Blair attacked for sitting on his hands while 'middle Britain's timebomb' ticks

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The Government has been accused by MPs on all sides of ducking controversial decisions on the pensions crisis - dubbed a "timebomb for middle Britain" - until after the general election.

The Government has been accused by MPs on all sides of ducking controversial decisions on the pensions crisis - dubbed a "timebomb for middle Britain" - until after the general election.

The scale of the crisis was revealed by a two-year-long study by a pensions commission, chaired by Adair Turner, which found that 12 million people over the age of 25 are not saving enough for their retirement. Mr Turner, a former CBI leader, said they were "living in a fool's paradise''.

However, Tony Blair and Gordon Brown, the Chancellor, were accused of "kicking the crisis into the long grass'' after ordering Mr Turner to report back in a year's time on the long-term solutions.

The pensions crisis has become one of a growing list of problems that will be tackled after the election, which includes the soaring cost of council tax bills, the referendum on the European constitution, the future of the nuclear power industry, House of Lords reform, and the ban on foxhunting.

The report said the cause of the crisis is rising life expectancy and a forecast low birth rate which will nearly double the percentage of the population aged 65 years and over by 2050, while the percentage in work to support the pensioners will fall. Downing Street insisted that the Chancellor's £5bn a year raid on pension funds was not to blame, and a "sideshow" compared with the bleak picture uncovered by the commission.

The Turner commission, which has been studying Britain's chaotic pensions system for two years, found that spending on pensioners would have to rise by £57bn a year to keep pensions at the current level unless drastic action was taken.

All the options are unpalatable: retirement age would have to rise to almost 70 if taxes or savings rates did not increase, said the commission.

The Chancellor was so alarmed at the Turner report that he ruled out raising taxes to fund European levels of pensions in a pre-emptive strike at the weekend.

Alan Johnson, the Pensions minister, ruled out another option, of forcing people to work longer for their retirement by raising the statutory pension age from 65 to 70.

That leaves the Government with two options: to persuade more workers and their employers voluntarily to join second pension schemes, or force them to do so through compulsion.

The unions yesterday made clear they believe that compulsion was the only answer to the crisis. Mr Blair is worried that forcing firms to raise their costs by funding a second pension for their employees would be fiercely resisted by the CBI. Downing Street said there would be "no knee-jerk reaction" to the Turner report.

Frank Field, a former social security secretary, led the attack on the Prime Minister and the Chancellor for delaying the decision. Mr Field warned Mr Blair that the electorate had grown tired of trusting him, and said the Turner commission should be told to report back by February so that Labour could put its proposals to the test in its election manifesto.

David Willetts, the shadow Pensions Secretary, said the Government was in a state of "paralysis" over pensions because the Chancellor was unwilling to contemplate scrapping his means-tested pension credit for the poorest old people.

The report also took a sideswipe at the Chancellor's focus on allocating the biggest increases to means-tested pension credits for poorer pensions, rather than the state pension. It said the deterioration in private pension savings was occurring in middle income earners - "the same group most affected by the planned reduction in the generosity of state pension provision."

The pensions commission revealed "a timebomb for Middle Britain", said Steve Webb, Liberal Democrat spokesman.

John McDonnell, chairman of the Socialist Campaign Group of left-wing Labour MPs, said: "Our pension provision is shameful for a Labour government. Our elderly are already living in poverty and unless the Government takes urgent action millions more will also face penury when they retire."



LABOUR'S POLICY WAITING LIST

EUROPEAN CONSTITUTION: Tony Blair was persuaded by senior ministers, led by Jack Straw, the Foreign Secretary, to announce on 20 April that he will allow a referendum on the new European constitution. However, the poll has been put off until after the general election.

NUCLEAR ENERGY: Britain's nuclear power stations are ageing and need replacing if Britain is to retain a nuclear element in its energy supply. However, it could cost billions of pounds to build a new generation of nuclear reactors, and it would excite protests from the green lobby.

COUNCIL TAX: Bills have soared, causing protests from pensioners on low fixed incomes. Ministers ordered a review but in July, Nick Raynsford, the Local Government minister, announced a second inquiry would report at the end of 2005 - six months after the likely election date.

HOUSE OF LORDS: Reform of the Lords and removal of the hereditary peers was a manifesto commitment in 1997, and repeated in 2001 but final reform still put off until after the next election. All but 93 hereditaries were removed, but no agreement was reached on further reform.

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