Walk on! A panegyric for May’s interventionism.

 

road

For ever?

This footpath is not a road – it is a footpath; it is not closed, it has been closed; it is not blocked by roadworks , the footpath is walkable but the pedestrian has to walk past some red tape. If Philip Hammond wants to know how we can increase productivity, he can start with councils like Basingstoke and Deane which close footpaths to pedestrians, drive traffic onto roads, create greater congestion and ultimately stink out the environment.

I have written about Basingstoke and Deane several times on this blog. It is a council only interested in macro projects like the John Lewis store below. If you want to know the reality behind the store read this – it’s about where we work!


lewis

Why they closed the footpath for a year!

Regulation is not supposed to close paths but to make them easier and safer to use. The footpath pictured has been closed for around 300 days of the last year. It’s closure has increased the travel to and from work at Basing View and Basingstoke station by around 20 minutes a day.

Government can regulate by investing in infrastructure that allows us to walk from A to B in a straight line.

The frustration voiced by Theresa May at the Tory Party Conference on Wednesday was on behalf of the millions of people who want to go about their daily work without this kind of nonsense. Reading my notes from her speech words and phrases spring out at me

“revolution”

“change has got to come”

“Government can be a force for good”

“if you believe you’re a citizen of the world , your’e a citizen of nothing”.

 

May referred to a “Global Britain” – an odd phrase; Britain is an island, we can only be global in the sense that we are apart from Europe but integrated with both Europe and the world as Britain. This means taking back devolved power (Sovereignty) but in May’s lexicon, exercising power.

“Change” happens in May’s world because of “intervention”, not because of forces beyond Government’s control. “Government can be a force for good”.

At a fringe meeting at the Conference, I asked the Pensions Minister what the capital value of the State Pension was. He could not answer me; I reminded him it was £250,000. I asked him what the average pot value was – he knew it to be today £30,000. By 2030, pots are expected to have grown in real terms to £49,000. If the triple lock remains for a fraction of that time – the real value of the state pension will be over £300,000. My point is Theresa May’s point – “Government can be a Force for Good”.

For all the hullaballoo about personal pensions over the past 30 years (they were established in 1987), the average personal pension pot (when we strip out the occupational DC pots) from the numbers – is less than £20,000. In pension terms that’s about £80 per month.


The State has been a Force for Good

force for good.png

So while most of us have been worrying about our personal pensions, our state pension has been building up behind us and is – typically worth nearly ten times what the average person’s been able to save for themselves.

To a very large extent that is due to the efficiency of the Pay as You Go state pension system and the hopeless inefficiency of personal pensions. It is because politicians chose to believe in market solutions, refused to intervene over commissions, hidden charges and overt product fees that in retrospect- make the eyes water.

Thankfully, there were civil servants who soldiered on with state pensions. Without the perseverance of the DWP/GAD/Treasury we would not have the capacity to promise people retiring today the Single State Pension – which for many people is there lifeline to financial security in later years.


Some are likening May to Thatcher but in terms of ideology, she is in exactly the opposite corner. The Pensions Minister gave me some spurious clap-trap about the State Pension being an £89bn pa drain on public funds. This is total nonsense, the State Pension is affordable because of Britain’s capacity to generate tax and national insurance and because of the National Insurance Fund which is a reserve that Government can fall back on. The State is merely an organiser, an unblocker of footpaths!

I concluded yesterday’s blog with a Steve Bee cartoon that suggests that what we get out of pensions is dependent on what we put in. Steve is right – but only 10% right. As Con Keating has pointed out to me, the other 90% of what we get out of pensions is down to investment gains – or in an unfunded environment, by the rate of revaluation of the pension promise.

fca6

Organising pension governance the FCA way

In the week that Theresa May made her great interventionist statement, the FCA published “Transaction cost disclosure in workplace pensions“. I don’t think the FCA paper will be remembered in the history books (though I do think that May’s speech will).

But I think that the FCA paper, is a revolution and it is a recognition that change has got to come and it recognises that Government can be a force for good – though interventionism.

Margaret Thatcher would have never wanted the FCA’s consultation to be published. She would have closed that road/footpath.

I spoke with someone close to May’s policy making on Tuesday night and asked him who he devised  the policy for. He was quite clear, the person he had been asked to think of when he put forward a policy was the person just getting by, the working person/family struggling to get from A to B because of the lack of help – because of the obstacles in his or her way.


 

getting-by

Just getting by?

I get the idea. There is something absolutely right about intervening on behalf of the person just getting by. It is absolutely wrong to assume that global forces and a free market can bring this person to a comfort level we find acceptable. The person just getting by needs someone to clear away the signs that say “Road Closed” and be allowed to walk from A to B in a straight line.

The person just getting by needs to be able to see the footpath that leads to home ownership, to a secure retirement. He or she needs to feel confident that the health service will be both national and sufficient . He or she needs to feel confident that the family can be educated properly and have the same chances in life as those getting by with ease.

In short, the idea is social justice. But not a justice that is created by levelling everyone down through penal taxation of those who generate wealth, but justice by making those who should pay taxes – pay their taxes.

I believe (unlike it seems our Pension Minister) that we can afford our state pension bills, provided we grow our economy through increased production. I would say the same about health, housing and education. The Government can do a great deal and can help us be more productive.

To do so, it needs to pay attention to the real world we live in. I am pleased that it is appointing Matthew Taylor to look at the way we work and ask questions about the suitability of Government work policies.

It needs at the very micro-level, to get into the heads of the silly people who own the transport policy of Basingstoke and Deane that footpaths are there not to be dug up, but to be walked along, because that is how many people  get to work and pay their council tax.

Driverless

other means of transport are available

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , , , , , , . Bookmark the permalink.

4 Responses to Walk on! A panegyric for May’s interventionism.

  1. The most effective way to assist those “just getting by” is to create new homes that they can afford to rent or buy, then they are more likely to be in a position to increase their savings and divert money into pensions. One way to increase that supply of new homes is to build on public land whilst removing the cost of the land from the housing “offer” using a long lease mechanism.

    Liked by 1 person

  2. henry tapper says:

    I agree Jan – I am with Nigel Wilson on this “QE was designed by the rich for the rich; it drove up the price of assets rather than creating new ones and there has never been so much money available as today”, It’s time to spend that cheap money

    Liked by 1 person

  3. Ian Neale says:

    Henry, when I read “the National Insurance Fund which is a reserve that Government can fall back on” I was reminded of something Aneurin Bevan apparently said, viz. “the great secret about the National Insurance Fund is that there is no fund.” So fr as I have been aware, National Insurance Contributions have always gone into consolidated government revenue and thus the money never has been ring-fenced from other tax income.

    Liked by 1 person

  4. henry tapper says:

    I have never seen it – but I believe there is a national insurance fund.

    Like

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