Julian Knight: Another day, another pensions chief – and it will all end in tears
Sunday 07 June 2009
So yet another Work and Pensions secretary bites the dust. This time around, James Purnell has chosen to take the long walk off a short pier in a bid to be a latter-day Michael Heseltine. He may get his wish as far as Gordon Brown going is concerned, but he's definitely no Hezza.
Looking beyond the slow asphyxiation of this Labour Government, the telling fact for me is that Purnell was the eighth secretary since Labour took power. That equates to a new head honcho every 18 months. Along the way there have been good ministers – John Hutton, Peter Hain and to a certain extent Alan Johnson spring to mind – and utterly useless ones such as Harriet Harman and Andrew Smith. The fact that we have had so many incumbents at the DWP shows that, as far as Labour MPs are concerned, this is a stepping stone, and not a job to be truly tackled, an opportunity to make a telling and lasting contribution to their country. What's the surprise there? They're politicians after all and the long-term for them is the next day's headlines.
In my view, Purnell doesn't make it into the good camp because, to be frank, when it came to pensions, he did nothing. The problem is that Labour's upper echelons think that, since the Turner report, the pensions issue is settled for a generation, in effect a done deal. But nothing could be further from the truth. The crisis is deepening almost by the day.
Last week we had BP and Barclays announcing pension cutbacks, but these are two of the better-positioned schemes. Although they may not feel it at the moment, members of these schemes are actually among the lucky ones in the private sector.
Looking at the deficits of workplace pension schemes across the UK economy, a combination of desperate investment performance and life expectancy far longer than even the most optimistic estimates a few years ago is putting us on track towards a potentially terrifying reckoning.
At best, we are already engaged in the bidding down of workplace pensions, where employer contributions fall to nearly zero. At worst, we could see unbearable pressure put on the Pension Protection Fund – a type of insurance meant to act as a safety net for schemes – with firms unable to cope any more with their liabilities. A lot of UK companies are basically pension schemes with a business attached.
As for the new Work and Pensions Secretary, Yvette Cooper, her record as minister responsible for Home Information Packs – a policy that as originally proposed could have done some good but was mashed into a dog's dinner and introduced in a staggeringly incompetent way – gives me no cause for hope.
Long after the credit crunch, MPs expenses and Gordon Brown have drifted into the history books we are going to be living with a huge crisis in workplace pensions, which has the potential to leave us impoverished at a time when our earning capacity is at its lowest.
I sincerely hope the next government will grasp the dire nature of our situation but looking at the Tory policy vacuum I suspect, again, the Secretary of State will be a stepping-stone role, a middle-ranking job in the Cabinet for its own sake, liable to be squeezed by the Treasury at every turn. Remember how Brown as Chancellor tried to strangle the Turner report at birth? This will happen right up until the pensions system blows up in all our faces. Purnell was simply the latest occupant of the ministry of treading water and marking time.
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