Hutton warns over pensions plans

23 June 2011 Last updated at 03:33 GMT Lord Hutton's review has formed the basis of plans for public sector pensions reform The government could force people out of pension schemes if reforms are too punitive, ministers will be warned.

The message will come from Lord Hutton of Furness who advised the government on changes to public sector pensions.

In a speech, he will warn of the dangers of raising pension contribution levels so high that scheme members have no alternative but to leave.

Downing Street said the government wanted to continue to have constructive conversations with the unions.

Significant exodus

The former Labour Work and Pensions Secretary will urge ministers to have a "full and proper consultation and discussion with the trade unions".

In a speech on Thursday at the Institute for Public Policy Research, he will reiterate that with average life expectancy increasing change is unavoidable.

But he will warn there is a danger of a significant exodus from the local government pension scheme in particular if contributions are raised too high and no other compensation is provided.

The scheme, one of the largest in the public sector, has just over four-and-a-half million members.

Lord Hutton will call for consultation with the unions to try to avoid what he will describe as "the confrontation and division that marked previous decades".

Strike looming

According to the Guardian, Lord Hutton will say: "If these reforms have any chance of succeeding then people need to know that they are being treated fairly… there should be full and proper consultation and discussion with the trade unions.

"That is how we do things in Britain - the public would take a very dim view of any government that fails to honour this basic requirement.

"We must try and avoid the confrontation and division that marked previous decades and must not turn the clock back."

About three-quarters of a million public sector workers are due to go on strike on Thursday next week over pension reforms.

Lord Hutton's independent review of the future of public sector pensions, which was published in March, has formed the basis of the government's plans for change.

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Grant warns new boss Villas-Boas

Villas-Boas promises fresh approach at Chelsea

Former Chelsea manager Avram Grant has warned Andre Villas-Boas that he must achieve immediate success to satisfy owner Roman Abramovich.

Villas-Boas, 33, was appointed by Chelsea on Wednesday, having achieved league, cup and Europa League success in his only season in charge at Porto.

"Roman is a guy who wants results and gives you everything to achieve them," Grant told BBC Radio 5live.

"He wants it as quick as you can, because he has put a lot of money in."

The 56-year-old added: "At the end of the day, football is a game of results, especially Chelsea."

Grant managed the Blues during the 2007/08 season and was sacked by Abramovich after his side came second in the Premier League and lost to Manchester United in the Champions League final.

He believes Villas-Boas's relatively young age should not count against him.

"I liked him a lot when I was director [of football] of Chelsea and he was a scout," added Grant, who was dismissed as manager by relegated West Ham towards the end of last season. "He's a nice guy, nice person and I enjoyed being with him.

"I know he's young but fellow coach Pep Guardiola was young when he started at Barcelona - and without much experience - and did a great job. Experience is important but quality and authority is more important.

"Andre did a great job at Porto. The players liked him. Players are human beings. If they [Chelsea] see he has the quality then they will support him."

Former Chelsea striker Jimmy Floyd Hasselbaink also believes that Villas-Boas should be judged solely on his abilities.

"Yes, he is only 33, but I think we should look at him just as a man on his own," commented the 39-year-old Dutchman. "He is a different manager, a different individual, so just give him a chance to succeed."

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Hard times ahead, economist warns

27 May 2011 Last updated at 16:10 GMT By Hugh Pym Chief economics correspondent, BBC News Mr Dale says he could change his mind about raising rates at any point The Bank of England's chief economist has told the BBC there are "relatively hard times ahead".

Spencer Dale said the possibilities of growth remaining feeble and inflation high were "very significant risks".

Mr Dale, who sits on the Bank's Monetary Policy Committee (MPC), has voted for interest rates to rise in recent months.

Mr Dale was on a two-and-a-half day visit to the Scottish Borders and Edinburgh.

He visited a textile factory and a timber processing plant, as well as speaking at meetings of the CBI and Chambers of Commerce.

It was part of the MPC's regular programme of trips around the UK to gauge the state of the economy.

During the visit, he took time out to speak to the BBC.

Inflation risk

I first asked Mr Dale about why he had voted at four successive meetings for a 0.25% increase in the Bank's official interest rate.

He has been in a minority on the committee, with the decisions coming down in favour of holding rates at the record low of 0.5%.

He acknowledged that economic growth was subdued.

"I am not confident about the strength of the recovery, particularly in terms of the weakness we see in the household sector and the implications that may have for consumption," he said.

But the Bank's top economist added: "I am even more worried about inflation and the risk that we may see price pressures from the rest of the world continue to push up and the high levels of inflation we have seen in the UK persist for longer than we otherwise expect."

So should households expect an increase in the cost of borrowing sometime this year?

"I think the level of interest rates at the moment is at an extraordinary low level - the Bank rate is at the lowest level it's ever been," he said.

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I understand exactly the pain that many households are feeling and have huge sympathy for them ”

End Quote Spencer Dale Bank of England chief economist "At some point, I do expect interest rates to rise, but how quickly and how much, I really can't say."

Mr Dale made it clear that he was open-minded and could change his vote at future meetings of the MPC.

"I could change my view at any point in either direction - that's the only way you can behave as a policymaker," he told me.

"You have got to approach this job with a big dose of pragmatism and humility. We don't know precisely what's going on in the economy at the moment and we know even less about how the economy is going to evolve going forward.

"So all you can do I think is remain open-minded, keep challenging yourself and then vote in terms of the interest rate you think is most appropriate to get inflation back down to target."

'Bleak time'

Households are facing an intense squeeze with average pay rises about half the annual rate of inflation.

Mr Dale argued that this was part of the rebalancing of the economy away from consumption and borrowing towards investment and export growth.

He pointed out that monetary policy could not offset this process. But he added: "I understand exactly the pain that many households are feeling and have huge sympathy for them."

I asked him whether there was light at the end of the tunnel with some indicators still looking bleak.

"I think the next year or two will be a relatively bleak time. I think we have relatively hard times ahead," he replied.

"But I think we are starting towards a path of sustainable recovery.

"The lower level of sterling should help to support this rebalancing of the economy and, moreover, I do expect inflation to start to fall in a year or two's time and that will also help to reduce some of the pressures."

But is he worried about growth remaining pretty weak?

"I am worried about growth remaining feeble and I am also worried about inflation remaining high - and if you like that's the dilemma facing the MPC at the moment - trying to balance these two very significant risks."

Mr Dale left the impression that the Bank of England was well aware of the conflicting pressures in the economy and that there would be challenging times ahead as policymakers decided when to make the first move on interest rates.

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