Andy Haldane seems to be Rachel Reeves’ favorite economist. They worked together at the Bank of England and he now runs the Royal Society of the Arts, a kind of think-tank that is left-leaning enough not to annoy her party but close enough to the City’s thinking to be trusted. I put my hand up, I’m a fellow of the place myself.
Here is Haldane on the budget, speaking with the authority of a former Bank of England Chief Economist and the confidence of someone on the right side of the likely next Chancellor of the Exchequer. This is from an opinion piece in the FT.
The Budget measures were macroeconomic marginalia for a simple reason: Hunt’s self-imposed fiscal straitjacket.
Falling paths for deficits and debts sound prudent. But in the investment-starved UK economy, fiscal rules that fail to protect investment damage the economy’s medium-term health and, with it, the public finances.
The current fiscal rules are self-defeating on their own terms. These rules meant investment to boost the UK’s growth potential went unrewarded this week: housing, where the UK builds half the houses it needs; public investment, where the UK is towards the bottom of international league tables; local government spending, where councils are going bust; and skills and apprenticeships, where a majority of businesses suffer shortages.
These are the engines of the economy. None fired this week. We should be grateful for the small mercy of stability. But small mercies will not repair the nation’s depleted finances and the government’s disastrous poll ratings. This was a Budget without own goals, but was still a no-score draw. The hunt for UK growth remains just that. This is the height of fiscal folly.
The “height of fiscal folly” suggests that we will be getting something rather different from a future Labour Government. I don’t doubt that Reeves and Haldane are both looking at ways to implement the growth strategies dreamt of by Liz Truss without the nightmare that her dreams turned into.
The issue for pension people is whether any future Government will mandate a different approach to the investment of our DC funds and the funds that underpin our DB rights.
I don’t think that Reeves intends to go that way, I do think she has other levers at her control and these involve the soft compulsion of pension regulation, in particular the way the Pensions Regulator (but the FCA too) approach the balance between short term security and long-term growth.
We have in the PPF (and in FSCS too) safety nets for failure and we have in the Mansion House proposals, a clear vision of success. In between we have the uncertainty created by a lack of clear purpose among those entrusted to manage our money. That lack of clarity is something that the Government can and should address so that trustees , IGCs , GAAs and those charged with funding our pensions (and pots) have clarification on “fiduciary duty”.
Environmental , Social and Governance issues are matters for trustees to think about , but the thinking so far is diverse to a point where I’d call it “all over the place”. It results in pensions with “no own goals but still a no score draw“. We could play out pensions in this way but we could do a lot of damage in doing so. It might be the height of folly, doing the prudent thing.
There are a couple of events this week which I’d draw your attention to
- Pension PlayPen with David Robbins – Tuesday 10.30, this issue will be on the table – free link here but please subscribe.
- The Trades Union pension conference on Wednesday – registration link here
The latter has a sub-title “pensions under the next Government”.
