LORD TURNER of Ecchinswell has laboured for three years to try to find a way to help the Government to provide a long-term solution to the pensions problem. Now, just days before he is to produce his final report, he finds it being effectively rubbished by the Treasury. He could be forgiven if he felt inclined to hurl copies of the document at the Chancellor before striding back to his day job and devoting more of his time to amassing his own comfortable retirement provision.
But, however angry he may feel at being so appallingly undermined by those who asked him to help them out, Lord Turner is likely to deliver his report in a calm and measured manner. It will deserve an equally calm and measured response. Suggestions that the Chancellor has already determined that it will be consigned to the same bin that remains the resting place for the report into long-term care for the elderly, unread, let alone unacted upon, would surely be as insulting to the Government as they are to Lord Turner.
He has, undoubtedly, gone very much further than the Government had originally intended. Yet it soon became clear to him that he could not view the problems in private pension provision without looking at the state system. Perhaps it was a mistake on the Government’s part to ennoble Adair Turner before he had produced the report that was required.
Instead, he has reached conclusions that will not be popular in many quarters. His conclusion that the basic state pension should be raised and means-testing abolished was bound to upset the Chancellor, who appears wedded to his pension credits even though they have caused such expensive chaos. That he would suggest that employers should be obliged to contribute to employees’ pension funds was sure to upset companies that do not like being told what to do or feel that they cannot afford to make this provision. And that he was going to conclude that the pensionable age should be made later was guaranteed to upset a lot of people who do not want to work any longer than they must now.
A politician looking no further than the next ballot box might have concluded that there was nothing to be gained from implementing the Turner report. That may be to under-estimate the intelligence of the electorate: there might have been a surprised but admiring reaction to a Government prepared to take unpalatable decisions for the long-term good of the country.
Now Lord Turner finds that just days before his report is published he receives a letter from the Chancellor pointing out he might be planning to change the basis on which pension credits are calculated. Currently, they are linked to earnings while the basic pension is linked to inflation. If credits were linked to inflation rather than earnings, there would be a significant cost saving. It would be a logical move. The important thing for pensioners should be that their buying power is preserved, not their wealth relative to the working population is maintained.
If the Chancellor has been contemplating such a move, it would have been sensible to discuss it with the Pensions Commissioner before he completed his report. Unless his intention was to undermine the entire exercise.
Territory clear at property firm
STEPHEN HESTER is making clear that he is now in charge at British Land, even though John Ritblat remains chairman. His decision to change the company’s valuers was a clever move, aimed at dispensing with any vestige of sniping about the ‘‘optimistic’’ nature of the numbers.
This time the properties have been valued by the same firm that puts a price on Land Securities’ assets and they still produced a number slightly ahead of analysts’ estimates.
Another popular myth about British Land, that the company is reluctant to sell properties, should be finally dispersed with the news that Plantation House is on the market. The City landmark has been in the group’s portfolio since 1971, but there is no room for emotional ties as Mr Hester reshapes the business. That means that the old-fashioned headquarters must go, too. The new culture requires modern, open-plan offices.
British Land is even venturing overseas, concentrating on retail parks, which are now such an important part of its UK portfolio.
Things have not changed completely. John Ritblat does take a swipe at the Government’s plans for a new tax on development values, claiming that “development is currently being strangled by waves of bureaucracy”. He argues that such bureaucracy can already add £5 million to the cost of a single City building.
Chairmen should be allowed to have a voice and Mr Hester would be silly to try to muzzle Mr Ritblat. However, the Ritblat era at British Land is clearly drawing to an end. Nick Ritblat, once a mooted successor, is sensibly leaving the board.
Rules off track
THOSE at the Treasury who were so determined not to compensate “the grannies” who lost money when Railtrack was effectively renationalised must wonder whether that saving was worthwhile. The amount of money being poured into the railways would make any granny reach for her smelling salts.
Network Rail, as it is now known, has run up debts of £17 billion. The cost of servicing that debt reached £466 million in the half year to September, leaving the organisation with a £108 million loss.
The Treasury would be more concerned about the numbers if it had to take them on to the nation’s accounts. Instead, a fictional independence allows Network Rail to lie in statistical limbo.
George Osborne, the Shadow Chancellor, yesterday called on the Chancellor to improve the credibility of his fiscal rules. He could start with Network Rail.
Unsound risk
RALPH BERNARD has some harsh criticisms of Capital. His interesting approach to addressing the radio station’s problems is to cut back drastically on advertising and not raise prices, which means revenues will fall further. It was a remedy that helped to send GCap shares down by 17 per cent. The company is now worth less than two thirds of its value when it was created. Mr Bernard may blame Capital for the problems, but it was he who chose to risk his shareholders’ money by taking GWR into a nil- premium merger with Capital.
