Tuesday, November 2, 2010

The real shock for savers in Tony Blair’s book

Never mind the tittle tattle about how Tony Blar says he hit the bottle during his final years in Downing Street. Nor his wearily familiar defence of the dodgy dossier and our subsequent invasion of Iraq.
No, what really shocks me about Mr Blair’s autobiography is his account of how millions of ordinary people’s retirement plans were reduced to a mere bargaining chip in what sounds like a game of political strip poker between him and Gordon Brown.
The former Prime Minister describes how he supported pension reforms proposed by Adair Turner but these were opposed by the Chancellor of the Exchequer at that time. Lord Turner recommended raising the State pension age and restoring some linkage with earnings – both changes now planned by the Coalition Government – but Mr Brown was thought to be against these reforms. Now we know just how much so.
Mr Blair’s book ‘A Journey’ says: “We had been having a huge set-to about Adair Turner’s pension proposals. John Hutton (the pensions secretary) and I both thought them right but Gordon disagreed.
“He was in a venomous mood and I can truthfully say it was the ugliest meeting we had ever had…the temperature which was already below freezing point went Arctic.”
Mr Blair goes on to relate how Mr Brown threatened to call for an inquiry into allegations that wealthy friends of the Prime Minister had gained seats in the House of Lords after making donations to the Labour Party. Mr Blair claims Mr Brown said he would expose what became known as the ‘cash for honours’ scandal unless Lord Turner’s proposals were dropped.
As I pointed out in this space at the time: “The Chancellor has waited a long time to become Prime Minister and has no wish to go to the polls offering the voters the chance to “work till you drop”. One in five men and one in eight women never reach the age of 67.
“Mr Brown knows there is rising awareness of how public sector employees can still retire at 60 on pensions heavily subsidised by the taxpayer. Worse, the £5billion tax on pensions he imposed in his first Budget as “a reform of advanced corporation tax” is now widely recognised as the biggest stealth tax of all and a major contributor to company pension deficits and closures.”
As it turned out, the demographics of an ageing population eventually proved irresistible and the ‘cash for honours’ story soon seemed small beer compared to the mass fraud of the MPs’ expenses scandal. Even so, I agree with Mike Warburton of accountants Grant Thornton who said: “I find it extraordinary that something as important as pensions planning for our population, indeed I would argue that it is the single most important financial issue facing us, should be relegated to little more than a bargaining chip in the wholly unrelated matter of political party funding.”
Mr Blair’s revelation of what goes on behind closed doors in Downing Street demonstrates why our pensions have been so badly mishandled by several governments. Saving for retirement requires long term planning but, on the evidence of these memoirs, most politicians seem to struggle to think further ahead than the next publicity stunt or botched back-stabbing.

No comments:

Post a Comment