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Westlake Legal Group > Posts tagged "Pensions"

Guy Opperman: Only Capitalism can tackle the Climate Emergency – and our pension funds can lead the way. 

Guy Opperman is the Minister for Pensions and Financial Inclusion, and is MP for Hexham.

I’m delighted to have been reappointed as Minister for Pensions and Financial Inclusion by Boris Johnson. In the past two years, we’ve achieved so much, from supporting the introduction of the Mid-Life MOT, to pioneering the Pensions Dashboard. But there is so much more to do, and now is the time to keep moving forward.

One of the most exciting changes I am proud to have been part of is the work we are undertaking to tackle climate change. This October, a change is coming that will have a bigger effect on tackling climate change than almost any other decision by government.


We are taking a massive step forward by introducing new Environmental, Social and Governance regulations, or ESG for short. ESG requires occupational pension funds to invest with environmentally sensitive principles and take account of climate change. With our UK pension funds managing well over £1 trillion in assets, their investment power is immense.

When saving for a pension, I am convinced that most people want two key things in return. Firstly, and indeed crucially – a balanced portfolio that produced a secure, long-term return to live on in retirement. But also that our investments have a higher purpose. That when our pension is invested, it should be invested in an ethical way.

We know that the world is facing a Climate Emergency. We can all see that we are losing the ice pack, endangered species and our tropical forests at an alarming rate. The term ‘emergency’ may sound alarmist, but if we don’t address these long-term problems now, there won’t be a long term. 

As a country, we have already made great strides to reduce our carbon footprint; carbon emissions have fallen by 25 per cent – the largest reduction in the G20. We’ve just had the longest coal-free run since the 1880s, and green energy is on track to produce most of the Britain’s electricity this year for the first time.

And in June, Britain became the first major economy to legislate for net carbon zero by 2050 – meaning that our contribution to climate change will end in a little over three decades. Our net zero target is undoubtedly ambitious, but if we all – from government down to individuals – make small but significant changes, we can make a real difference. 

There are some MPs on the opposition benches in Parliament who believe that the only way to halt climate change is to overthrow capitalism – to introduce a new economic system. I am afraid they are utterly wrong. I believe that it is capitalism itself that can save our planet. 

For too long, there has been a perception by too many pension trustees that the environmental practices of the firms they invest in are purely ethical concerns that they do not need to worry about. This is utterly wrong and cannot continue. Under the new ESG regulations, trustees now must consider the environmental practices of the firms they invest in before taking investment decisions to create a balanced portfolio. This will make a real difference and give pensions trustees the nudge they need to do their part to tackle climate change. But going forward, we can do so much more. 

Our pension funds have exactly what we need to tackle this problem. A lot of capital, an ability to think very long term, and no political agenda. Clearly, if we do not harness the financial muscle of these massive pension portfolios, we are missing a trick. 

Britain has Greentech firms innovating to help tackle consumers tackle climate change and drive down the cost of providing energy, but they need investment to continue innovating. So going forward, as part of a balanced portfolio, pensions trustees should be supporting our climate friendly companies.

Thanks to the government’s automatic enrolment programme, more than ten million employees have been enrolled into an occupational pension – now saving eight per cent of their annual income. It is undoubtedly one of the greatest success stories of the Conservative and coalition governments.

Ethical investment can no longer be a niche. It needs to be mainstream. What bigger challenge is there than addressing the climate emergency? As I said, if we don’t address these long-term issues now, there won’t be a long-term. 

My colleagues in Parliament tell me that pensions are not sexy, but this time it could be pension power that is the force for good to address our twenty-first century problems.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Bob Seely: Saving Britain billions. Ideas for the contenders in this leadership contest.

Bob Seely is a member of the Foreign Affairs Select Committee, and is MP for the Isle of Wight.

Throughout this coming week, the candidates for the Conservative Party leadership launch their campaigns in earnest.

Whoever wins faces a massive challenge. Not only do we have to deliver Brexit – and until we do Britons won’t listen to us on anything else – but we also need to introduce a raft of domestic and foreign policies to renew us in office.

We badly need new ideas and new projects , some of which will need new cash. We also need to cut taxes. To help with the coming battle for ideas, and to support Liz Truss’ work on the spending review, here below are ideas to save between £50-100 billion. That figure doesn’t include the £39bn from a nodeal Brexit.

– – –

First, some basic facts. Government spending made up 38.5 per cent of GDP in 2017-2018. Departmental budgets set by spending review (DEL) amounted to £358.4 billion in 2017-2018, but the total departmental expenditure, including spending which is difficult to predict, manage or forecast (AME) was £812.9 billion in 2017-2018. Of that, £734.9bn was spent on services.

So where could we save money?

High speed rail

First, scrap the planned High Speed Rail link – HS2 – and save £50-100 billion. HS2 initially cost £33.4 billion, then rose to £42.6 billionIt is now costed at £56 billion. One government-commissioned estimate suggests it could total a breath-taking £403 million per mile. The Institute of Economic Affairs estimates the real cost to be £80 billion, and even that may be too little.

Terry Morgan, former chair of HS2 Ltd, told the Lords “everybody has their own guesstimate” of cost and “nobody knows, actually, the number”. Doug Thornton, HS2’s former Land and Property Director, has said the valuation of properties along the route was “enormously wrong”The National Audit Office found that the estimated net cost to acquire land and property for Phase One was £1,120 million in 2012 (2011 prices) ,but £4,316 million was budgeted at the 2015 spending review (2015 prices). Every honest review has considered it bad return for the taxpayer. The Lords’ respected Economic Affairs Committee has suggested delaying HS2. Let’s bite the bullet and bin this white elephant.

As with all the ideas here, the money could be better used by giving it back to taxpayers in the form of tax cuts, or supporting local and regional infrastructure projects to counter London’s domination of infrastructure spending, or to right the injustice faced by female pensioners – the so-called WASPI women. Alternatively, the next Conservative Government could pledge to ensure fibretopremises broadband nationwide to deliver near unlimited broadband speeds.

The farce of HS2 highlights a wider issue; UK public projects cost much more than in other countries – construction cost per mile of HS2 maybe as much as nine times that of its French equivalentMegaprojects run over-budget and over-time – time after time.

Cost overruns for the Channel Tunnel were 80 percent and for the National Health Service IT System up to 700 percent. The Scottish Parliament was estimated to cost between £10 and £40 million. It cost £414 million and was delivered three years late. An excellent study by the Taxpayers Alliance found that 57 per cent of over 300 public schemes overran by an average of 33.7 per centAnother study in 2009 found total net overrun on 240 projects was more than £19 billion. Even by Government standards, these are eye-watering sums. Running public projects to time and budget would allow us to slash taxes and still leave billions for education, policing or defence.

Overseas aid

Second, reallocate the 0.7 percent legally defined amount that the UK needs to spend on overseas aid. Many traditional Labour and Conservative voters alike are losing faith with this figure.

Why? Because we now spend more on overseas aid than we do on policing. To keep public support for overseas aid, which is important, and to integrate our overseas policy, we need to change the definition of aid to give us more flexibility in how we spend, as I outlined in a Henry Jackson Society study six months ago.

We should continue and even increase the basic lifesaving and humanitarian development aid that we are rightly proud of. But there are other elements of the £14.5 billion aid bill that we can re-allocate to provide much-needed support to the Foreign & Commonwealth Office(FCO), Ministry of Defence (MoD) and Department for International Trade (DIT). The DfID money should fund:

  • The BBC World Service TV and Radio, tasking it with becoming the global broadcaster of integrity to counter the propaganda output of authoritarian states such as Russia and China.
  • Minstry of Defence peacekeeping operation.
  • Some of the Department of International Trade’s work, especially where that trade represents a moral as well as economic good, such as providing new and greener technologies for developing nations.

Whilst the above doesn’t offer money back to the Treasury, ieffectively gives a spending boost of £85 million to the FCO, £269 million to our Armed Forces and tens of millions to our trade missionswithout having to raise taxes or borrowing. In addition, £254 million for the World Service that comes from the licence fee can be returned to taxpayers or reinvested in the service.

Health and social care

Third, integrate health and social care with local government. This has a potential for big efficiency savings, allowing money to frontline services rather than bureaucracy.

Attempts to make this idea work so far have floundered. The Better Care Fund was intended to save £511 million for departments and partners in the first year. It failedNevertheless, the idea is a valid, one and the council in my constituency of the Isle of Wight is hoping to win Government support to set up a pilot scheme.

In an increasingly complex world integration, be it in overseasspending, or public servicesintegration is key to efficiency and delivery. Artificial Intelligence, tele-medicine and better use of big data will support this, especially in more isolated communities such as the Island.

Cut corporation tax

Fourth, cut tax to raise more in revenue. The principle is a sound one – we cut top rate tax in the 1980s and dramatically increased the tax take.

Slash rates of corporation tax to 12.5 per cent.  Britain has been willing to give the fiscal firepower to “pull every lever we’ve got” a no-deal BrexitDown from 28 per cent in 2008, Corporation tax will soon be set at 17 per cent, the lowest in the G20 – yet receipts have never been higher at £56.2 billion. Lower corporation tax would increase the demand for labour, which in turn raises wages and increases consumption.

Winter fuel payments

Fitth, there are more difficult areas to cover. For example means test winter fuel payments would not be popular but could save £2 billion a year. Despite being estimated to cost £1,967 million in 2018/19, these were described by the Work and Pensions Committee (114.) as a “blunt instrument” which “gives a cash payment to many households do not need it”.

According to the Social Market Foundation, pensioners, who are by far the wealthiest age group in society, “are likely to save rather than spend the value of the windfall. It asked: “Why should older, wealthier pensioners receive more money than poorer, younger ones?”

An estimate for 2012-13 stated if payments were only made to those in receipt of pension credit, expenditure would only be £600 million in 2012-13 (to nearest £100 million). Surely it is better to spend the money on increasing the basic state pension, or increasing the amount that poorer pensioners receive, than giving it to those need is less.

Street and motorway lighting

Next, there are smaller but no less valuable schemes that we could champion. For example, do we need to keep streetlighting on overnight in rural areasThere’s no link between having lights off or dimmed and an increase in crime. Do motorways lights have to be on throughout the night? On the Isle of Wightwe can vary our lighting from a central point. That has the potential to save tens or hundreds of thousands of pounds per annum.

Roadside verges

Next, why don’t we cut roadside verges less. They represent a natural habitat for wildlife, but often the way they are cut today during flowering season kills wildflowers and replaces them with thick grass which need more cutting. There are parts of verges, in roundabouts, on curves, which will need very regular cutting, but if we adopted verge cutting to encourage wildflowers and pollinators such as bees, we would beautify roadsides AND save moneyDorset saved £93,000 by ‘greening’ their verge cutting, and Monmouthshire County Council estimates it has saved £35,000 annually from reducing verge mowing. For councils’ up and down the country, every little helps, especially if it has an environmental and quality of life benefit.

Legalising cannabis

Sixth, there are other potential tax streams which have not been examined. Should we examine legalising cannabis, for example, especially weaker strains of it, not only to raise tax but also for reasons linked to mental health and crime reduction.

Colorado, with a population of under six million, raised $247 million in 2017 alone from marijuana tax. One of the most comprehensive studies into legalisation estimates that between £397 million and £871 millio, could be raised annually. A US-style system here could generate up to £2.26 billion a year from tax and fees.

n addition, there is money saved. The Taxpayers Alliance estimates that by legalising cannabis, the UK could save at least £891.7 million a year in reduced spending by police, prisons, courts and the NHS through pain relief treatments. Do we need a Royal Commission on this subject? Should we be treating cannabis, especially in mild form, as yet another sin tax, like smoking and alcohol?

Doing things better

Seventh, we need to do simple things better. There are more prosaic aspects of best practice, such as procurement.

Procurement amounts to around one third of public spending in the UK. In 2016/2017, the UK public sector spent an estimated £355 billion with external suppliers. Efficiencies, such as buying common goods and services on behalf of the whole government, saved £255 million through the Crown Commercial Service and £879 million through specialist commercial expertise.

We need a systematic method of driving procurement best practise across all of Government, from paperclips to tanks, and supporting new, smaller entrants into a market dominated by bigger players who too often bid, take their cut and sub-contract.

Finally, by leaving the EU we will have more power over procurement, buying locally as far as free markets allow. Some organisations believe that EU regulation costs the UK as much as £33.3 billion per year, potentially moreBy taking a common sense attitude to regulation post Brexit, we could save Britain billions.

– – –

These ideas are just a start. Ensuring a Conservative Government after the next General Election requires two things. First, we must deliver on Brexit, second, we need to produce ideas and policies that renew in office.

This is a contribution to the debate. Let’s see what the candidates offer in the week ahead. I wish them well.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Penny Mordaunt: It’s time for servant leadership that will listen to the people

The author is Secretary of State for Defence, and is MP for Portsmouth North.

So the opening shots of a Conservative leadership contest have been fired against the backdrop of disastrous European election results. In both the Conservative and Labour parties, the post-mortems have begun. There’s general agreement that Brexit (or the lack of it) seems to be cause. But is that the whole story?

For while the main parties argue about Brexit, 25,000 desperately worried steelworkers across the country anxiously wait on news of their jobs. Last week, Panorama revealed how vulnerable disabled and autistic people at Whorlton Hall were being taunted and abused by carers. This was in much the same way as others had been eight years ago in a similar abuse case at Winterbourne View. Overseas, serious tensions are brewing as regional and global powers square off.

Set against this, the public now has to endure a parade of leadership candidates speaking to Westminster, from Westminster, about Westminster. Policy has given way to presentation. A game plan on Brexit, some animated soundbites, and a rallying cry to get better on social media and a fresh face seems to be all that’s required. Policies – or to be more accurate spending commitments – will be announced with little thought or consultation just for something plausible to say on a topic. Policy created in a vacuum never works: just look at the 2017 Conservative general election manifesto.

We’re facing a breakdown of public trust in our politics and our leadership. The compass is spinning, and across the political spectrum tactical presentation has replaced strategic policy. Some members of the same Party are not on speaking terms. One half is appalled at what the other voted for. The other half is appalled that we have not delivered Brexit yet. Others have left to form new political parties.

To blame this division solely on Brexit would be wrong. It was there previously, across many dimensions. It existed between urban and rural areas, men and women, high and low incomes and old and young. Brexit has tracked along these fault lines. The referendum, when it came, promised clarity at least on Europe – a clear mandate to leave. No wonder the British people are so dismayed at the last three years.

The disappointment about Brexit felt by the membership in the Conservative Party is echoed in that of the nation. The people haven’t lost faith in politics. They’ve lost faith in politicians who have lost faith in them. And they are calling for change.

The inadequacy of politics today goes beyond Brexit. It’s much more profound. And it requires Westminster and Whitehall to recognise that the world around them is changing, perhaps more rapidly than they realise.

The public are impatient for reform, yet legislation is achingly slow. We cannot regulate at the speed needed to enable British scientists and entrepreneurs to bring their inventions to market and to be based here. Nor right social wrongs, even when all are agreed it is the right thing to do, even when funding is there, even when the expertise is there, as has been the case with Winterbourne. Successive administrations have failed to facilitate benefits our citizens could have – access to new drugs and treatments. And governments have limited our ambition as a nation by what the Treasury alone can afford, resulting in pilots, roundtables, short-term grants and little real impact.

Political leaders have failed to notice and failed to protect people from failed leadership elsewhere. Corporate leaders have stolen pensions, avoided tax, presided over the collapse of the financial system and sheltered money offshore. Spiritual and charity leaders have covered up sexual abuse. Tech giants who have used our personal information against us and failed to protect the vulnerable. So, it’s no surprise people feel let down by their leaders.

In recent times, our politics has sometimes failed to read – and therefore failed to lead – those it serves. There is little focus on the torn social fabric of the UK.

In our United Kingdom, you can get married or have a civil partnership or access particular healthcare solely dependent on your postcode. Is this how we planned that the massive benefits of devolution – national and local – would make the United Kingdom stronger?

Apart from a string of worthy reports, the major challenges for our country, from social care to social mobility, still largely reside under a thick layer of dust in the “too tough” in-tray. And the focus on the major challenges facing the world, and the inspiration for us all to tackle them, appears not to be driven by brave politicians but by Blue Planet film makers and schoolchildren.

People are so passionate about their country and their communities, and they want to positively affect the world around them. Their frustration comes from the fact that they want to help, they have solutions, ideas and enterprises, but we don’t listen. They want to be part of a team that is working towards the same goals. They want their nation to pull together to deliver on the issues they care about. Instead, we seem to be pulling things apart.

That is how it feels. And how it feels matters. It affects our ambition. It affects what we believe is possible. And it affects our direction as a nation. It must change, and it can change. To be a political leader now, when we need to restore trust, confidence and hope, will take more than the usual tired routine.

And so this leadership contest cannot mirror those of the past. It has to be more than a fight against competing factions. We must articulate national missions that we can all unite around. How do we ensure that every citizen can reach their full potential, access the best healthcare science has discovered, protect the environment, provide social care and living support, and a secure home for all? That is the only way everyone will be able to contribute, to get different sectors to work together and to get real long-term investment. We will only arrive at those missions and the means to deliver them by listening to and being guided by our citizens.

To unlock our nation’s potential requires a different kind of leadership. Britain needs some humility from its leaders, not just from the candidates in this contest, but from us all. We should trust the people with more than just Brexit. It’s time for some servant leadership.

And that starts with listening. So next week, I will host with some of my colleagues what could be the largest live consultation our party has ever undertaken. It will allow views to be expressed on the national missions and how we deliver on them.

If we come together, listen to each other, take on the challenges and embrace the opportunities of our times to enable all that our party and nation has to offer, then there will be nothing we cannot do. To lead, we must listen.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Onward, Hancock – and the delusion of leadership candidates retreating to their comfort zone

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

Reading Matt Hancock’s piece in the Sunday Times a couple of weekends ago previewing Onward’s interesting new publication, Generation Why, and watching a clip of his speech at the publication’s launch, reminded me why I gave up talking to people in politics about football nearly 20 years ago.

A weird link? Let me explain. There comes a time when, despite theoretically sharing an interest in the same subject, you have so little actual shared experience of that subject that it becomes impossible to have any sort of meaningful conversation about it. You might as well be talking to each other in a foreign language.

As a youth of 16 or 17, playing at the bottom of the non-league pyramid, my favourite place to play was Heanor Town. For those that don’t know the East Midlands, Heanor is a small town in the North of Derbyshire. The football pitch was located at the top of the slope of the cricket pitch. While badly sloped, the pitch was impeccably cut whatever the weather (usually cold or freezing), the floodlights worked, and the dressing rooms had the intense smell of deep heat. Most importantly, the locals absolutely loved football and sport in general. Heanor was a football town.

When you talked to the locals about football, they didn’t just talk about Man Utd or Derby or Forest; of course, they did talk about them, but they’d be as happy talking about the last game against Kimberley Town, or Jeff Astle’s last song on Fantasy Football, or how Notts County fans moaned all the time. In short, when talking about football there was a shared understanding that you were talking about the game as a whole. It was expected that everyone knew practically everything there was to know about the game since they were a child – about players, fans, grounds, songs, old kits and all the rest.

When I arrived in London politics, full as it was with privately educated, mostly Southern staff that hadn’t played much, that shared understanding was totally absent. While many professed a love of the game, their entire way of speaking about it was alien. They’d talk almost entirely about the top of the game over the last few years since they became interested or – increasingly and weirdly – about football statistics. Nobody knew what the Anglo-Italian Cup was, let alone the FA Vase. And because nobody had really played at school, nobody knew what it was like to get hit on the thigh with a Mitre Multiplex in January. The Fast Show’s “I love football” sketch was no longer an amusing parody, but reality. Talking about football was a bizarre and depressing experience. So I stopped.

Which takes me back to Hancock’s article and speech. In giving advice to the Conservatives in appealing to the young, he wrote: “First, we need to get our tone right. Sometimes Conservatives can sound, as Ruth Davidson succinctly put it, a bit ‘dour’. Of course, it’s our job to be the pragmatists, but nobody wants to hang out with the person always pointing out the problems, rather than the one hopeful about the solutions…” At the event, he said:  “As well as delivering better economic prospects for people, we’ve got to sound like we actually like this country. We’ve got to patriots for the Britain of now, not the Britain of 1940. And enough about being just comfortable with modern Britain, we need to champions of modern Britain.”

Just as I found it increasingly difficult to relate to most of the privately-educated, metropolitan Conservatives talking about football, hearing this, I found myself similarly thinking that I have literally nothing in common with the same sorts of people’s views on politics. It’s as if we’ve grown up in entirely different worlds. Honestly, how can anyone think that the British people are collectively optimistic, happy-go-lucky, and modernity-obsessed? How can anyone seriously think that this is the best way to engage with people? How can they imagine themselves walking into the average pub, shopping centre or call centre canteen and connecting with ordinary people with such a case? 

Ordinary people don’t want to hear about 1940 or about life before large-scale immigration; most are happy with the people they live amongst. But they also emphatically don’t want to hear politicians droning on about how great the future is going to be and how technology and 3D printing is going to change everything for the better. It’s just not how they think about the world and not how they talk about it.

Look at what most working class and lower middle class people really think about things – those that make up the bulk of electorate. They think: that the economy is, at best fine, but that they see little of the benefits of growth; that long-term careers are a relic of the past; that good pensions have gone and that a long retirement is just a dream; that home ownership is increasingly unattainable; that the cost of living is too high; that their town centres are boring; that the NHS is over-burdened and under-funded and might fail them when the time comes; that crime is rising and police numbers are falling; that their savings will get raided to pay for social care; that childcare is ruinously expensive; and they think that politicians are out of touch thieves. While this is more prevalent amongst the old in provincial England, it’s actually common everywhere.

Why get so worked up over one little speech and an article? Because it’s clear that the Conservative Party is preparing to return to its recent comfort zone – using claims of a broad appeal to the young, which would be reasonable, to justify an appeal to the tiny number of successful, highly affluent, urban voters who are basically like those at the top of the Party. It’s dressed up as daring and confrontational, but is in fact just about following a path of least-resistance in the Party, while making those that make the case feel good about themselves. If Hancock is so sure this plays well, Heanor are home to Gedling Miners Welfare on Saturday. I’m sure they’d love to hear from him.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

David Willetts: There are ways for Conservatives to win over younger voters – but they aren’t easy

Lord Willetts is Executive Chair of the Resolution Foundation. He is a former Minister for Universities and Science.

The big challenge facing British politics today is obviously Brexit. But in some ways, the main parties, and especially the Conservative Party, face an even bigger political challenge – bridging Britain’s age divide. This issue, which I wrote about a decade ago in my book The Pinch, has risen to the fore again thanks to an excellent report published yesterday by the think-tank Onward.

Onward show that age rather than class is now the best predictor of voting intention. Labour had a 29 per cent lead among 25-34 year olds in the 2017 election and Conservatives had a 36 per cent lead among over-65s. There are a host of other factors which might lie behind this age gap – older people are less ethnically diverse, less likely to live in cites, less likely to have a degree. But even after allowing for such effects there is a still a fundamental age gap in voting.

This need not itself be a problem for the Conservatives (the focus of Onward’s work). If young people vote Labour and, as they go through the life cycle, older people vote Tory then as the population ages there might even be an electoral gain for a party appealing to older voters. But this depends on voters turning Conservative as they grow older. And that is not happening.

Instead, the Conservative Party is retreating towards a cohort of ever older voters. The “tipping-point age” at which a voter is more likely to be Conservative than Labour used to be 34. It went up to 47 at the 2017 General Election and is now 51 years old. So voting Tory is not just a life cycle effect: instead a cohort of older Tories is gradually being replaced by succeeding cohorts who are more inclined to Labour. That is the existential threat which Onward urge Conservatives to face.

“Younger voters” are obviously not a homogenous group, and neither are their voting intentions. Many of them are in the middle of British politics – slightly “left” on economic and welfare issues, and slightly “right” on cultural and national issues. But that is not, of course, where the Conservative Party is seen to be.

There are some things that both parties should prioritise to win young people over. Helping them get started on the housing ladder is crucial. And that means building more homes in the places where they want to live.

The Onward polling suggests some other things young people want – more conditionality in immigration, to reduce the gap between rich and poor, more technical education and backing for people on average wages.

Many Conservatives will be encouraged by younger voters’ desire to keep their own money, rather than increasing tax, and to make public services more efficient, rather than spend more on them. Rather less encouragingly, this may reflect younger voters getting a pretty raw deal from the welfare state in recent years, as it is increasingly focussed on older people. Working age benefits have now entered their fourth year of a cash freeze, while state pensions increase under the triple lock. Just imagine the politics of treating benefits for pensioners the same way as benefits for working age families. And the NHS is mainly used by the over-60s.

This all suggests a rather acute dilemma for Conservatives – with even tougher choices than those set out in the report. After all, Onward’s polling shows that 70 per cent of voters believe that Britain needs a ‘radical change of direction’.

Older voters are the heaviest users of public services and the welfare state is increasingly for them. The areas where there are concentrations of older voters now shifting to Conservatives are heavily dependent on public services. This demographic shift is expensive, too. An ageing population and rising healthcare costs mean that the cost of maintaining the current welfare state will rise by £36 billion a year by 2030. Someone has to pay for this greying state.

What is the right way to meet this demographic challenge? Should we cut back public services to satisfy younger voters’ desire for taxes to be held down? But then core Tory voters are losing out. Or should we levy higher taxes on the working age population to pay for increased public spending on older voters? That cuts across the views of the younger voters that the Party needs to win over. And finding an extra £36 billion a year through income tax alone would require a huge increase in headline rates that no party would countenance.

There is of course another way to square this circle. What if older people were themselves expected to make more of a contribution to the public services they use? This could be done by reforming council tax so that high-value properties pay more, or expecting wealthy pensioners to make more of a contribution to the costs of social care. That is the dilemma which the Conservative Party’s 2017 election manifesto tried to confront. It may have been handled ineptly, but the underlying dilemma has not gone away.

That is where the debate is heading, whichever party is in power over the next decade. Choosing which public services you want to maintain, or what to tax more – income or capital – will be the real test of Britain’s age divide.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Damian Green: Money, older people – and peace of mind

Damian Green is a former First Secretary of State, and is MP for Ashford.

Demographics don’t lie. The UK population is aging. A child born in 2018 can reasonably expect to live until at least 91 years of age. Even more striking is the expectation that around 30 per cent of children born today will live to receive a communication (in a form we cannot today imagine) from the monarch on their 100th birthday. While we should celebrate increases in life expectancy, we need to work to ensure that these positive changes in the quantity of life are matched by improvements in the quality of life.

As a Party, we try to rise to this challenge. In government, we have done more than ever before to help people build the resources they need to enjoy later life. Since 2012, our automatic enrolment policy has introduced nine million extra people to pension saving. The reformed State Pension (the ‘New State Pension’) is simpler and fairer; it will ensure that most people will have more money when they retire than they would have had under the old system.

We need to be realistic. Big challenges remain if we want to ensure that everyone has enough money to meet their needs in retirement. The first and perhaps biggest roadblock standing in the way of a decent retirement for all is the fact that people simply aren’t saving enough. According to the Pensions and Lifetime Savings Association (PLSA), only around 50 per cent of savers are currently on track to have sufficient means in retirement. Clearly, this is not good enough.

Part of the problem is that people just do not know how much they will need in later life. This makes it hard for them to plan effectively and save enough each month to achieve the lifestyle they want when they choose to stop working. The PLSA’s solution to this problem is to provide savers with a clear idea of how much they will need each year – in pounds and pence – to live a ‘minimum’, ‘modest’ or ‘comfortable’ lifestyle in retirement.

The PLSA’s Retirement Income Targets, due out in 2019, are grounded on an approach pioneered by Australia. Each target level will be based on a ‘basket of goods’, which will allow savers to compare lifestyles and see how much they cost on an annual basis. This will enable people to make informed long-term savings choices in a way that they are unable to at present. I commend this approach to the Government.

The other great source of uncertainty in later life is, of course, health. Nobody can predict how individual circumstances will change as age takes its course. Nevertheless, what we do know is that an aging population will have a higher demand for social care. A quarter of men and a third of women aged 65 will need care support at some point in their lives.

No matter how well people plan for retirement, if the need for care arises it can easily and quickly erode savings. The average annual cost of care home residence rose by around 10 per cent last year to just under £34,000. If nursing support is required, annual fees can increase to more than £40,000. Care costs of this sort have a serious impact on the adequacy of pension savings and, given that people are already not saving enough for retirement, many could be at real risk of poverty. When it comes to funding care costs, I believe that there are three important strands that the Government needs to consider if it is to offer a sustainable, comprehensive solution: state support, private assets, and individual planning.

The Government needs to give savers certainty about what the state will pay for and the level of support that it will offer. This will make it easier for both people and the Treasury to plan for the costs of care. Beyond state provision, care costs will have to be paid for by individuals. The Government needs to be bold in this area and consider all possible sources of funding, including a small proportion of the housing wealth of the better off.

We didn’t explain our policy on this issue well enough during last year’s general election. However, we cannot escape the fact that for most people their house is their most valuable asset, alongside their pension. If housing is not included in the mix, we risk a situation in which retirees become ‘cash poor’ and ‘asset rich’, which is a sure way of increasing pensioner poverty. The Government should raise awareness of the ways in which people can unlock the value present in their home and use it to support care costs.

To tie this all together, we need to provide information on all of this in an accessible place to allow people to think about retirement income and care costs in the round. I welcome the new Single Financial Guidance Body, which will go live at the end of this year and combine the Money Advice Service, Pension Wise and The Pensions Advisory Service. In my view, this service should incorporate the PLSA’s Retirement Income Targets.

The final piece of the jigsaw is a mid-life ‘financial MOT’ between the ages of 40 and 50. It’s exactly this sort of initiative that will get people thinking about retirement and the sort of lifestyle they want to live in their later years. It would help people plan for all sorts of retirement costs, including social care, and could nudge them to save more. All options for funding care needs should be on the table in these sessions, so that people can make preparations that they feel are best for them.

Fewer old people fall into poverty now, which is a huge social advance. But we need to do better to make sure that older people are not unnecessarily anxious about the extra financial pressures they may face. We also need to make sure that we all make better decisions when we are younger to minimise this anxiety. The Conservative approach is to give people a framework to make the right choices and a safety net to catch them when the best laid plans go awry. Long-term thinking needs to accompany urgent action on these matters.

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