Mark Leftly: Austerity and pension problems leave PCS facing a takeover, not a merger

Westminster Outlook The Public & Commercial Services Union was forged in trauma and will end in capitulation.

The PCS was the result of the merger of two civil service unions in 1998. But on day one, the joint general secretary Barry Reamsbottom warned that he had found documents proving that militant factions were planning to hijack the new 270,000-membership super-union. Mr Reamsbottom, a moderate, vowed that he would make it his "business to defend our new union" against the militants, who, he said, were "anti-New Labour" and detested the new Prime Minister, Tony Blair.

Referring to the fact that left-wing unions had been crushed by Margaret Thatcher in only the previous decade, he added: "Once again they see the chance of this big union forming with all its membership. This is quite a prize for them."

Mr Reamsbottom failed. Mark Serwotka, a supporter of the Socialist Alliance umbrella group of the militant left, seized control in a vote that was disputed by Mr Reamsbottom's right-wing faction until he lost a court battle in 2002.

Mr Serwotka is still in charge, but not for much longer. By next year, the once-mighty PCS will be subsumed into the behemoth that is Unite, with its 1.1 million members.

After years of merger talks, Unite and PCS are on the precipice of a deal: the PCS is about to send out motion papers for its conference in Brighton next month that will include an update on those discussions; yesterday Unite's top brass were convening a special meeting to go through the heads of terms.

Under Mr Serwotka's leadership, the PCS has fallen into financial disarray. We have previously revealed the union's acute pension problems, with an estimated deficit of up to ?65.5m against PCS's ?27.6m annual income.

The PCS has campaigned hard against Coalition cuts to their public-sector members' pension terms, yet are even more draconian with their own staff. A lump sum will no longer be paid at 65 in most circumstances, and it will take 45 years of employment with the PCS for a person to receive a pension of half their pay in retirement, against just 30 years today.

The union is struggling with a steep membership decline, as civil servants axed by government austerity cuts move into the private sector. In 2005, the PCS had 313,000 members, turning a ?1m surplus, against fewer than 245,000 and a ?3.1m loss in 2012.

Critics argue that the PCS's left-wing has burnt through its money, with many even comparing the union's hard-left with Viv Nicholson, a semi-tragic figure from the 1960s. Mrs Nicholson and her husband, Keith, won ?152,000 on the pools – worth ?3m today – but within four years they had squandered half their fortune. Mrs Nicholson ended up performing "Big Spender" in a Manchester strip club. Her life was immortalised in the 1999 West End musical Spend, Spend, Spend.

Whether that comparison is fair or not, there is little doubt that this is not a merger of equals. What Unite likes the look of, sources claim, is the PCS's headquarters building on prime land in Clapham, south London. "That could easily be turned into yuppie flats worth tens of millions of pounds," says one senior trade unionist.

That money could plug the pension gap, meaning that Unite will have taken its membership to nearly 1.5 million members at little financial cost. If he's not already a serious political player, that certainly gives Unite's general secretary, Len McCluskey, the sort of clout to give the Coalition nightmares and put even more pressure on the Labour Party – to which it is affiliated – to write a public spending-orientated general election manifesto.

That affiliation is also problematic for a civil service union. Even though the PCS is run by the very left of what is already a left-wing movement, there has always been an ideal that the union should be politically neutral when dealing with governments of any hue.

PCS's civil service members have to be politically neutral in their jobs so that they can serve whichever party is in office. The PCS leadership dislikes all the parties of central government, which is a kind of neutrality.

Although Ed Miliband has drastically reformed Labour's links with the unions and Mr McCluskey has floated the idea of severing links with the party should it lose the election, Unite is far from politically neutral. As one unionist puts it, the civil service representatives might want to punch the Tory minister in front of them, but at least the PCS banner means that negotiations do not start off on a party political footing.

I'm told that the PCS is now only fighting over small details, like how many positions it would receive on the merged unions' committees. Most corporate mergers are takeovers and that is the case here: these last arguments are merely the last rages against the fading of the light.

In a recent post on the PCS's website, the union claimed that the merger would "bridge the traditional divide between unions in the public and private sectors to boost our bargaining power". A faction opposing the deal noted this point was made on April Fool's Day.

The financial reality is that the PCS has ultimately failed, just as Mr Reamsbottom feared it would.