Cost of old age will lead to saving not spending

"The cost of providing for old age is going to become a great deal more expensive for everybody. This is tough stuff. It means people are going to have to spend less of their earnings"

Anyone with an eye for his or her future welfare would do well to pay close attention to events in Birmingham over the next two days. However much it may be dressed up, the central message ringing out from the National Association of Pension Funds' annual meeting will make sombre listening.

Essentially it will tell us that the cost of providing for old age is going to become a great deal more expensive for everyone. This is tough stuff. It means people are going to have to spend less of their earnings and save more, if they are going to have any prospect of maintaining a reasonable standard of welfare. Put another way, most of us are going to feel poorer during our working lives.

It is a message the pension fund actuaries and managers are going to have to get through to a much greater degree than they have done so far. They would not be exaggerating were they to say we are standing on the cusp of a pensions revolution. Or more properly, a revolution must occur in people's attitudes to providing for old age.

The role of the state in caring for its citizens' retirement and dotage is withering. This is a well understood phenomenon. But the consequences of this are still not properly appreciated by many of those who will be affected, which means just about everyone.

We shall have to move away from narrowly equating old age with pensions only, towards a more general idea of saving, whether it be in the form of one's house or other financial vehicles.

The recent change in the law on long-term nursing care for the elderly, from which the state has largely withdrawn, shifting the funding burden to peoples' savings and homes, underscores the new environment and the change in attitudes it demands.

The British, so used to spending today for their inflationary tomorrows, are going to have to get used again to long-term saving. And they will have to tell their children there is likely to be a lot less money to inherit, once the old-age bills have been settled.

Nervous times on

the high street

These are nervous times on the high street. There is money to be spent, but persuading shoppers to spend it is proving more of a problem than most retailers would like to admit. Christmas was a money spinner, the January sales started well and Easter set the tills ringing again .

But in between high days and holidays the consumer is padlocking the purse. It seems that shoppers these days need a special reason to spend. Witness the hordes of bargain hunters who descended on Rumbelows after the news that the loss-making electrical stores were to close. The threat of higher interest rates following weak March retail figures must be sending a shiver down the back of many an embattled shop-owner.

All of which makes the achievements at Sears look the more impressive. Formerly a ramshackle conglomerate put together as a property play by the late Sir Charles Clore, Sears was never the most dashing of retailers. Its rock solid property portfolio meant the Selfridges to Freemans catalogue business, was never going to go off the rails. But its sheer size - more than 3,000 shops - gave it the turning circle of an ocean liner. Liam Strong, the chief executive brought in from British Airways, looks as though he is slowly, but surely, bringing the ship around.

Sears' problem has always been too many shops spread over too many different formats. British Shoe Corporation, long a headache, was losing money three years ago and trading under a dozen names. Now the plan is to move towards just four. Womenswear, which includes Richards and Wallis, is improving and new designs for Dolcis and Adams childrenswear are being trailed.

A marketing man to his boots, Mr Strong is spending heavily on new stores and refurbishments: around £55m last year and the same again this time. Selfridges is in the midst of a £50m revamp. The strategy is bringing its rewards; new formats such as the self-service Shoe Express stores are delivering the best results. The new Dolcis design look like something out of a Hollywood film set.

Mr Strong is only echoing what other retailers have said in expressing concern about the anomalies of consumer behaviour. House of Fraser, the Dickins & Jones and Army & Navy department store group which announced disappointing results last week, is also making cautious noises.

Recovery theorists are now looking to 1996 for a meaningful improvement in the retail sector. It may well be, however, that retailers are going to have to reconcile themselves to a long term consumer apathy, in which case there will be more closures to add to the growing list of Rumbelows and Athenas.

Monolith British Gas

scuppers a good idea

It's a funny thing about big, monolithic companies such as British Gas. Despite banks of highly paid advisers and consultants, they tend to be slow to spot vital initiatives and changes affecting their business and even slower to act. It apparently took British Gas a good two weeks before it noticed Alan Duncan's amendment to the gas bill, snuck in there by an upstart competitor, United Gas. The idea was that British Gas should be forced to hive off its pipeline business into a separate subsidiary, thus ensuring full transparency and the possibility of fair and equal competition to BG's own selling operation.

Once alerted to this dangerous little beastie, however, British Gas moved, as only British Gas knows how, to stamp out what was actually an eminently sensible initiative. In these matters British Gas is like a great juggernaut. To begin with there is a great revving of engines and outpouring of smoke and exhaust but not much movement. Slowly the great dinosaur begins to move forward changing through the gears until it becomes quite unstoppable squashing all in its path.

Mr Duncan's amendment may never have stood much of a chance; British Gas made sure there was none. It was duly voted down in committee yesterday, destroyed by a barrage of lobbying, lunching and anything else that came to hand. It cannot now be revived. It is a sad irony of this particular initiative that though it had British Gas all in a tiz, the effect would have been a good deal less dramatic than what the Monopolies and Mergers Commission was proposing two years ago. The MMC wanted to force BG to divest its pipeline business, a full scale breakup. The amendment merely required separation.

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