The government has announced its final offer on public sector pensions changes, after talks led to a broad agreement with most trade unions representing affected workers. However on Tuesday evening there were signs the deal was slipping after two key unions suggested they would U-turn on earlier agreements.
Chief Secretary to the Treasury Danny Alexander told the Commons on Tuesday that so-called "heads of agreement" had now been established with most unions in the local government, health, civil service and teachers’ schemes.
Alexander paid tribute to the TUC and other negotiators for reaching the deal, which he said was the "final offer". Legislation on the reforms will now be tabled in the new year, even though two unions, the civil service PCS union and the teachers' NUT union, have said they will not accept the deal.
This was followed by a surprise twist later on Tuesday when the GMB union and Unison said they were withdrawing their provisional agreements to the deal.
"I am pleased to report that heads of agreement have now been established with most Unions in the local government, health, civil service and teachers’ schemes. It will of course now be for union executives and memberships to decide their response," he said.
However the PCS responded by claiming that Alexander had misled MPs in his claim that the union had walked away from the talks. PCS leader Mark Serwotka said: "The truth is, the Cabinet Office unilaterally announced yesterday PCS would no longer be invited to negotiations over pensions, even though the union believes the government has a legal obligation to do so."
Under the proposals, those less than 10 years away from retirement would not face any change to their pension, and those earning less than £26,000 would be protected from an increase in contributions next year. But the reforms will see many public sector workers paying more and retiring later, with all new workers joining a career average pension scheme rather than a final salary one.
The set of concessions announced by the government last week were the second in as many months, in a dispute with the unions that has been rumbling on since February.
However some commentators believe that if the unions accept the deal currently on the table then government ministers will be seen to have "won" the dispute, having given away fewer concessions than they had expected to.
The PCS union, which represents more than 200,000 civil servants, maintains the deal would be a bad one for public sector workers, as does the teachers' union the NUT. But other unions, including the health workers' giant Unison, have said they would take the offer back to members, suggesting at least some unions will sign a deal before the end of the year.
The PCS union says it expects to hold further industrial action in the new year. If the NUT continues to reject the deal, as seems likely, it raises the prospect of schools closing again in 2012, although if other teaching unions accept the current deal then disruption may not be as severe as seen in the strikes on 30 November.