Picket line postal workers say losing battle will be a disaster for the UK's public sector

For all the hype about threats of violence, it was peaceful outside the Mount Pleasant sorting office in north London this morning. There was no chanting, no hint of aggression and no police, just a few dozen people explaining why they were there.

Forty-five-year-old Derrick Francis, who has worked for Royal Mail for 20 years, had recently gone on strike for 15  days, losing more than £1,000 in earnings. "Striking is not a decision we take lightly," he said. "But some things are worth fighting for. If we do nothing then in 10 years Royal Mail as we know it will cease to exist. What Royal Mail are trying to do now will not only destroy our working conditions but the service itself."

Like all the workers on the picket line he insisted the strikers were not against change. "In 2007 we had an agreement that things would change but that Royal Mail staff would be consulted on that change – and they have torn it up."

Mark Baulch, a postman since 1983, and on the national executive of the Communication Workers Union, said: "Royal Mail are trying to portray us as dinosaurs when, in reality, the modernisation they are proposing means customers will be getting later deliveries and effectively worsening the service. The scale of the change that is being proposed is huge, and we want the right to be involved in that change."

He accused the management of "terrorising" workers. "Management are forcing their will … increasing workloads to an impossible level then punishing people for not being able to do it."

Workers were not only worried about losing their jobs and working conditions but were deeply concerned about pensions, said Steve Jones, a Royal Mail engineer, also a member of the CWU national executive, who joined the service 34 years ago as a 16-year-old.

He said Royal Mail was facing a deficit of up to £10bn and that he, personally, had lost £30,000 off the value of his pension. "People have dedicated a lot of their lives to Royal Mail and they are scared. To tell someone who has done 20, 30, 40 years to just go and get another job is a bit rich."

Merlin Reader, a full-time CWU union rep, said that today was the 15th time he had been on strike in recent months, costing him over £1,000. "This is a key battle. We're at the vanguard of an attack … on public services. The bankers' bonuses are back, there is money back in the city, and working people are having to pay for it. We have to win otherwise it would be a disaster, not just for us but for anyone who works for the public sector and believes in service before profit in this country."

National Institute of Economic and Social Research also suggests increasing state pension age to 70

Income tax should rise by 7p in the pound or alternatively the state pension age should be increased to 70 to plug the black hole in the government's finances, a leading economic thinkthank said today.

The National Institute of Economic and Social Research proposed the two options to illustrate the severity of the measures it said would be necessary to deal with the government's budget deficit.

And it accused the main political parties of refusing to acknowledge the scale of the problem created by excessive borrowing.

"The choices we face are very stark and politicians are not facing up to it," said Ray Barrell, an NIESR economist.

"We have to change the structural deficit or start stealing from our children."

Barrell said that Britain's structural deficit – the underlying level of borrowing, excluding the extra borrowing caused by the recession – was running at 6% of GDP and that this was unsustainable.

The NIESR proposed two alternative ways in which this could be addressed.

The government could raise the state pension age to 70 by 2015 and phase out benefits for the over-60s, it said.

Alternatively, it could raise the basic rate of income tax by 7p in the pound, freeze public sector pay for five years, cut 120,000 government jobs a year for the next five years and put VAT on items that are currently exempt.

Martin Weale, director of the NIESR, said: "Unless these deficits are addressed, the country will go on getting poorer and poorer, and people will eventually wonder why there isn't enough money for their pensions."

All main parties have now accepted the need for public spending cuts and the Tories have proposed raising the state pension age to 66 from 2016.

But Weale said they needed to go further.

"If people want public spending they will have to pay for it – or else they will have to decide to do without some hospitals, or heating in schools. I would be very surprised if it could be achieved through minor spending reductions."