Brown’s £5 billion Raid on Pensions

07 Feb

The Legacy of Gordon Brown

I remember Brown’s first days very well. One thing he did was abolish PEPS and replace them with the incomprehensible other thinggy – ISAs, wasn’t it? The plebs could just about understand PEPs, but ISAs were so many, varied and complex that I just gave up and invested the money in lottery tickets instead.

So much for governments making it easier for the plebs to “invest in the stock market”.

As for “Brown’s raid” on pensions, it is indeed a fairly complex field. However, everything to do with his budgets was complex. I think he did that to try to prove how clever he was. Despite the complexity (or perhaps because of it) multiple loopholes were always exploited by the well-off – see footballers et al TODAY, earning £200,000 per week but paying practically no tax – if you believe the press ….

I refer to Brown’s own advisors at the time who said his idea was barmy.

Treasury papers released after MPs had gone on their Easter break showed the Chancellor’s senior civil servants warned that his plan to abolish dividend tax credits for pension funds would cut the value of shares, threaten the closure of more final salary schemes and raise public spending.

However, it has now emerged that the Downing Street policy adviser on the economy, Derek Scott, also opposed the policy but, like the Treasury officials, his advice was cast aside.

He said last night that Mr Blair decided not to oppose the plan for Mr Brown’s first Budget because he did not want a knock-down fight with the Chancellor.

“I thought it was a crackers thing to do,” said Mr Scott, a private economics consultant. “The policy came out of the Treasury and I thought it was a mad thing to do and said so at the time. The idea that it helps investment by hitting pension funds is ludicrous.

“There was not a detailed discussion in a rational way between the Treasury and No. 10. It is something that we became aware of and I opposed it very strongly but Tony Blair didn’t want to overrule Gordon. He didn’t want to fight Gordon on it. I said it was not sensible thing to do but it was early on in the Parliament and Tony said that if Gordon wants to do this, I don’t want to stand in his way.”

The bottom line? I seem to remember thirty years ago smugly telling foreigners that “Britain’s pensions are fully-funded and not paid out of general current taxation compared to yours, so there.”

I believe that was true then but that it certainly isn’t true now. So, as people in general live longer the quality and quantity of their pension funds has deteriorated. Thanks very much, successive governments.

PS THIS is the sort of government that the childish Brown-Blair decade-long sniping and snarling feud produced. Blair had someone to try to work out what Brown was doing or likely to do and warn him and Brown did his best to deceive this hapless spy. It’s more like the Russians spying on the Americans, and it was LABOUR who spun the phrase “joined-up government”!

“Derek Scott was the economic adviser to Tony Blair from 1997 to 2003. His job was to alert Blair to Treasury manoeuvres but the Brown camp tried to keep him out of the loop.”

Not that Blair ever had the balls to DO anything to rein in Brown even if he DID find out what he was up to.

Wasn’t there a film about boxing once called “Raging Bull”? It should have been about Brown ….

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Posted by on February 7, 2011 in Britain, Business & the Economy


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