I am writing on 15th of January, 6 months after the blog below. I had hoped then that Torsten Bell would be our Pension Minister and the thinking of him, along with that of Haldane and Johnson would dominate our thinking about later age finance. Not just pensions but Social Care and the taxation of wealth at key points of life (and death).
I was disappointed that towards the end of her six months as Pension Minister, she turned to the insurers and asset managers who form the lobbies such as the Investment Association and Association of British Insurers. I no longer see them as pension providers. The longevity is shipped abroad, we are no longer in investing and sharing surplus. Wealth has taken over from social insurance and Emma Reynolds had become a part of that.
Instead of Emma Reynold, we now have Torsten Bell and we will no doubt see policy driven by intellect and not by the lobby groups. I am happy.
The caution that propelled Labour to power is the opposite of what will be needed in government to promote growth and improve public services.
These are not the words of Momentum and the Labour far-left, they are from Andy Haldane, CEO of the Royal Society of the Arts and someone people think could and should be the next Governor of the Bank of England.
Outside the political tent, left centrist thinkers have had plenty of time to work out what needs to be done to turn round Britain’s rum economic fortunes.
The idea of “change”
As Rachel Reeves politely put it yesterday, “there is not a lot of money about” and in terms of immediate access to cash she is no doubt right, the Labour party put itself in its own triple lock, refusing to put up major taxes, borrow more or cut essential services. This caused the Conservatives to ridicule the concept of “change” which dominated the Labour Party Manifesto.
Conservatism doesn’t stand for change, the message is in the title. Haldane may have had the dilemma of popular conservatism in his mind when he wrote in the FT
Change is not always for the better, but nothing has ever improved without it.
The difficulty the Labour party had in the election was about maintaining its 20% lead in the polls and translating that into votes and finally seats. It failed to do all this. The final margin of victory in terms of votes was only 10% and Labour won a substantial majority on only a third of votes cast. With a small turn-out (60%) only one in five of the people in this country voted for them. Just how fragile was its task, you can understand the caution of Starmer and his colleagues. Nothing could spook the public – change could not be spelt out.
Haldane spells out the changes he wants to see in his article (available on this free link – email henry@agewage.com if it has run out). He sees an abundance of available capital to make Britain great again.
The legacy of the past two year’s prudence is a semblance of a return to form
The UK economy is at last recovering, if slowly, with inflation at target, real wages rising at 2-3 per cent and borrowing costs set to fall in the second half of the year
The markets are recognising this return to form
UK assets, cheap at the start of this year, have gained ground in anticipation.
or at least that we are a better bet than some of our neighbours
After years of turbulence, the UK now looks like a sea of political calm relative to the situation across the Channel and Atlantic. The political risk premium on UK assets, too high for too long, is shrinking and the country’s attractiveness as an investment destination is rising.
Empowering Britain’s regions to deliver their own economic regeneration, dynamizing local and central Government and creating means to unlock latent capital in the storehouses of wealth (housing and pensions) is key to Haldane’s vision.
Like Rachel Reeves, he knows where the money is, getting it redeployed to get Britain ticking again is the challenge
the new government needs to give industrial strategy the full-throated, deep-pocketed support Joe Biden has provided in the US.
The “pockets” need not be picked , money is waiting to be distributed but needs the co-operation of regulators.
The UK’s growing army of regulators, while individually well intentioned, have become a collective blight on private sector innovation, prioritising risk avoidance over dynamism. An independent royal commission is needed to reassess regulators’ statutory objectives and cultures to make them growth, risk and innovation friendly.
I am glad that Haldane has placed his emphasis on regulation. I spoke with one of senior lawyers in private practice two weeks ago who specifically pointed to the Pensions Regulator as a case to Haldane’s point. The biggest obstacle to unlocking the capital in pensions is the well-intentioned reluctance of TPR and its owner the DWP, to let it happen.
Which brings me to the point of this blog. I have noticed from my too-frequent visits to Caxton House (DWP) and to Brighton (TPR) the lack of dynamism that comes from a clear common purpose for pensions. The questions that are asked about change are “how will this play with the Treasury”, not how will this benefit our customers (pensioners).
This timidity comes from deep rooted anxiety about maintaining the status-quo, not least because the institution they protect keeps them in work. There are many civil servants in the DWP and TPR who would be better redeployed into the private sector to help deliver not prevent the innovation that is needed.
Instead of regulators intent on managing the quietest graveyard, we need regulators alert to the real needs of the people they protect, a need for a retirement not just with money, but into a society that is fit for purpose. We must recycle the savings we have committed to our future to that common purpose and fix our minds on delivering pensions- which is our common job.
Now- and for the months ahead – the left centrist thinkers – Haldane and Johnson and those inside the political tent (Torsten Bell is now MP for Swansea West). It does not cost money to devise a strategy. Nor does it cost much money to unlock the doors that lead to change. But it does take brains and they are in great supply. In the medium term, there is the capital to make Britain great again. Haldane concludes
the good news is that the world is awash with money, much of it patient.
The job of this new Government is to find ways to get it working for Britain and for our futures.
We do not need populist prejudice, we need intellectual rigour ;we need Haldane and Johnson at the heart of the new Government’s thinking. We need Bell to make the good ideas happen – alongside a careful and considerate Government.