John Hutton to lead inquiry into public sector pensions

The government has appointed former Labour pensions minister John Hutton to chair a ‘root and branch’ inquiry into public sector pensions.

The independent Public Services Commission will examine the long-term sustainability and affordability of public sector pensions and make recommendations that, the Treasury said, were fair to both workers and taxpayers and ‘consistent with the fiscal challenges ahead’.

It will produce an interim report in September ahead of the Treasury’s spending review.

According to the Treasury the total cost of unfunded public service pensions in 2010/11 is estimated at £25.4 billion, more than twice the cost of child benefit.

Last week the new Office for Budget Responsibility said the gap between contributions and pensions in payment in the public sector was set to more than double to £9 billion over the next four years.

Speaking on the BBC 1’s Andrew Marr show yesterday the chancellor stressed that existing accrued pension rights would be protected.

In a later statement Osborne said: ‘I am delighted that John Hutton has accepted my invitation to chair the Commission. John is an experienced public servant, who I know will bring a clear and unbiased analysis to bear on this complex and important issue.’

Lord Hutton held a number of senior ministerial posts in the Labour government, including secretary of state for work and pensions between November 1995 and June 2007.

A well-known Blairite Hutton was one of five cabinet ministers who resigned during Gordon Brown’s leadership crisis last summer. He was ennobled in the dissolution honours.

Hutton’s appointment comes two weeks after Frank Field, former social security minister in the first Blair government, agreed to chair a coalition government commission into poverty.