Barbara's back, and this time it's personal

Labour pensions `sham' enrages Lady Castle. By Stephen Castle

Barbara Castle, the Labour Party's grande dame, has reopened her fierce party conference row over pensions with Harriet Harman, the Shadow Social Security Secretary.

Lady Castle, in charge of Social Services in Harold Wilson's government from 1974 to 1976, is championing restoration of the link between pensions and earnings, which the current Labour leadership does not want.

She is now questioning whether the leadership's promise to consult over pensions policy - widely seen as a way of outflanking her at this year's Blackpool conference - is a "sham". She says she is "deeply concerned by recent speeches and statements" which appear to "pre-empt" discussions.

Lady Castle's intervention, in a letter to Ms Harman, comes on the eve of the party's Pensions Review Working Party, due to meet tomorrow. The octogenarian Labour peer is expected to elaborate on her views on television today. In the run-up toBlackpool, Lady Castle fought a high- profile but unsuccessful campaign to restore the pensions-earnings link. The conference debate on pensions formed a rallying cry for the left during a week in which the leadership went largely unopposed.

As part of a compromise deal, struck on the eve of the conference, Lady Castle was offered a role on a new Labour Pensions Review Body.

Its working party (comprised mainly of academics and on which Lady Castle does not sit) will meet tomorrow to try and resolve some of the outstanding technical issues such as the costings of specific proposals.

By re-opening the war over pensions, Lady Castle is indicating that she will not keep silent on the sensitive issue in the run-up to the general election. That may alarm party chiefs who have managed to maintain party discipline on most issues.

Her letter argues that she is "deeply concerned by recent speeches and statements from members of your shadow social security team which seem to pre-empt our discussion".

Lady Castle cites comments from Ms Harman over Labour plans for a "pension entitlement", adding: "In doing so you seem to confirm the party's original proposals (outlined in `Security in Retirement') for a means-tested basic pension, on the one hand, and a funded private second-tier pension on the other, despite the force of opinion expressed at this year's party conference."

She adds: "If your proposals represent fixed and pre-determined policies which are not `up for discussion' then the Pensions Review is a sham and your promise to involve pensioners in this important aspect of policy- making is worthless. I cannot believe this is the case but those who have been invited to join the Pensions Review must be reassured about its purpose."

Ms Harman wishes to target resources more closely on pensioners in the extremes of poverty. She argues that a restoration of the earnings link would take years and would, in the interim, provide only a small additional benefit to the poorest pensioners.

Modernisers including Mr Blair and his shadow chancellor, Gordon Brown, view the party's pensions pledge at the last general election as a mistake. Mr Brown has restricted Labour spending pledges to a minimum. Sources close to the Labour peer argue that, if the Labour front bench pushes its proposals through unamended, it will pay a price in terms of internal discord.

Ms Harman said: "Our priority has to be bringing help to the poorest pensioners, the 955,000 people who go without the pounds 14 a week income support to which they are entitled. As we go into winter they stand to lose cold weather payments worth pounds 9 or pounds 10 a week, to which they are entitled. Our stakeholder pensions are a low-cost, value for money, second-tier pension for the 12 million workers who do not have access to occupational pensions."