Jeremy Warner's Outlook: Turner's plans have yet to be published, yet already they are caught in political crosswinds

GCap goes for a last throw of the dice

So there's another worthy Government review destined to collect dust in some dim lit vault at the Department for Work and Pensions. The recommendations of Adair Turner's Pension Commission are heading for the rocks before he's even had a chance to publish them if the behind the scenes demolition job already being carried out by the Treasury is anything to go by.

The Treasury and its henchmen were fast back tracking yesterday, saying that the Chancellor has a completely open mind on pensions reform and is in many respects not averse to the Turner proposals. Yet the truth is out; the Chancellor does not these recommendations like.

Part of the reason for this opposition may be pure pique. The Chancellor regards the allocation of state benefit as very much his bag and he's not going to be lectured by anyone on how to do it. Lord Turner's position isn't in this regard helped by the perception that the Pensions Commission is Tony Blair's creature.

Yet the Chancellor's presumed objections are also because the proposals stab at the very heart of the means tested pensions credit system he himself was responsible for. If anyone is going to tamper with the Chancellor's baby, it will be the Chancellor himself, thank you very much.

Lord Turner has strayed beyond his remit, some officials insist, which was only to review and assess the long term, private savings market and suggest ways of making it more effective. State benefit is a matter for the Government to decide. Never mind that it is impossible to reform one without the other. How, for instance, can the Pensions Commission assess whether there is any need for compulsory saving without first addressing the failings in state provision?

Lord Turner has therefore chosen to interpret his remit widely and he's come up with what looks an eminently sensible set of recommendations - a higher basic state pension to address poverty prevention and remove the need for means tested benefit, a higher age of entitlement to help pay the costs of providing such a pension, and a national savings scheme into which all employees and employers are required to pay unless they specifically decide to opt out and pursue alternatives.

Unfortunately, common sense and politics always did make uneasy bedfellows, and when it comes to the politics of pensions, all rational thinking went out the door years ago to be replaced by an impenetrable quagmire of on the hoof, counter productive gobbledegook.

From a Labour perspective, there are two fundamental objections to the Turner proposals. One is to the lifting of the state retirement age, which may be acceptable to middle class people with long life expectancy and decent, independent pensions provision, but would be unpalatable to lower income earners. Certainly there would be few votes in it and the Government is in any case on record as saying it won't do it - not now, not ever.

The other is that there is nothing fundamentally wrong with the present system of targeted, means tested retirement benefit. Sure, it may be a disincentive to saving, but what is the point of low income earners saving in any case? By doing so, they only deprive themselves of already scarce disposable income while the amounts saved are likely to be too small to make much difference to income in retirement.

So far, so reasonable, at least for those who believe in the merits of a welfare state. The trouble is that if we persist with the present system, more and more people will find themselves relying on means-tested benefit in old age as the basic state pension, which is indexed to prices, withers in size relative to average earnings, but means-tested benefit, which is indexed to earnings, continues to grow. If the present system is left untouched, 70 per cent of pensioners could find themselves on means-tested benefit at some stage during their retirement by 2050.

Those on the margin would give up saving altogether, as they would only deprive themselves of benefit by engaging in any affordable self provision. IFAs and other product providers are likely to become ever more wary of selling long-term savings products, lest they be accused of mis-selling.

Nor even would the present system be particularly affordable as the population ages. On the Government's own projections, the cost of present arrangements rises from 6.1 per cent of GDP now to 6.9 per cent by 2050, yet these take no account of recent upgrades in mortality rates. Factoring in the latest estimates for life expectancy would take the number closer to 10 per cent.

The Chancellor has written to Lord Turner pointing out that there is no Government commitment to keep the minimum income guarantee linked to earnings beyond 2008, ergo the costs of present arrangements might be much lower than the Pensions Commission assumes. Is he serious? Does he really suggest that post 2008 means tested state retirement benefit is going to shrink relative to average earnings until eventually it is below 10 per cent? That would be the worst of all possible worlds, with the poorest pensioners hit hardest.

As can readily be seen, it's tricky stuff, this pensions business. A problem solved in one part of the matrix only creates new problems in others, which is why Lord Turner has chosen to paint on such a broad canvass. The devil will be in the detail, but in broad outline the reforms he proposes have clear merit - simplicity, affordability, predictability, and clear incentives and mechanisms to save. The present system is by contrast just a terrible mess. So might Gordon be persuaded to see the light? We'll see.

GCap goes for a last throw of the dice

The merger of GWR and Capital Radio to form Britain's largest independent radio group, far from being the triumph its sponsors predicted, has turned into an unmitigated disaster. Yesterday's interim results and strategy review don't give much reason for renewed faith. The prescribed strategy looks more like a last desperate throw of the dice than a credible turnaround strategy.

Revenues are down 11 per cent, pre-tax profits have collapsed 28 per cent, the dividend is being halved and the group is disposing of nine local radio stations. Wasn't the whole point of the merger to get bigger? To say that the GGap's two largest shareholders, Daily Mail & General Trust and Fidelity, neither of them known for their tolerance of underperformance, aren't happy is an understatement. They are hopping mad about it.

Now just to be fair on the chief executive, Ralf Bernard, he cannot be held to blame for the meltdown in the company's core Capital Radio franchise. Mr Bernard came from the GWR side of the group. It is now plain he was sold a pup. Yet performance across the group has been poor, and substantial investment in digital channels has yet to pay dividends.

Mr Bernard describes plans to rebuild the Capital franchise as "bold", which is presumably meant in the Sir Humphrey sense of the word, as in "that's a bold decision, minister". Indeed it is, for it is not immediately apparent why halving the ad minutage per day and never playing any more than two ads in a row should do anything for the bottom line.

Again to be fair on Mr Bernard, if by so doing he can halt and reverse the slide in the station's market share, it may eventually work. The reason the BBC does so much better in radio than commercial rival is largely because it is not forced to carry any of those irritating interruptions for ads. Furthermore, if available advertising minutage is scarce, then in theory advertisers might be persuaded to pay more for it. Yet the idea is obviously high risk, and there is bound to be a very considerable short-term cost.

It's not easy for companies to lose market leadership. They have to do something seriously wrong to achieve it. Yet Capital has managed it with aplomb, with market share more than halved over the last four years. Some of this is down to growing fragmentation of the market, which management cannot be blamed for, but by no means all.

Private equity was thought ready to pounce on the walking wounded of a company GCap has become. It is after all hard to see how anyone could make a worse fist of it than the present lot. Yet after yesterday's damage, they may be having second thoughts.

j.warner@independent.co.uk