Ros Altmann: 'Politicians are undermining the benefits of capitalism'
Ros Altmann won her first big battle for steelworkers: the outspoken economist is again on the warpath, says Margareto Pagano
Saturday 30 March 2013
In the summer of 2002 the BBC's Panorama crew asked Ros Altmann to go with them to Cardiff to explain to the 150,000 steelworkers at Allied Steel and Wire, part of the UK's nationalised steel industry which had just gone into receivership, why they were about to lose their pensions.
A decade later she still remembers how painful it was watching the faces of those angry steelworkers when she explained to them that, although the pension fund had money, it would only go to those who had retired. Those of them still working at the steel plants would get less than half of what was due.
"These were men who had been working since their teens. They had paid into the pension fund all their lives, only to be told the money wasn't there," she says. "They were angry and confused. Many of them were close to retirement. But do you know what they said? They asked how they could find new jobs. They didn't complain, didn't ask how to get benefits, nothing like that. It was devastating and I couldn't turn my back on them." Nor did she.
Ironically Ms Altmann was working at the time as a pensions adviser to Tony Blair's No 10's policy unit. Yet she threw herself into the cause and helped to turn the plight of the steelworkers into a national campaign, setting up the Pensionstheft Action Group, even taking her son on demonstrations with her. For five years she fought for the Cardiff workers, but there were bright moments too – like the "Stripping off our Pensions" stunt when they famously stripped, albeit reluctantly, on the beaches at Labour Party conferences.
"They wore two pairs of underpants," she says, laughing.
Striptease aside, getting justice for the workers was tortuous. They did battle with half a dozen ministers, the Parliamentary Ombudsman, Mr Blair and Gordon Brown, and challenged the Government through several High Court appeals.
"What drove me through the campaign was the old saying 'All it takes for evil to triumph is for good men to be silent.' I soon realised that these people had no hope of justice if there was no public campaign, because even working behind the scenes with the Government did not do the trick," she says.
Even the pensions industry accused her of rocking the boat. As the conflicts between the Allied Wired lobbying and her No 10 work intensified, she resigned her political job: "There were times when I despaired of ever achieving any kind of justice, but in the end it worked." Finally, the workers got their £2bn compensation in December 2007. Her efforts – and that of many of the lawyers involved – were pro bono and she still receives Christmas cards and presents from the workers thanking her.
There was nothing obvious in her past to shape such grit. The daughter of a Harley Street dentist, she had been an academic and City investment manager, so this was her first bloodying, and she still despairs at the astonishing lack of feeling towards the steelworkers from government officials. She's been up for a fight ever since, helping the victims of Equitable Life, and as director general of Saga, fought for equal women's pension rights. Now running her own consultancy, advising pension funds, hedge funds and corporates on how to invest, her latest campaign is to halt quantitative easing, encourage more savings culture and help the elderly plan for long-term care.
Today Ms Altmann is in full battle kit, and it's colourful; her jacket is fuschia over a lowish-cut black dress, she wears even brighter baby-pink lipstick, sparkling diamante earrings, necklace and watchstrap. With her big dark hair and tanned skin – she swims outdoors even in the winter – she looks more of a young Joan Collins of Dynasty days than a crusading Joan of Arc.
She's been dressed to kill since 5am – it's the day after the Budget – and has already been on ITV's Daybreak show giving her naturally outspoken views on the economy – ahead of the Chancellor, George Osborne, and Ed Balls, the shadow Chancellor. It was Ms Altmann who brought Mr Osborne's so-called "granny tax" howler to the public's attention last year, so she's been on the outlook for new ones.
So what about this year? "Well, at least there weren't any big disasters," she says, as far as she can see. "Sadly, it was again a Budget for borrowers, not savers. There were some good incentives for small businesses, but I worry the Help to Buy mortgage subsidies will stoke up house prices. Why wasn't there more to get the pension funds investing in big projects and housing? I don't understand as with contingent guarantees, this could get much-needed money into the real economy."
We meet on the top floor of the London School of Economics where she is a governor and non-executive director; it's her Alma Mater. She took her PhD here, investigating the incomes of the elderly, and it's where she first met Mervyn King, the Bank of England's Governor, who was teaching economics and whom she got to know during their research trips to Harvard, where they mixed with leading economists who went on to work in the White House, such as Larry Summers.
Although a fan of Sir Mervyn, she worries that the Bank's £375bn experiment with QE is a reckless one that may damage the economy long-term. More pertinently, she argues that there's no evidence that printing new money is working: "QE may have actually lowered growth, not boosted it. Printing money, inflating or monetising deficits can ease short-term pain but have dangerous long-term effects. It may buy us time but, without other measures, buying gilts is unlikely to boost growth as predicted. The real problem is transmission – how do we get lending going again? If you want money to go from A to B, why are they putting it through C – or QE?
"The financial crash showed that most academic economic models were flawed. Now the central bankers are hell-bent on chasing another model which is not proven."
It's pensioners she worries about most: "They cannot undo the impact of low annuity rates in the future, while their real income has been compromised further as pensioner inflation is higher than the national average. It's got a knock-on effect too as the over-50s spend half of all consumer spending."
Branded an "idiot" by some bloggers early on for her hostility to QE, Ms Altmann's views are gathering momentum: "As an independent economist I can speak out, but most economists work for banks, and are not going to criticise the policy because their employers benefit from it. But I sense people are beginning to look again, particularly asset managers, not just here but around the world."
Indeed, she's about to be filmed again by a television crew from the Canadian broadcaster CBC for a documentary on the new dizzy power of the world's central bankers: Canada's Mark Carney, the UK's incoming Governor, has agreed to be quizzed.
"Just look at Cyprus, what a disaster. It beggars belief that the ECB, the IMF and the EU agreed to break a sacred principle of depositor protection. No one wants to admit that the banking system is bust. We are living through a dangerous period: policy makers are undermining the benefits of capitalism for the masses for the benefit of the few. That can't be right."
Luckily for us, it was Ms Altmann's horror of having to cut up rats for experiments that made her switch from studying psychology to economics at university. Lucky for us too, that rather than cut up rats, she's been smelling them out and dissecting their policies instead. Where next will she turn her scapel? "Annuities. They are a disgrace – no other country in the world is able to lock your money away as we do in the UK."
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