By a convenient coincidence, the start of the all-but compulsory pensions levy has found Shadow Chancellor Ed Balls — memorable for his earlier role in a pensions debacle — eager to tell the Labour conference about his latest brainwave.
He claims that the Government could stimulate the whole economy by building 100,000 affordable houses, funded by the ‘windfall’ from the forthcoming auction of the 4G mobile phone spectrum.
If you don’t know anything about mobile phone spectrums (or perhaps it should be spectra?), do not worry. What matters is that some £3 billion will flow into the Treasury from that source.
Spotlight: Shadow chancellor, Ed Balls, delivered his keynote speech to the Labour party conference in Manchester on MondayThere really is no point whatever in attaching the alluring label of ‘windfall’ to this revenue, making it sound like a win on the Lottery.
It will simply be part of Chancellor George Osborne’s anticipated income and will be useful in plugging one of the many gaping holes in our national finances caused by Labour in their spending orgy.
The coincidental element arises because Balls himself was responsible for a near-mortal blow to Britain’s pensions system back in the late Nineties.
Millions of you may remember it all too well. Until then the final-salary system was one of the great consolations of a working lifetime.
'Windfall': Ed Balls claims the Government could stimulate the whole economy by building 100,000 affordable housesEmployees saved, employers contributed, the funds were invested and you got a very reasonable retirement income.
The blow to these arrangements was a change in the tax rebates which Balls thought up.
His scheme cut the prospective income of pension funds, then so prosperous, by 20 pc.
The actuaries looked over the new arrangements, got out their calculators and told companies that they could no longer afford them. Indeed, they could soon owe more in pensions than their companies were worth. As a result, very few final-salary schemes are still open in the private sector.
‘Balls just didn’t get it,’ as a friend of mine running a huge scheme gloomily related. And, all too obviously, he doesn’t get it when he talks about ‘windfalls’, either.
There is a vital aspect to our pension schemes, old and new, which nobody seems to care about.
All the schemes, used and discarded, praised and attacked, work on the lines that pensions should be relative to what you earned in employment.
Why? This may seem a shocking thought but what business is it of the state? I find it hard to comprehend why the state should ensure an income gap between the well-paid and the poorly-paid when they choose to retire.
We can all understand the state insisting on a minimum contribution to reduce the chance that you become a charge on the social services. But that does not explain the Government’s desire to maintain a standard-of-living gap in retirement.
Mistake: The Shadow Chancellor was responsible for a near-mortal blow to Britain's pensions system in the late NinetiesThe principle was first introduced in the late Fifties by a Tory Government.
But Labour stuck with it then and does so still.
Explanations on a postcard please, or rather in these times, in a brief email.
The new enrolment scheme, starting this week, will exploit employees’ reluctance to opt out of the new system as part of ministers’ drive to get people back into the savings habit. But it will not mean a prosperous retirement.
More... Labour's tax bombshell: Hours before Ed Miliband's big speech his frontbench team suggest a hike in income tax and axing benefits for wealthy pensioners So who got us into this mess, Mr Balls? Hypocrite who dare not tell voters the truth
Alongside the state pension scheme and the lure of the benefits system, it is hard to see the new arrangements working well once the contributions rise to 4 pc, as they are intended to by October 2018.
The Government knows this well and the best brains in Whitehall are working hard at this complex problem. So we are told.
Justified? All schemes work on the lines that pensions should be relative to what you earned in employmentEasier to see is the price that business will pay: 3 pc of salary and 1pc of tax relief that will have to come from somewhere.
If the scheme is a ‘success’ it will mean a daunting cost for many businesses. Reminding them that employing people is an expensive process.
Increasingly, employers will look to see if various jobs cannot be automated.
However, there was at least one good sign on the employment issue in Ed Miliband’s splendid speech — a fine Leader of the Opposition effort, dodging the trickiest issue and oozing a self-confidence which few thought he had.
(Disraeli is probably turning in his grave. His ghost can console himself with the thought that virtually every prime minister in modern times declares himself or herself inspired to create ‘one nation’.)
In Miliband we now have a party leader who is not so in love with university education — a good thesis on Sophocles, say, or Woodwind Instruments of the First Assyrian Empire may be fine, but it does not help much in the world of work.
Miliband wants training and apprenticeships freely open to average young men and women with a suitable new qualification.
(Reducing the school-leaving age would also help — but nobody is that brave.) Miliband has identified a real issue in the elitist theme that both parties have pursued so foolishly until now.
I sometimes wish I had kept my own apprenticeship articles.
Interestingly enough that period was before Labour introduced training boards and the other paraphernalia of state intervention.
Firms were happy to provide and pay for apprenticeships in those far-off days. But then, of course, they were not taxed so heavily.
Perhaps there is a connection.
