We Need Frank

by Daniel on September 6, 2004

Andrew Smith has just resigned as the pensions minister. I’m not particularly interested in the political backstory to this; I’m much more interested in the opportunity it offers to undo one of the Original Sins of New Labour.

It was an appalling mistake to sack Frank Field and it is time to undo it.

Straight up at the start, I must confess that I don’t like Frank Field. He is a God-botherer and he is entirely too keen on what I regard as alarmingly authoritarian schemes to try and reform the feckless poor through government action[1]. I would say that he has a nasty case of the pathologised form of the Work Ethic, and that the poor and unfortunate can generally do without the kind of help that well-meaning social reformers tend to inflict on them.

However, I am not recommending that he be drafted to a position in the Home Office. The job that has come open is in pensions, and Frank Field understands pensions (I’ve selected an article more or less at random there; his site is chock full of sensible articles about them). Nobody else in government does (or at least, nobody acts as if they do), and this matters. The UK has a problem with insufficient saving for the long term, and nobody appears to see that the obvious reason why UK punters don’t save enough for the long term is that the only way for them to do so would be to hand over their cash to an industry which has suffered PR disaster after disaster. At the same time, the great and the good of our country have found it very difficult to communicate to the public that the amount of saving that their employer has been carrying out on their behalf has been drastically reduced, mainly because to do so would most likely involve owning up to the fact that the movement from defined-benefit to defined-contribution pension plans has been carried out on terms which seem more or less equivalent to a 5% wage cut over the last ten years.

Pensions are important, and boring. We’ve covered the issue a few times in the past. In a nutshell, people don’t understand pensions because they’re difficult and dull, people have been rather systematically taken advantage because of this asymmetry of knowledge, and because people dimly realise this, they don’t trust the pensions system. Which means that they don’t save, which is bad news.

Now I am told from Newsnight that a likely candidate for the pensions minister job is Geoff Hoon. There is something about Hoon’s record that rather suggests to me that he is probably the wrong choice if you want to project an image of trustworthiness.

The fact that appointing Frank Field would be a massive up-yours to Gordon Brown should not really carry that much weight in Tony Blair’s decision process, but if it’s the featherweight that tips the scales, I promise not to grumble.

[1]I have a post in the works on the general issue of anti-social behaviour orders (ASBOs) in the UK. In summary, I’ve seen them work in my part of London. I agree with the general concept that even though the danger of abuse is obvious, there is a role for a police power to exclude known bad elements from their place of business without the requirement to catch them in an illegal act. ASBOs have worked very well against localised crack problems, for example. However, this success in small local pilot schemes should not be taken as warranting throwing the bloody things around like confetti; there are quite obvious reasons why this pilot is unlikely to scale. But this is for another post.



Jack 09.07.04 at 1:08 am

I would like to ban the use of the word pension for non defined benefit arrangements because, other than a vague intention to make a provision for old age they are completely different. The word conjurs images of someone else taking care of you.

Not that it is necessarily the case that DC schemes are a cut. Anyone who moves employers regularly may well do better with a dc scheme.

Politicians should also be banned from using the term “earnings link” unless they promise that is to hold it for at least ten and preferably twenty years.

He doesn’t agree about the reason we are not saving enough. For him it is the tax disincentive arising from the pension credit that is discouraging savers and a system that is almost comically regressive.

I suggest that he would need rather more backing than he is likely to get if he is to overcome the treasury. The treasury believes it has solved pensions in that the cost of the state pension is not currently expected to rise as a portion of GDP!

I fear that current policy makers are satisfied that they aren’t seen to be screwing the wealthy and they are dong quite a lot for the very poor. Anything after that is unlikely to gain much traction.

On the other hand the pensioners can just vote themselves a pay rise when there’s enough of them.


DC 09.07.04 at 1:26 am

Apparently Hoon’s nickname in Westminster circles is Buff.

Buff Hoon, geddit?

Just saying, that’s all.


harry 09.07.04 at 2:49 am

Daniel — I have this wierd feeling of deja vu but I can’t pin it down. Anyway, it is that once you posted something that seemed absolutely right, in all respects, to the word, and after reading it I thought — ‘surely the guy understands that the fact that he is completely right is compelling evidence that the course of action he is recommending will not be taken’.


Matthew 09.07.04 at 8:35 am

” been carried out on terms which seem more or less equivalent to a 5% wage cut over the last ten years”

Could the government not legislate that all salaries should carry some indication of the present-value of one’s pension scheme, to concentrate minds? Admittedly it would make it more complicated…

For those who haven’t seen them,

John Eatwell, ‘The anatomy of the pensions crisis’ (http://www.cerf.cam.ac.uk/publications/files/Eatwell-%20pensions%20crisis.pdf) (or search google) and Nicholas Barr, ‘reforming pensions’ (http://wbln0018.worldbank.org/HDNet/HDDocs.nsf/2d5135ecbf351de6852566a90069b8b6/307dcdf30f915c4b8525696200583bf2/$FILE/Reforming%20Pensions.pdf) are both good

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