But life is different in the public sector. The suggestion that someone now aged 47 would have to work until 65 instead of 60 before being eligible for a generous final salary pension is enough to have the trade unions threatening a general strike. Such was the fury in Brighton yesterday when Alan Johnson, the Trade and Industry Secretary, told the TUC that he was determined that the public-sector pension schemes would be changed, that the general secretary of Unison, Dave Prentis, said that he had never in his 30 years of negotiating for public-sector workers seen them so angry.
It is taxpayers working in the private sector who should be fuming. When the Government first declared its intention of lifting the pensionable age in the public sector, it said that it would do so for those reaching 60 in 2013. The idea was not well received and, with an election looming, the proposals were quietly pushed to one side. Now it transpires that Mr Johnson has resurrected them but having pushed the implementation date out by another five years. This, however, is not a concession which has won him any headway with the unions, although it should have won him some scorn from those who have to fund these generous schemes, which are a massive, though unquantified, burden on the public purse.
If the trade union leaders had paid attention to Sir Adair Turner as he spoke in Brighton yesterday, they would have realised that their position is untenable. The man charged by the Government with providing the answers to Britain’s pension problems was not about to pre-empt the end-of-November launch of his report but he did lay down the stark choices that the Government faces as life expectancy continues to grow. A man reaching 65 in 2050 is currently expected to have another 22 years of pension collecting ahead of him but all the evidence is that the figure could grow, perhaps as far as the high twenties. The options are limited: either pensioners become progressively poorer or taxes rise to fund them or there is more money put into private pensions or the retirement age rises. Any combination of the final three seems the most likely option, for promising people a lower pension would not be a popular choice for a government of any complexion.
Sir Adair explained that his commission had gleaned that there was strong opposition to means testing, as necessitated by pension credits, and that there would also be strong opposition to any increase in taxation to fund pensions. It was also true, as the brothers have made clear, that people do not rejoice at the idea of increasing the state pension age. But however unpopular, choices have to be made. There are arguments both in favour of, and against, compulsion to increase savings. Sir Adair did not come down firmly for or against but the hint was that he did not favour it. The Government does not appear to do so either.
But one idea the Government should embrace is the suggestion from the National Association of Pension Funds that there should be a standing commission on pensions, reporting every three years. Like life expectancy, issues around pensions evolve gradually and it would be sensible for continuous review rather than sudden realisation that drastic change is required.
Play the game, Sir Gerry
NOT before time, the Takeover Panel has told Sir Gerry Robinson that he should make an offer for Rentokil or leave the company to go about its business. Phoney bids have become increasingly prevalent as companies and individuals muse publicly about their ideas without having to commit to putting down a penny.
The Panel has given Sir Gerry’s Raphoe until midday on October 17 to announce a firm intention to make an offer or shut the door on such a possibility for at least six months. This seems more than generous. It is now eight weeks since Sir Gerry first announced that he was planning to come back from retirement in Ireland to put his talents to work in turning round an ailing FTSE 100 company.
His comments immediately put Rentokil in the frame as one of the obvious targets, and a month later it was confirmed that he did see himself as the saviour of the rat-catcher. But while his actions have caused understandable unrest at Rentokil, and inevitably distracted new chief executive Doug Flynn from the much-needed effort to sort out the myriad problems in the group, Sir Gerry has not actually offered shareholders in the business anything other than vague ideas about what he might be planning.
One investor, Franklin Templeton, having recently built up a large position in the stock, is backing Sir Gerry. Cynics suggest that the real motive in doing this may be to try to encourage a proper bid from elsewhere for the business. But whether from elsewhere or from Raphoe, Rentokil deserves to be protected from much more of this phoney war.
Mr Flynn would rather be getting on with his work than fighting a hostile takeover but at least, if a bid were made, he would be able to argue his case and investors would be able to decide whether they thought Sir Gerry’s offer to work for them, in return for a salary and millions of shares, was more attractive.
Saint-Gobain is at least playing the game properly. It has made its first offer and BPB yesterday resoundingly rejected it. Some take issue with the multiple that BPB has chosen to apply in its own valuation of itself, and it is certainly higher than that of the UK companies in its chosen peer group. But Saint-Gobain has made clear that it sees the plasterboard maker as an important part of its growth strategy and the UK company is right to believe it should increase its offer.
Gardner leave
SIR ROY GARDNER thought that he could make Centrica into much more than an energy business. “Our vision is to be a leading supplier of essential services in our chosen markets,” proclaims the company’s website.
Yet while there are Centrica subsidiaries that can unblock the drains or fix broken locks, Sir Roy has had to accept that Centrica remains essentially an energy company. He is about to sell the communications company, Onetel, and, in a reversal of the strategy that saw him buy the Automobile Association, Centrica is actually hunting for energy assets to buy.
Amid rumours that energy companies might see Centrica itself as a bid target, Sir Roy has decided that his reign at the company should be brought to an end. Apparently, he is already being sounded out for potential FTSE 100 chairmanships.
The one role he is unlikely to contemplate is the chairmanship of another football club. Being in charge at Manchester United when Malcolm Glazer came to call proved a bruising experience for Sir Roy. Coping with any ordinary hostile bid would be easy after that.
- COATS, the British thread maker, is being heavily fined by the European Union for operating cartels in the sector going back to 1990. Last year it was fined for its involvement in what was dubbed the “needles and pins” cartel case, although Guinness Peat, which now owns the business, is appealing against the scale of the fine. Much of the time Coats was indulging in this market-rigging, the company was run by Neville Bain, who went on to preside over a disastrous period in the history of the Post Office. Mr Bain was the author of Winning Ways through Corporate Governance.
