William Kay: The real message of Turner is to spend - and borrow - less

I blame that Archduke Franz Ferdinand. If he hadn't taken the wrong turning down Sarajevo high street and got himself shot, there might not have been a First World War. Without that, young Adolf Hitler wouldn't have wanted to wreak his terrible revenge. And if it hadn't been for Hitler's Second World War, there would not have been a UK baby boom which, according to Adair Turner this week, is at the root of our pensions mess.

I blame that Archduke Franz Ferdinand. If he hadn't taken the wrong turning down Sarajevo high street and got himself shot, there might not have been a First World War. Without that, young Adolf Hitler wouldn't have wanted to wreak his terrible revenge. And if it hadn't been for Hitler's Second World War, there would not have been a UK baby boom which, according to Adair Turner this week, is at the root of our pensions mess.

The main message of the report of the Pensions Commission, chaired by Mr Turner, is that the causes of the crisis are many and varied. So, fittingly, are the possible answers. The baby boom produced an army of workers for the period from about 1965 to 2010, when they will start to retire. This meant that retirers had plenty of people slaving away on their behalf to finance state pensions. That masked the steadily encroaching impact of rising longevity, which is going to hit the economy with tremendous force in about 10 years' time.

So Turner is saying that the country has to get its act together sharpish if the baby-boomer pensioners are not to crowd out other claims on tax revenues, such as building hospitals, schools and roads. The alternative will be the sort of tax increases that will prompt widespread emigration and/or riots that would echo the 1990 poll tax demonstrations.

If we are not to have pensioners organising mass steamings through Asda or Tesco to feed themselves, our behaviour is going to have to change. We are going to have to spend less and save more.

In that sense, the pensions crisis is the other side of the billowing debt coin. Both are products of our relatively newfound love of spending. If you plunge your arm down into the bottom of the mire, this is what you find: a cultural problem that is not to be denied except by politically suicidal measures such as value-added tax going up from 17.5 per cent to maybe 25 per cent.

This is a problem that didn't really exist before 1974. So you can gauge someone's age by their attitude to debt. Whatever high-spending habits they have got into lately, anyone over 50 is likely to have been brought up to save before buying, rather than buy then borrow. This can be dated from the raging 20 per cent inflation of the mid-70s, when it was sensible to buy now before the price went up.

I do not say that one policy is better than the other, as there are respectable arguments on both sides. But someone who regularly borrows to spend is not going to put pension contributions high up the agenda.

I accept that a sudden conversion to self-denial would stop the economy in its tracks. But the "live now, pay later" cult is a major factor in the attitude of so many people that the state will bail them out. We have average debts of £5,000 a head and a large proportion have no savings whatsoever. Millions more with modest savings are wasting their time because the means test denies them a pension credit.

Faced with this, I predict that successive governments will nudge us towards higher tax and working longer as the least painful way out of the pensions horror story, with savings incentives as a sweetener.

That will be much easier than persuading people not to want so much. And with a little sleight of hand, the politicians who happen to be in power at the critical time will calculate that it won't cost too many votes. A sorry tale.

Better educated but still in the dark?

* The Financial Services Authority (FSA) takes over responsibility for supervising mortgage brokers in two weeks, and it is already clear that we are in for an orgy of box-ticking.

Home buyers are to be deluged in Key Facts sheets and a welter of warnings and advice on how to complain. But on what is likely to be the most common rip-off - brokers charging excessive fees - the public is left in the dark. Sarah Wilson, the FSA apparatchik in charge of this project, admitted that unless you think you have been overcharged, knowing how to complain is no help. But the FSA is fearful of accusations of price-fixing, so it falls back on the laudable but lengthy process of educating the public.

Credit card firms begin to bare their souls

Short of seeing Sandra Quinn, the credit card industry's top apologist, doing the Dance of the Seven Veils, it is hard to see what more the card issuers can do to bare their souls. As it is, Ms Quinn, communications director at the Association of Payment Clearing Services (Apacs), proudly announced this week that she has cut up some of her cards. That comes tantalisingly close to the Gerald Ratner school of self-immolation; a bit like the head of General Motors saying he goes to work by bike.

Ms Quinn was in full hairshirt mode this week, unveiling the latest summary box format to go on the back of credit card publicity material. This will be the basis for an educational campaign targeted at the one in four who admit to never reading the small print and don't find it easy or convenient to compare different card deals.

Unfortunately, no one will know how successful this drive will be, as I was assured that Apacs has no figure in mind for how far they would like to cut the proportion of delinquents. But at least they can say they have done something about the problem.

The other leg of this campaign is to introduce data-sharing among card issuers, so they can know how many cards an applicant has in their wallet. The industry has been stung by reports of people committing suicide after over-borrowing. Data-sharing may not save a single life, but it will give the banks a ready answer to those who blame them for contributing by giving out too much credit.