HERE is a statistic that Lord Turner of Ecchinswell may find useful as he braves the wrath of Gordon Brown and unveils his report on pensions today.
Nearly three quarters of Britons either absolutely do not trust or probably do not trust the Government on pensions. A similar proportion say that the Government will probably not, or definitely not, solve the pensions crisis.
These are the findings of new research carried out for Friends Provident, the life and pensions company. One can only marvel at the optimism of the other 25 per cent of the interviewees and fear that they will be badly disappointed.
The survey found that the majority of people believed that the way forward was for a higher state pension and more government incentives to encourage people to save in private schemes. Lord Turner’s thinking is along similar lines. The Government cannot be expected to adopt it instantly as policy, but it should embark on a speedy process of evaluating the recommendations in the report and seeing what it deems possible to implement. The Chancellor may be determined to maintain a low basic state pensions and means- tested top-ups, but his prejudices should not be allowed to stand in the way of a thorough examination of the ideas that Lord Turner has spent three years formulating.
It seems now that the private sector savings scheme that he has devised involves not only compulsory contributions from employers but also a contribution from government. This will anger some businesses, but would also have the folk at the Treasury howling about expense.
If they have just put down the latest OECD report on the UK economy, then such a reaction could be forgiven. It makes gloomy reading, predicting rising unemployment for Britain and an embarrassing budget deficit that will be consistently contravening the EU’s Stability and Growth pact. Like so many other students of the UK economy, the OECD sees tax increases or spending cuts as almost inevitable.
Mr Brown will paint a different picture on Monday when he unveils his Pre-Budget Report. Nevertheless, he must be pondering where he might find the extra cash. Banks were rightly angry when he first mooted the idea of grabbing the cash in dormant accounts after just three years. Now it seems that the Treasury has been persuaded that a rather longer period would be less like daylight robbery, although taking the cash will still amount to the Chancellor helping himself to personal property and, effectively, putting an extra tax on banks.
The money is, of course, to be used only for charitable works, we are told. But an inventive mind might see bumping up pensions as a truly charitable purpose.
Plain sailing
A DEFICIT of £200 million would not be of concern to Sheikh Mohammed, the Crown Prince of Dubai. He could write a cheque for that amount and barely notice the difference in his bank account. The trustees of the P&O pension scheme, looking at a deficit of that scale, decided to ask for a cheque before they would agree to the sale of the company.
In the case of the £3.3 billion bid for P&O, such a request was unlikely to be a deal-breaker, although the Sheikh is paying in two instalments, the first of £125 million and the second of £75 million. Other deals, however, will be scuppered by the demands of trustees determined to do their best to safeguard the interests of their pensioners.
With the trustees happy, the P&O deal now looks like plain sailing. Dubai Ports World is offering a 46 per cent premium to the share price before bid speculation took effect. At that level, other bidders are unlikely to try to compete, although infrastructure specialists such as Macquarie have taken a look at P&O’s assets.
Dubai has been expanding its overseas ports interests almost as rapidly as it has been transforming its desert landscape into an international financial and leisure centre. Adding P&O makes sound strategic sense. Keeping the P&O name and the London headquarters will go some way to appeasing those who hate seeing Britain’s corporate heritage being sold.
The recently retired chairman, Lord Sterling of Plaistow, had done much to streamline the business and make it attractive to a bidder. Ports, he had decided, should be the focus for the group. The new owners say that they have no plans to sell the P&O ferry business, but the sheikhs may have little long-term interest in operating cross-channel ferries in a hugely competitive market. It may not be very long before that last bit of streamlining happens.
Silent knight
THE choice of Sir Alan Sugar to front television commercials for National Savings & Investments always looked curious. The star of BBC’s The Apprentice is no champion of the small investor. His treatment of his own private shareholders can be little short of contemptuous.
At the Amstrad annual meeting last year, neither he nor his deputy chairman turned up, earning Amstrad the title of worst AGM of the year from the institutional investor Co- operative Insurance Services.
At this year’s AGM, last Thursday, Sir Alan was up for re-election, amid hostility from at least one shareholder adviser, which was critical of his “unchecked power” in the boardroom. He is both chairman and chief executive.
It has taken five days of repeated chivvying from this newspaper just for Amstrad to give us the AGM results. Sir Alan was re-elected, we are told. Hardly surprising, since he owns 28 per cent of the company.
However, Amstrad still refuses to disclose the number of proxy votes for and against Sir Alan. By law, it does not have to, so long as it told those who turned up in person. (The AGM was at the Mary Green Manor Hotel, Brentwood, Essex — convenient for Sir Alan, less convenient for other shareholders, perhaps.) Come on Sir Alan. “I don’t like bullshitters,” you told viewers of The Apprentice every week. How about some straight disclosure? The sooner the Combined Code is amended to end this absurdity and force companies to divulge shareholder votes, the better.
Alchemy’s Jon Moulton had a message of cheer for those gathered at the Savoy on Monday for the Society of Turnaround Professional’s awards dinner. The UK economy was worsening, he said. Leveraged deals were becoming more precarious: he recently encountered one with nine different levels of debt. Now hedge funds were competing against private equity specialists for acquisitions. Give it 18 months or so, he predicted, and there would be enough disasters to keep turnaround specialists very lucratively employed.
