Towards the end of the second term Tony Blair suggested that long-term reforms of pensions could only proceed smoothly with a cross-party consensus. Now there is no consensus, not even within his cabinet.
Next week Adair Turner's Pensions Commission will publish its long awaited proposals. Some of the recommendations will be surprisingly wide-ranging and firm. There are sections where Lord Turner of Ecchinswellweighs up the options cautiously and others where he reaches fairly blunt conclusions. Blair is in a hurry to respond as he seeks to implement a legacy of sweeping reforms.
Gordon Brown, the Chancellor, is patient and in the case of pensions anticipates a debate that could last up to five years, safely beyond the next election. Once more the perspectives of a departing Prime Minister wanting to make his mark and his likely successor seeking to avoid a bucket load of expensive or vote-losing policies are in conflict.
Already some of the more unthinking Blairites brief that the tensions are the latest example of Brown being "anti-reform". Yet again these apparently noble crusaders pose their destructive question: Is Brown up for reform?
There is a curious machismo within new Labour over "reform". A small but influential group shows off about commitment to "reform", like teenage boys posturing about their apparent sexual experiences. The substance of the reform matters less. It is what they happen to believe at any given time. But they taunt Brown over their reforming virility as if he is the boy in the playground who has never gone out with a girl. At all times they proclaim how "bold" they are compared with him. Most of the time in reality they are incoherent reformers. They are not dating any girls and would not know what to do if they met one.
What should matter in any serious debate is the nature of the reform being proposed. Some reforms are progressive, innovative and coherent. Others are not. In the case of pensions the latest big "test" being set for Brown by some in Downing Street is whether or not he supports restoring the link with wages. I am baffled.
Blair was a strong opponent of such a costly spending commitment in his early years as leader. I recall him asking poor old Peter Hain to put the case against the restoration of the link in response to a passionate speech from Barbara Castle at Labour's conference in 1996.
Privately Hain had some sympathies with the case put by Castle, which is why he was asked to oppose it. Blair was right then and, if he has changed his mind, is wrong now. Already Brown twitches nervously about the public spending commitments piling up above those already precariously budgeted for. Potentially this would be a huge additional spending pledge.
The artificial and juvenile divide between self-proclaimed reformers and those they deem as weak-kneed conservatives serves only to undermine the Government's own past. In relation to pensions Brown has been a radical reformer, redistributing the limited resources so the poorer pensioners receive substantial increases in the form of the pensions credit.
The Government should proclaim the reform, but some senior Labour MPs are its biggest critics. They do not even acknowledge the ambitious sweep of the change. Only they are allowed to be bold reformers. They are playing a dangerous game and one that the Conservatives will welcome, briefing intensively that the likely next Labour leader is opposed to "reform". Some of the internal tensions are unavoidable in relation to pensions. Inevitably there is a conflict between the policies that are almost certainly necessary and those that are electorally acceptable. It is known already that the Commission will recommend that the working age should be raised to 67. The Government therefore is faced with the prospect of arguing that employees must work for longer, save more and at the end of it get a state pension that is worth considerably less than it used to be.
The right thing to do is not always easy to sell.
There are important questions about the impact of means-testing on the readiness to save. Compulsion is also a thorny issue, in effect a form of higher taxation. Employers will be far from thrilled if they are compelled to increase the amount they pay into employees' pensions. Sir Digby Jones, the director general of the CBI, is an admirer of Brown's stewardship of the economy. In advance of next year's budget he squeals without any justification about high taxes and the regulatory burden on businesses. He will scream much louder if businesses face another hike to pay for pensions.
Brown does not wish to "shelve" Lord Turner's report, as has been reported. I am told he is impressed with a lot of it, in particular the sections on voluntary contributions, the options for more flexible retirement and the need for greater fairness. But there are concerns that the tone of the report is too hard-edged in relation to compulsory contributions from employers and employees, raising the retirement age and the need to restore the link with earnings rather than prices. Potentially it is a manifesto for losing the next election and propelling public spending up towards the stratosphere.
Already the Conservatives show signs of making mischief rather than approaching the issue sensibly. Yesterday Sir Malcolm Rifkind, the shadow Secretary of State for Pensions, mocked Brown for questioning the affordability of Lord Turner's proposals. Yet the two contenders for the Conservative leadership continue to promise tax cuts as well as implying support for big increases in public spending. The Conservatives face a challenge on pensions' policy too.
Apart from linking pensions with earnings I do not get the impression that Brown is opposed as a matter of course to the proposals put forward by Lord Turner. But in his view there are a lot of groups and individuals that need to be brought on board. At the same time he does not want to be the prime minister forced to put up taxes in order to meet the pensions' bill that arises from rushed reforms.
The Government should have acted earlier during its long honeymoon after the 1997 election, but while it boasted about making hard choices it avoided them. From next week the debate must finally begin in relation to state pensions, company pensions policy, employment practice and society's attitude to older workers. It will not be easy, but voters are not daft. They know that in a society where people live longer and work for a proportionately smaller phase of their lives the sums do not add up.
The debate will not get very far if it is portrayed from within government as one between the far-sighted warriors that are "pro-reform" and those antiquated conservatives that are against. Not for the first time the rising tensions are more complex than that.Reuse content