The Government is in the middle of a political not an economic crisis. The crisis began the morning the Times announced it would not be including radical plans to overhaul pensions in this year’s budget and it has deepened at each corner turned since.
The reasons given for shelving the pension reform was the underlying problems with world financial markets. Today stock-markets are more or less back to the levels at the start of the year, interest rates are at 0.5% and the vast majority of higher earners in this country are awash with cash having virtually no mortgage to pay. There is no economic crisis.
Asking higher earners to accept a reduction in incentives to save is like taking away sweets from a spoiled child. The enormous inequalities between those well-pensioned on long-term employment contracts and those with minimal pensions on zero hours contracts has never been more obvious.
And yet the Chancellor cites economic instability and the minutiae of mini-economic cycles as a reason not to make the fundamental reforms he himself has promised.
The craven capitulation of the Chancellor of the Exchequer to the protectionism of his back-benchers is the reason that the well-pensioned continue to rack up extreme pension wealth relative to the poorest in our society. I am with Osborne, this has nothing to do with Europe– this has everything to do with political opportunism.
Admit you’ve boobed and start again
The best thing that Osborne could do right now is come clean and admit what a total balls-up he has made of this budget and accept that Plan A, which was to find his budget repair kit from the £17bn odd that companies will contribute tax-free into our pensions (the bulk of which goes tax-free to the wealthy. Not only could Osborne have reflated the tyres with income tax on some of this money, but he could have taken national insurance too.
He could have taken this money , not from people’s net disposable income but from their pension pots or- in the case of those still accruing defined benefits, as a charge against the future promise. In short, Osborne missed an open goal.
Putting the money where the votes were has impressed nobody.
Instead of taking his money painlessly from the pots of the wealthy, he chose to have a go at those with least, to the outrage of the country. Whatever political upset he might have had from his backbenchers by taking pension taxes from the rich is as nothing to the opprobrium meeted upon him now.
If his plan was to smooth the way to a yes vote, he has spectacularly failed, offering the leavers the publicity that dominated the headlines over the weekend.
Above all, the people who are the guardians of our money, those who we would like to consider are the guardians of our fiscal prudence, have shown themselves as short-termist, putting the interests of a political position (staying in Europe) and of political insecurity (their small majority) above the interests of the country.
Morally the policy is entirely bankrupt. The interests of the wealthy property owning class, particularly those over 50 have been promoted over the poorest in society. Of all the indictments from Duncan Smith, the accusation that Osborne put our money where his votes were, was the most damning.
Corbyn is right, this budget has so unwound that we need another one. we need Budget II to rewind to the point only a few weeks ago when we could see a clear strategy that was morally and fiscally in tune with the Conservative manifesto and what the country had voted for.
I carry a Conservative member’s card in my wallet, not because I like the Conservative Party, but because I feel I can do more good within than without. Because I am so politically agnostic as to not care which party does a good job, so long as a good job is done.
Corbyn knows what he is doing – it is easy to know that when you have no power – but at least he can act the Fool to Osborne’s Lear.
Corbyn should focus on a budget repair kit that reflates the tyres using the long-term investments this country makes in its retirement. HMRC should become the fund manager for the excess benefits being squirrelled by the wealthy as un needed security in later life.
I would happily invest a proportion of my contributions in a manager with a 100% annual management charge so long as the charge went to the benefit of this country. Indeed – being at heart a Keynsian, I can see no better way of reflating the economy than through a reinvestment of a part of my future savings.
Return to Plan A
I hope that Osborne spent yesterday dusting off the plans for the radical overhaul of pensions that he promised us 12 months ago (and has failed to deliver).
The plans for that overhaul were, I am told, well advanced and shelved only for the short -term. Short-termism has blown up in the Chancellor’s face.
Now is the time to return to plan A , to relaunch the radical overhaul of pensions and to do so without further ado.
For if Osborne had stuck to his guns on pensions- this political crisis would never have happened.