David Prosser: Hutton in the pensions hotseat, but who's really steering?

One needs to be vigilant to write about the Government's pensions policy these days. Turn away for a second and the secretary of state in charge has changed. John Hutton, who on Wednesday replaced the beleaguered David Blunkett, is the fourth occupant of the hot seat at the Department of Work and Pensions in the space of a year.

It's the stuff of political satire, but this ridiculous merry-go-round is no laughing matter. The Prime Minister says that getting to grips with pension reform is one of the most important challenges of his final term. Yet each man put in charge of meeting this challenge lasts only a few months.

There are fewer than four weeks to go before Adair Turner presents the final report of the Pensions Commission, appointed by the Government to devise a road-map for reforms that will endure for the next 30 years. Hutton faces a tough time mastering one of the most complicated briefs in government before the report is published.

To make matters worse, achieving a technical grasp of the issues is just part of the job. Forging a political consensus on pensions will be even harder - the new secretary of state must work out how to meet the Prime Minister's expectations without upsetting Gordon Brown, while all the time trying to avoid translating the Turner Report into policies that are a bodged compromise.

The pensions crisis boils down to two big questions: what do we do about the fact that the basic state pension is inadequate as even a subsistence-level income, and how do we help (or force) more people to save privately for old age?

These two issues are linked, of course. Offer a higher basic state pension and you reduce the incentive for people to save. But pay a paltry state rate and those who can't afford to save are left in poverty. Moreover, offering tax breaks to encourage people to save more costs £19bn a year, which is money that could be used to underwrite universal benefits.

Outside Westminster, most experts back a citizen's pension - a universal state pension payable to all at a much higher rate than today's benefit, irrespective of past National Insurance contributions. In addition, auto-enrolment, where employees are automatically signed up to company pension schemes unless they opt out, is favoured.

However, while these proposals might be radical enough to please Tony Blair, the introduction of a Citizen's Pension would fly in the face of Gordon Brown's longstanding commitment to means tests such as the Pension Credit. Equally, auto-enrolment is a move towards compulsory pension contributions, to which the Chancellor is opposed. Over to you, Mr Hutton.

The Government raised £5.5bn from Stamp Duty on house purchases during the last financial year - a record. This reflects rising house prices, but the way Stamp Duty is charged remains unfair.

Earlier this year, the Chancellor doubled the starting threshold for Stamp Duty to £120,000. But the tax is still charged in tiers - at 1 per cent on purchases between £120,000 and £250,000, at 3 per cent on deals up to £500,000 and at 4 per cent above this level.

So while buying a £250,000 house will cost £2,500 in tax, an extra pound on the price tag raises the bill to just over £7,500.

Email: d.prosser-@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
Life and Style
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own