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BBC strike special Part One: The Background

November 7, 2010

In a Views Across the Pond three-part special I look at the current BBC strikes in the UK, investigating the background reasons into the action, the effects the action has had on normal BBC output and the response from the BBC regarding this disruption and follow-up on why I support it and what needs to reasonably be done to at least avert what is at the moment being seen as long-term strike action.

Thompson faces a difficult time if he continues to ram through pension reform before knowing just how bad the deficit is.

On Friday 5 November, NUJ members at the BBC started the first 48 hour strike to petition against planned pension proposals by the BBC management. Despite other union’s within the BBC having voted to accept the changes (BECTU settles BBC pension dispute, for now), NUJ staff still felt that the deal on the table was unfair and essentially asked them to work longer, pay more into their contributions but in most cases receive significantly less when they retired.  The NUJ suggested that some would lose up to £100,000 under plans being imposed. The BBC itself countered that it had an estimated £1.56 bn hole to plug-in its pension pot and if it didn’t act now, the people who would ultimately be affected were the public, the licence fee payers.

At the moment an impasse has occurred with the NUJ, at present, standing alone against the proposals and asking for any decisions to be put on hold until the corporation’s pension review has completed its findings in early 2011. The BBC, headed by Director General Mark Thompson (recently revealed as the UK’s highest paid public sector worker) counter this is the best and final offer they have on the table. 

It is hard for some members of the public to understand why staff are striking.  After all, everyone is facing hardships at the moment because of the recent financial collapse and the measures the Con-Lib coalition government is taking to downsize the huge government spending deficit.  For some in the public, the strikes are nothing more than over privileged graduates looking for above and beyond what they deserve. The truth is, if you only see the BBC as big name stars, and high paid managers, then yes the conclusion is in some ways understandable but what people tend to forget is that for the most part the BBC is staffed by ordinary men and women who have the same bills to pay, the same financial burdens as everyone else, families to support and lives to live.  All they ask for is a pension that does not lose a “significant part of its value yearly” and a pension where what has already been promised, has already been paid for, is protected.

This three-part special takes a longer look at the strikes.  In part one it looks at the history, the reasons behind the strikes, in part two, it chronicles the impact the strikes have had on output, and the PR struggle with the NUJ and Mark Thompson and in conclusion looks at the simple proposals that have been offered, and explains why I myself am in support of this action.

The background

Every story has a beginning and in order to understand the strikes better, to at least gain insight, one must understand what led to the strike.

In June 2010, the BBC revealed to staff that it would be changing the pension scheme that it’s employees were currently in.  The proposed changes would see a 1% cap on pensionable salary, meaning for every year in the scheme your pension would likely lose value, the final salary scheme would be closed, and current staff being given the option to leave their current scheme “joining [instead] a defined contribution scheme” (NUJ). Although this has since changed to defined benefit, when the initial proposals were introduced, the definable contributions meant that staff had set contributions but would not be guaranteed on what they would get upon retirement.

As BECTU (29 June 2010) explained:

the restriction on future pensionable salary increases of 1% will permanently break the link between an individual’s salary and their final pension.

The final salary scheme ensured that staff would receive a defined pay-out upon retirement. In many cases their pension would be more than halved under the BBC’s alternative scheme. Although the NUJ and other unions had no problem with working longer and would themselves consider paying more, what they and the other unions at that time were not happy with was the proposal to pay more, work longer yet receive much less than they had been promised. This came at a time when the Telegraph revealed that:

Mark Thompson, director general of the BBC, along with eight executive board members are understood to have access to a multi-million pound pension fund, while other members are excluded.It comes after almost 20,000 BBC staff were asked to accept a 1 per cent cap on their pensionable salaries.

As Tom McPhail a pension expert was quoted as saying in The Telegraph’s story:

“A lot of the BBC’s employees will be shocked to discover that executives still enjoy the benefits of an arrangement established more than 20 years ago, which is completely at odds with the restrictions that they are looking to place on staff today.”

Many saw one rule for one and another rule for the elite being enacted. Although this system has been in place for well over 20 years for executives and pension top-ups would mean new executives pensions would be in line with existing execs, the scheme had for the most part not been made public.  And it was a scheme that was only available to executives which turned out to be a hard pill to swallow for the 20,000 BBC employees who were being asked to accept a cap while a separate pension pot was ongoing.  At the time of writing, a number of senior managers have not accepted Thompson’s now proposed changes to this perk.

To be fair to the BBC, they themselves were not the only company having to take measures to plug deficit holes in their pension pots.  Because many pension schemes rely heavily on the stock market due to investment and because of the 2008 global financial collapse coupled with residual effects of pension contributions holidays the BBC were not alone in making changes. BT, the Post Office, BP, BA and many other companies not as high-profile were making what were very controversial changes. It also came at a time when media were highlighting the dangers of pension poverty in the future. Yes public sector workers fair better with an 85% take up in pension payments in contrast to 62.9% of private sector workers not saving into an occupational pension scheme.

As Zarin Patel, Chief Financial Officer for the BBC (and revealed as 7th place highest paid public worker in the country) noted:

The Scheme’s assets, like those of many other pension schemes, have been affected by market volatility following the global economic downturn. Although financial markets have improved during 2009/10, the investments in the Scheme have not returned to previously expected levels and the outlook for the future remains uncertain. In addition, with people living longer, the cost of funding their pensions inevitably increases.

Patel herself makes a number of admissions which are questionable here.  For the first part she talks about pension schemes being affected by the market and if we look further at her statement she initially puts the deficit at £2 bn, based on an initial estimate by the Scheme’s Trustees, but as she notes the financial market to which the pension scheme is so closely linked to, improved and if you look at current, so-called final proposals, on the table the BBC management now estimate that the deficit is £1.5bn.  The NUJ in their reasons for strikes ask that the BBC to wait and:

see the true size of the pension scheme deficit before negotiating a pensions settlement. The BBC Pension Scheme Trustees will not even know the size of the deficit until the triennial valuation reports early next year. By law, they will then have to agree a recovery plan. Instead BBC managers are bypassing Trustees and trying to impose an early, draconian change. Under the current proposals staff are being asked to sign up to radical and irreversible changes without knowing the key facts.

A ’90 day consultation’ period began which was initially questioned by the staff especially considering the BBC were tabling what it considered as the only viable solution.  The BBC then claimed this was a genuine consultation which meant a) alternative proposals could be brought forward and b) their pension plan was not as solid as they initially claimed.  The BBC did seem however stubborn on certain aspects of the negotiations which meant balloting began to members of the three main unions – Bectu, NUJ and Unite, in the face of what was almost universal staff anger regarding the initial proposals. Some BBC staff expressed their anger at Mark Thompson, Lucy Adams , Director of BBC People (24th on the list of highest paid public sector workers), and Zarin Patel sitting across from the unions and effectively dictating the proceedings without being willing to properly negotiate. Staff were angered that three people who earned over £1.5 million combined per year – not including other ‘perks’ – were telling them they had to make concessions.

Initial strikes dates were agreed coinciding with what unions called ‘key news events’ – in this case the conference season of the three main parties. However before the first dates were publicaly announced Thompson offered to reopen talks with the unions. Unions were happy to go into negotiations with BBC management fully agreeing that changes may have to be made to the pension but not in the manner the BBC were proposing and not so quickly especially preempting the pension valuation.

Although productive in some ways, in others they were not. As BECTU’s General Secretary Gerry Morrissey explained:

“Whilst the BBC has heard and responded to some of our concerns, we are disappointed that the BBC’s response fails to take account of the long-term implications of the worsening of pension terms for staff and their families.

“We believe that the BBC should be prepared to justify its position fully by agreeing to revisit pension benefits in April 2011, should official figures confirm that the total scheme deficit is less than £1.5 billion. That said, the latest proposals from the BBC warrant further detailed examination with members.”

This sentiment was echoed by both Jeremy Dear, GS of the NUJ and Peter Skyte, national official for UNITE.

Union members were shown the proposals and these were rejected. Strikes were again to go ahead and the unions made public the dates.  As the Liberal Democrat and Labour conferences had already been and gone, the next ‘key news event’ to be hit was the Conservative Party Conference. This sparked another controversy as front of camera stars, such as Nick Robinson, Jeremy Paxman and Huw Edwards co signed a letter along with others citing the strikes could be “misinterpreted” as political bias against the Tories.

‘We would like to raise our serious concerns about holding a 48-hour strike during the Conservative Party conference including on the day of the Prime Minister’s speech. It risks looking unduly partisan – particularly when none of the other party conferences have been targeted. Impartiality is the watchword for the BBC’s political coverage and we would not wish to give a misleading impression that it is no longer something we value highly.’

The unions reacted furiously especially considering at least 11 of the 32 signatories were not union members, while several did not have a BBC pension.  There were some BBC staff who felt that the backlash from the stars was less about ‘impartiality’ and more about high-profile stars missing out on high profile television and radio exposure – many on the list of signatories were due to be at the Tory Conference. As NUJ representative Ian Pollack stated:

‘There is a simple fact that you appear to be overlooking: the other political conferences would have been targeted too but fell outside our scope because of the long-winded niceties of calling strikes.’

However the intervention of the BBC stars, many of whom would not be affected by the proposed changes, gave Mark Thompson a boost. However, when the unions refused to be pushed by the “Robinson letter” into changing strike plans, Thompson again offered to return to the table with another offer.

Union members were again balloted on Thompson’s latest (third) offer and three of the four unions accepted the proposals.  As BECTU explained on their website:

“I believe that the outcome of these talks, given the climate which the BBC and other public bodies face today, represents a decent settlement for BBC staff and is one that would not been have been achieved without the enduring support of our members and their local representatives.”

However, there is no hiding the fact that even with the improvements we have negotiated members will in future have less favourable terms than exist currently.”

The only union that rejected this, was the NUJ.  Although one of the smaller unions, it accounted for most of the journalists within the BBC. With over 70% voting against, the NUJ explained their reasons thus:

“This massive vote against the BBC’s latest proposal comes as no surprise, given the fundamental ‘pay more, work longer, get less’ nature of the offer. NUJ members across the BBC have consistently dubbed the proposals a ‘pensions robbery’. That hasn’t changed. The BBC has now left members with no choice but to take action to defend their pensions.”

As their literature explains: “We’re not asking for higher pensions. We’re not even saying we wouldn’t consider paying more or working more for a fair pension settlement. That means a pension which does not lose a significant part of its value every single year for the rest of our lives – which is what will happen under the BBC’s current proposals. That means a pension where what has been promised to us – which we have already paid for – is protected’.

Four dates were proposed – November 5 and 6 and November 15 and 16.  It would do well to point out that BECTU have also stated that although they accept the proposals, it is only “for now”, while many BECTU members expressed support for the NUJ position.

Look out for parts two and three of this in-depth look into the BBC strikes coming over the next week.

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