osborne’s speech announcing the result of the government’s spending review two weeks later? These are serious questions, worth examining in a bit of detail.

Is striking next week the right thing to do?

Let’s assume that the objective of strike action is to strengthen the unions’ hand in their negotiations with the BBC. Consider two possible scenarios. In one scenario, Mark Thompson’s efforts to undermine the strike are successful, the strike is weakly supported, and industrial action peters out. It’s pretty obvious this would be calamitous for any attempts to force further concessions out of the BBC. An emboldened Mark Thompson would push on with his proposals safe in the knowledge that the unions had shot their bolt, and they no longer had any ammunition left to fire. In the second scenario the strike gains overwhelming support, successfully achieves its objectives of taking programmes off air, with the threat of more to come. In this scenario the unions are clearly strengthened, they can go into negotiations with confidence, and Mark Thompson will know that more concessions will be required to gain peace.

In the end strikes are about power. The BBC has gone as far as it is prepared to go voluntarily. Now they are gambling that they’ve made enough concessions to weaken our resolve in fighting for our pension rights. There will be no more concessions until the strikes happen, because the BBC wants to test our determination. Only one thing can now persuade the BBC to make more concessions, and that is if they are convinced that our resolve is steadfast.

Finally, a word about the “targeting” of the Conservative Party. I confess to unease about this myself. Our battle is not with the Conservative Party, it is with an intransigent employer that is reneging on its promises. But at this point it is worth remembering how many cards the BBC holds when it comes to the timing of strike action. Strikes are most effective when they target live programmes, because these cannot be replaced with other, pre-recorded equivalents. Originally the strikes were planned to take the Last Night of the Proms off air. But the BBC cannily tabled it’s CAB2011 proposals just in time to ensure this strike action could no longer go ahead. Because the law mandates that strike action takes place within a maximum of 8 weeks of the strike ballot, the unions have few other targets to aim for.

I would place the blame for the strike dates on Mark Thompson’s shoulders. He knew that in delivering a new proposal that would need examination and consultation just before the originally planned strike dates, he would leave the unions with little option but to target the few remaining significant live events that occur before the strike mandate runs out. It is unfortunate that these are exclusively Conservative Party events. The unions should make every effort to explain that they view this as unfortunate. But ultimately this debate does not change the fundamental question at stake: are the BBC’s workforce prepared to make a sacrifice to strengthen the unions’ negotiating hand with the BBC?

In the absence of further concessions from the BBC, I’ll be on strike on Tuesday and Wednesday.

Another seminar…

September 30, 2010

Today Mark Thompson held another pensions seminar, and some more interesting information seeped out.

Mark came perilously close to admitting that getting rid of the pension scheme deficit is not the BBC’s main aim. When I suggested that the assets of BBC Worldwide be set against the deficit, he and Zarin Patel said that even if they did this, and it did close the deficit, then it would not meet their other objective, namely to remove the long term “risk” to the BBC of rising pension costs in the future. In other words, even if the BBC could get rid of the deficit, he’d still want to remove our pensions benefits.

So let’s be very clear. There ARE ways to deal with the deficit that don’t involve extra licence fee income. But the BBC has decided to use the “opportunity” presented by the deficit to drastically cut our pensions. In their polite phrase this involves a “transfer of risk” from the BBC to us. The plain truth is it is breaking a promise the BBC can afford to keep, but no longer wants to.

More and more he is relying on the argument that change is inevitable. A big slide was put up showing all the other companies that have made changes to their final salary schemes, completely glossing over the fact that many of these companies have found much less draconian ways of responding to their pension fund deficits. Time and again he returned to the argument that the BBC’s current pensions are out of kilter with “the market”. I have the very strong feeling that for him the political argument that the BBC cannot be seen to be out of kilter with other organisations trumps everything: even if there was a way of funding the existing (or close to existing) pension arrangements, Mark doesn’t want to. He is attempting to cover his flank from Daily Mail style attacks on supposed “gold plated” pensions.

It’s worth at this point remembering that the price of this defensive maneuvre is pensions robbery. When the pension scheme was set up it included a set of arrangements for dealing with deficits. It carefully defined the responsibilities of the BBC, employees and the trustees. One clause says quite clearly that pensionable salary is basic salary, and to get around this the BBC has had to bypass the trustees, and effectively change our contract of employment by engaging in linguistic sophistry, forcing us to agree to redefine what basic pay means. This is nothing to do with clinging on to “gold plated” pensions, and everything to do with holding the BBC to the promises it has made and which we have every right to expect them to keep. I do not expect to see  my basic pension rights traded to protect a political flank that was exposed by the incompetence of the BBC’s senior management in awarding and then defending outrageous executive salaries (not to speak of extravagant pension provisions).

Incidentally, as an aside, Mark has finally – finally – seen the light on executive pensions. The “special supplements” that have been paid to senior managers to get around the cap on their pensionable salary (a miserly cap of £123000), are to end. Again, it’s a case of following, when what was required was leadership.

Defending the final salary scheme (still)

September 24, 2010

Reports from union meetings seem to suggest that the senior union leadership at least at BECTU believe that fighting to defend the final salary scheme is a “lost cause”, and the only show in town is to try and improve CAB 2011 – the BBC’s new, marginally improved pensions offer.

I beg to differ.

It seems to me astonishing to allow the BBC to close down the debate on the existing scheme when fundamental questions remain unanswered, including why the BBC is not prepared to use alternative funding sources such as Worldwide profits to help fund the deficit, something the pension trustees regard as a viable solution. In fact, we haven’t even managed to get an answer out of the BBC as to why they won’t do this (see earlier posts for my explanation). This dispute is now very clearly about the BBC’s determination to force everyone off the final salary scheme, replace it with a vastly inferior alternative, and in the process drastically reduce the amount it spends on pensions. Given that pensions are a deferred salary, it is a savage assault on our remuneration.

I accept that Mark Thompson is not going to change his mind voluntarily about the final salary scheme. But the 90% vote for strike action shows that BBC employees are of a mind to try and force him to change his mind. It seems to me madness to throw away that mandate by negotiating for incremental improvements to the massively inferior CAB 2011, without making a very determined effort to compel the BBC to change its mind about the existing scheme.

In the end this is about power. If the existing pension scheme is effectively closed down not only will the BBC have forced through a drastic reduction in the reward package for staff, it will also have rewritten the power relationship with the unions, and with staff. How long I wonder before the BBC is back with a new “draconian” proposal, to slash the redundancy terms?

Me, the next few days

September 15, 2010

Just a note to say I’m away now for a few days, but I’ll be back early next week to pick up the story

Whilst I’m at it, a huge thank you to everyone for taking the time to read the blog, the number of hits has shot into the hundreds over the last couple of weeks. And especially thanks to everyone who has contacted me to express kind thoughts about the blog. See you in a few days.

Tomorrow’s forum with Mark Thompson…

September 15, 2010

Unfortunately I can’t be there. But I hope that he gets asked some of the tough questions with which he needs to confronted. No doubt there will be lots of questions about the new option – CAB 2011 – but in a way that’s what the BBC wants. They want to distract us from the bigger questions, the real issues that underpin what the BBC is trying to do to us.

– Why won’t you set non licence fee assets like Worldwide against the deficit?

– Why won’t you wait until the valuation is complete before working out a recovery plan?

– And will you confirm that whilst the BBC is planning to pump more money into pensions in the short term, the long term aim is to drastically reduce the amount that the BBC spends on pensions?

CAB 2011: A chink of light…

September 15, 2010

There was one very interesting question last night about the new CAB 2011 proposal (the 3rd option) that Mark Thompson has outlined. It hasn’t been confirmed yet, but it is very likely that this will be run as an additional part of the existing pension scheme. To do this requires a rule change (or changes). And that involves the trustees. So the question was, could the trustees not make their approval of the rule change conditional upon the BBC revisiting its proposals to destroy the final salary scheme? The point was made in response that Mark could withdraw the proposal (or presumably opt to set up an entirely new pension scheme to enact it, but this would be a huge effort for a £12 million expenditure). But it would be a hugely damaging blow for Mark to have to say that he couldn’t get the trustees approval for CAB 2011, so he was going to snatch it away. I don’t think he’d dare, so he’d have to negotiate.

It’s worth putting pressure on the trustees to exert maximum leverage through the opportunity offered by CAB 2011. This is their chance to redeem themselves and show that they understand the justifiable anger that members feel about the way the BBC has behaved.

Trustees’ meeting: at last some answers

September 14, 2010

Just back from the special meeting with the trustees. There were many passionate and well argued contributions from members of the scheme, all making the case that the trustees simply must take a higher profile. It was striking that the trustees all professed their shock and dismay at what the BBC has done (words like “aghast”, “outraged” and “scandalous” were used by the trustees themselves). But how many of us would have known that they all oppose what the BBC is doing before tonight?

At the end of the meeting a vote was held on the motion

“This meeting of members of the BBC Pension Scheme calls on the Trustees to perform their duties to protect the benefits of the members. Specifically, we call on them to oppose the BBC’s plan to reduce the eventual value of contributions already made to the Scheme”.

It was passed unanimously – with more than 800 proxy votes and about a hundred votes in the hall. The trustees got the message: they expressed regret that they hadn’t acted sooner, accepted that there was a very strong desire on the part of members that they should fight harder to defend the scheme, and fell over themselves to criticise the BBC’s conduct.

There were many points of clarification, and I’ll run through some of the most important here.

1) The 43rd deed

I have been banging on in this blog for some time about the 43rd deed of the pension scheme, which defines pensionable salary as basic salary. Why, I asked, does this not give the trustees the scope to challenge the BBC’s plan to redefine pensionable salary as only rising by a maximum of 1% a year? The answer from the trustees’ legal expert was breathtaking. The BBC is going to present us with two options. When our next pay rise comes along we will have the option of either a) declining the pay rise or b) agreeing to the pay rise but with strings attached. The main condition will compel you to agree that your basic salary has now been redefined as your existing salary plus 1%. The extra bit of the pay rise will be labeled a “salary supplement”, or something similar. Over the years your newly redefined “basic pay” will continue to rise by a maximum of 1% a year, but you will accumulate a larger and larger “salary supplement”.

It is to me simply staggering that we have a DG who is prepared to advance such an egregious piece of sophistry as a way of swindling us out of our rightful pensions. No wonder the BBC has been so reluctant to spell out the legal shenanigans on which it is basing its bypassing of the pension scheme rules. Mark Thompson should hang his head in shame.

2) Why do the pension scheme changes have to happen before the valuation is complete?

Again, the trustees supplied the answer, albeit in a roundabout way. First of all, they explicitly confirmed that there is no legal need to come up with a deficit recovery plan until the end of June next year (after the pension scheme valuation is complete). So why does Mark Thompson keep saying it must be dealt with before then? Because once the valuation is complete in March next year, there is a legal requirement to come up with what’s called a “recovery plan”. And – critically – that recovery plan must be negotiated with the trustees. At that point all the trustees’ legal obligations to protect the interests of members kick in. And the BBC would never get its way through that route.

Again what strikes me here is the dishonesty of Mark’s statements. A week ago Mark wrote: “We are facing a large pension deficit and must act now to reduce it” (my emphasis). There is no “must” about it. Rather there is a choice, made by management to avoid having to do what any reasonable member of the pension scheme has a right to expect – sit down with the trustees to discuss how to fund the deficit.

3) Why can’t the assets of BBC Worldwide be used to help cover the deficit?

There’s a simple answer to this one. According to the trustees, they can! Indeed, they were hoping to have discussions with the BBC about this very plan. But the BBC’s plan to rewrite our contracts – redefining basic salary – has bypassed all discussion with the trustees. If ever there were proof needed that the BBC’s plans are not primarily about the pension scheme deficit, then it is this. There is a perfectly good plan that could go a long way to cover the deficit, the trustees are in favour of it, and the BBC refuses to even discuss it. (You can read elsewhere in this blog why I think the BBC is taking this course.)

As I write this I have my BBC pass in front of me. On the back are the BBC’s values, and the first one says: “Trust is the foundation of the BBC”. How is it possible to have trust in a DG and senior management team when they have been so dishonest about their motives, their strategy and their goals?

£12million

September 14, 2010

If you want any confirmation about how derisory the new career average scheme is, look at Ariel today. The total cost of the new concession is estimated at just £12m a year. But it’s presented as the limit of what the BBC will do.

If we want more we’re going to have to fight for it.

The 3rd option in more detail…

September 13, 2010

I stand by my first reaction this morning: the 3rd option evades the issue and offers us a worse career average scheme than the one currently on offer. The focus should remain on pressuring the BBC to keep the pension promise embodied in the pension scheme rules.

But let’s take a more detailed look at what’s on offer.

First of all, to recap… The new scheme would require us to leave the final salary scheme. The value of the pension we’ve earned so far in that scheme will then rise “broadly” in line with inflation.

The new career average scheme would define your pensionable salary as the average (technically the arithmetic mean) annual salary that you earn over the period you’re in the  new scheme. Furthermore, your pension would then be calculated on the basis of a 60th for each year of service. So if you were in the new scheme for 5 years before retirement and your annual salaries during that time were 50K, 51K, 52K, 53K and 54K, then the average would be 52K, and this would be your pensionable salary. Your pension would then be 5/60’s or 1/12 of 52K or £4333.33. And this would be added to the final salary pension that you’d already accrued in the old scheme.

The pensionable age would be 65 (as opposed to 60 in the final salary scheme). So potentially you’d be drawing one pension 5 years before the other.

Member contributions would be 7% a year (as opposed to 4% a year in the current career average scheme. But if memory serves me right this is about the level of our contributions into the final salary scheme).

There is no word yet on the BBC’s contributions to the new career average scheme

And the sting in the tail is… once you’re taking your pension it will only rise in line with inflation (as measured by the CPI or consumer prices index) or 2.5%, whichever is the lower. This means that your pension can NEVER rise by more than 2.5%, no matter what level inflation is at. This is guaranteed to lead to a continual erosion of the spending power of your pension. RPI inflation (which is generally regarded as a better measure of actual living costs) is currently 4.8% for example (and even CPI is 3.1%). So pegging pension rises at 2.5% means that when inflation is high you lose out, and if inflation falls below 2.5% you don’t recoup the loss because the rise in pension slides down below 2.5%.

Good things about the new scheme? It’s better than what was on offer before because:

– in most circumstances the career average scheme will be better for you than staying in the final salary scheme and accepting a 1% cap on rises in pensionable salary. (The assumptions behind this are that you are still some way off retirement, and expect your salary to rise by more than 1% a year. It particularly becomes true if you have a large salary hike between now and taking your pension. If on the other hand you don’t think your salary is going to rise much, and you think inflation is going to stay low until you retire, then staying in the existing scheme is still probably better for you.)

– it gives some predictability in calculating your likely retirement income (unlike the defined contribution scheme which was launched as “option 2” when the proposals were first announced).

– because the career average is calculated on the basis of the years you spend in the new scheme, your average won’t get dragged down by the early low earning days of your career at the BBC. Conversely, if you’re still at a relatively early stage in your career, then this is not a very attractive scheme (and you might be better off taking a gamble – which is what it is – on the defined contribution scheme/option 2.)

So where does all this leave us?

The fundamental truths have not changed. The new scheme only seems “good” if you compare it with the appalling options that the BBC first offered. The BBC is determined to renege on its pension promise because Mark Thompson believes it is inappropriate for the BBC to continue to offer a final salary scheme, and he wants to use the deficit as an opportunity to drastically reduce the BBC’s long term spend on pensions.

The fundamental choice is this: do the problems in the pension scheme get solved by destroying the final salary scheme, or by finding ways to put extra money in to plug the deficit? I believe the BBC should choose the latter. But we should be under no illusions. It is highly unlikely that Mark will be persuaded by the moral case for defending a final salary scheme. Only determined resistance can change the terms of the debate.

First reaction

September 13, 2010

So the big offer is a new career average scheme that seems to be worse than the existing career average scheme. (Worse because we pay in more, and once we’re taking our pension it’s only allowed to rise by a maximum of 2.5%) .

It’s cute though. It means that all the questions will now be about the alternatives the BBC is offering, rather than about why the BBC is unwilling to stick to the pensions promise that is enshrined in the pension scheme rules. The fundamental questions remain:

– why are we being forced into a decision about the best way to reduce the pension scheme deficit long before the size of the deficit is known, and long before there is any legal need to do so?

– why will the BBC not consider any alternative ways of funding the deficit, such as diverting the profits from Worldwide into the pension scheme?

Mark’s new offer is confirmation that the BBC’s real agenda is not to find a way to fund the deficit, it is to destroy the final salary pension scheme in order to dramatically reduce the amount the BBC spends on pensions in the future.