The dispute at the heart of government over how to reform our state pension system shows no signs of approaching a resolution. A White Paper is due next month, but we now learn that any announcement is unlikely before the summer. The reasons for this deadlock are not economic or party political, as one might expect. They are strictly personal. We are told that Gordon Brown resents the Prime Minister's interference in his domain and has interpreted it as part of an attempt by Mr Blair to cling to power longer. As for Mr Blair, he is apparently minded to show his Chancellor who is boss and stamp on what he suspects is a plot to squeeze him out of Downing Street before he is ready to go. Pensions reform has become little more than a proxy battleground for the power struggle between these two titans of the British political scene.
This is deeply unfortunate, not least because the question of how Britain should respond to the challenge of a population that is living longer and saving too little is being neglected amid the backbiting. The Government-commissioned Turner report on pensions, published late last year, has not prompted the kind of serious and open discussion on pensions that is required. If anything it has had the opposite effect. And, sadly, the Turner commission's final statement yesterday - an attempt to chivvy the Government into action - is unlikely to have much effect. The two camps in this dispute appear to be digging in for a long fight.
Yet it is painfully obvious to everyone else that the state pensions system cannot be allowed to continue in its present state. There is certainly no cheap solution on offer to the looming crisis. We can have a degree of sympathy for the Chancellor and, in particular, his concern that the Prime Minister will saddle him with costly promises that will prove hard to keep in the future. Mr Blair has a bad habit of making decisions without sufficient attention to detail or regard to long-term consequences.
Nonetheless, we support the basic thrust of the Turner report. The proposal to boost the value of the state pension, by restoring the link with average earnings, is sensible. Without this we will drift towards a situation where pensioners receive only a pitifully small state pension. The expansion of means-testing that will inevitably follow such a mass impoverishment will result in even more disincentives to save. If the status quo prevails, the Turner commission estimates that 70 per cent of UK pensioners will end up reliant on means-tested benefits by 2050. This is not a prospect to savour - even for Mr Brown.
The Turner proposal for a national pensions saving scheme, in which employers and workers both make contributions, also has its merits. The fact that it would require members to opt out, as opposed to opt in, would guarantee a substantial increase in pension saving in Britain. Such measures do not add up to a panacea for the pensioners of the future, of course, but they would at least move us in the right direction.
A substantial amount of technical details will need to be agreed upon by various Whitehall departments before this White Paper is published. Tough questions of how the system will be funded need to be hammered out. And there is still a huge amount to be done by the Government in other areas to cultivate a savings culture. These are the sort of discussions that ought to be taking place in Whitehall and the Cabinet. Instead we are faced with the depressing sight of two squabbling politicians who, at the moment, seem more concerned with securing their own futures than those of the people they were elected to serve.Reuse content