Rescuing
Democracy in the United Kingdom from our current Elected
Dictatorship
| Chancellor
Gordon Brown cannily distanced himself from every Government
cock-up. Sleaze, Iraq, the NHS, problems with immigration,
education, transport, crime - all have been laid at the door
of Tony Blair. But the pensions crisis is Mr Brown's alone.
It was his decision to steal £5billion/year out of private
pensions and he failed to anticipate the growing crisis in
the industry. Blair supporters at Westminster are delighted.
Will this kill finally Mr Brown's leadership ambitions?
Ephraim Hardcastle - Daily Mail, October
14, 2004
|
Yawning
pensions divide
Alex
Brummer, Mail City Editor -
February 18, 2005
Private
companies are forced to face up to their pension liabilities
on a daily basis. Across the universe of firms there has
been a retreat from final salary schemes.
This
contrasts with the pubic sector where the government still
offers final salary schemes - even though it has made
no real provision for eventually paying the bills.
New
date from actuaries Watson Wyatt suggests that the unfunded
liabilities of the public sector will reach £690billion
in March this year, which is 60% higher than the government
estimates.
Official
figures put the unfunded liabilities at a more most £425
billion but this uses an unrealistic assumption for interest
rates and mortality estimates that went out with the ark.
The biggest holes are to found in unfunded schemes for
teachers, NHS, the civil service and the armed forces.
Given the pace at which the public sector has expanded
under Labour, the future charge on the public finances
and eventually the taxpayer can only become larger.
Yet
when even modest changes in public sector pensions are
proposed - such as raising the retirement age to 65 -
there is an outcry among workers. The most common contention
is that teachers and NHS workers are making financial
sacrifices for the nation and deserve comfortable retirement
as compensation for lower pay.
The
Office of National Statistics figures show this to be
stuff and nonsense. Average salaries in the public sector
are actually more than £1.50 an hour higher than
in the private sector where people must pay for their
own pensions.
Wages
in the public sector have been rising far more sharply
than in the wealth-creating business sector. The fact
that a few thousand bosses and entrepreneurs have huge
retirement pots should not detract from the fact that
the vast majority of private sector pensioners will struggle.
There
is no obligation on the wealth creators to bale out successive
governments that have failed to address public service
pensions in a fair and transparent way.
|
Labour
and a Pensions Black Hole
"Brown
and Blair have wilfully dug themselves into a pensions pit. Now
YOU will have to dig them out"
Alex
Brummer, Mail City Editor -
Oct. 13, 2004
The
greatest domestic betrayal by the Blair Government has been its
flagrant neglect of pensions policy. In the years following WW2,
the Labour Party promised a shattered British people 'cradle to
grave' protection paid for by National Insurance contributions.
Now it has, in effect, reneged on its social contract with the
nation.
The
authoritative Pensions Commission is telling us, rather
than the Government, that we must adjust our behaviour if a terrible
burden of £57billion a year is not to fall on the public
purse. The only way we can avoid this nightmare for the public
finances, according to the Commission, is to make a series of
unpalatable choices. If State provision is to be improved, we
will have to work into our late 60's and beyond. We must also
accept that we will have to pay higher taxes or face an impoverished
retirement. Moreover, if we work in the private sector, the Government
will have to consider making us save for our pension by introducing
an element of compulsion.
BURDEN
For
much of the post-war period, successive governments have escaped
lightly the burden of pension provision compared with most of
our international competitors. Even free enterprise American governments
have built up a generous earnings-related state pensions system.
British Governments have escaped responsibility by shifting pension
provision to private employees. Indeed, the 'gold standard' of
the defined benefit pension - under which people earned benefits
for every year worked - covered more than 60% of the workforce.
But
now, in seven short years of Labour misrule, the deal between
government and the private sector has been seriously undermined.
No longer can the Government count on private sector schemes to
bail them out. As Adair Turner and his Commission admit, the defined
benefit scheme is dying in the private sector. Contributions to
the replacement scheme, known as defined contribution or money
purchase, are wholly inadequate to makeup the shortfall in private
pensions.
As
a result, unless there are fundamental changes in the way in which
we pay for retirement, an ever larger and greying population will
become dependent on state provision. How did this disaster befall
us?
The
first explanation would be laughable were it not so serious. Figures
from the Government Actuary's Department show that men and women
are living longer. It says something about the short-termism of
government thinking that it has taken so long to make this admission.
A
second factor is the change in the tax status of company pension
funds. The crumbling in tax benefits began in 1986 under Margaret
Thatcher when private pension funds, which were building large
war chests for future provision, were told that the surpluses
could be no more than 5% of pension funds.
But
it was Gordon Brown who finally slaughtered the pensions golden
goose. His decision to remove the tax relief on dividends cost
the pensions industry £5billion a year. According to Tow
Bower in his new biography of the Chancellor, this decision ignored
actuarial advice which predicted that the change would lead to
a £50billion deficit in company schemes. At present, the
deficit among the FTSE-100 companies has been calculated as high
as twice that figure. This Treasury attack is now regarded as
one of the main factors contributing to £250billion being
wiped off share values between 1999 and 2002, bringing to an end
what the Commission calls a period of 'irrational exuberance'
in share markets. The truth is that pension and insurance fund
investments have never recovered from this 'bear market'.
Indeed,
an analysis by the free market think-tank the Centre for Policy
Studies shows that despite the economic stability delivered by
Mr Brown, shareholders have had a torrid time. While investors
in seven major overseas markets benefited from an average gain
of 46% in share prices since May 1, 1997, the gain for British
investors in the FTSE-100 has been a mean 2.1%.
WEAKNESS
Many
experts attribute this under-performance to the shadow cast over
investment in shares by the Chancellor's tax raid. The result
is that big pension funds such as Boots have put their money in
lower-risk bonds and reduced the returns on share investment.
The result of the tax raid and stock market weakness has been
devastating for private sector pension funds. As the report notes,
'the scale of the reversal, its sudden acceleration has major
adverse consequences for the adequacy of the UK pensions system'.
Meanwhile,
in public pensions, the Government has, by most accounts, compounded
the error in the private sector by its creation of an over-complex
system of state means-tested 'pensions credits'. The noble idea
of this system is that no retiree, including those with modest
savings, should have to fear a poverty stricken future. But this
system of credits is so generous that it has encouraged more people
to become dependent on state hand-outs and given them little incentive
to save. Anybody earning under £30,000 a year might as well
rely on the benevolence of the pensions credit, financial experts
say, rather than save in an inferior personal pensions plan.
STUPIDITY
This
stupidity must be stopped, and one way of eliminating it is by
offering greater incentives to save. One proposal, popular in
the financial community, is based on the principle 'buy-one-get-one-free',
or BOGOF, under which every pound saved by an employee would be
matched by £1 from Government.
This might replace the current system of tax reliefs, which most
people find too complicated to understand.
Other
ideas include the 'opt-on' pension under which employers would
be obliged to put their workers into a company pension scheme,
unless the workers specifically signed a legal contract saying
they wanted out. Many experts are concerned that this might not
work because many medium and smaller firms do not at present have
their own pension funds. That is why the Australian option of
compulsion is under close consideration by the Commission. Down
Under, all employers are required to pay in 9% to a private pension
plan for each worker and the employees themselves contribute 2
to 3%.
Whatever
solution is finally adopted, the pensions crisis looks as if it
will become worse before it improves. For there is no immediate
commitment by any political party to roll back the tax raid which
has undermined Britain's stock market and the private savings
culture.
Above
all, the most galling prospect for the hard-working population
of this country is that the very people taking pensions decisions
on our behalf are themselves the most protected. Inflation-proofed,
defined benefit pensions for politicians and the public sector
are an entrenched privilege. Yesterday's report reveals that the
Government has dug itself into a pensions black hole. Now it is
asking taxpayers to dig it out of trouble. But reform can only
work if it recreates the tax incentives to save and rekindles
the dynamism of the stock markets which had underpinned private
pension provision for decades.
For
the health of our democracy, we, the people of the United Kingdom,
must find a way to force Mr Blair to resign
Such
defiance of the democratic process and the will of the majority
of we people of the UK, must be exposed by voters as a matter
or urgency, and not just in the two by-elections we have had this
July and the European elections in June 2004. But how can this
be done?
The
most effective way of getting our deceitful PM to resign would
be to mobilise the army of Labour MPs currently in the House of
Commons and get them to demand it, the loss of their seat to be
a penalty if they did not. All voters in Labour-held constituencies
need to write a letter along these lines to their local Labour
MPs:
|
Dear
Despite
his absolute and unequivocal assurances over the past year
of the serious risk to our security of Saddam Hussein's
'weapons of mass destruction', Prime Minister Blair
has admitted, that the threat was non-existent. For that
critical error of judgement and for his gross incompetence
in handling this very important issue, I ask you to take
immediate steps to ensure that Tony Blair does the honourable
thing and resign without delay..
I
would therefore be much obliged if you would propose and
help mobilise a Parliamentary vote of 'No Confidence' in
Mr Blair which, despite Labour's huge majority, would leave
the PM with no option but to resign.
If
I get no reply to this letter, I shall assume you will continue
to support Mr Blair as our Prime Minister. In such circumstances
I shall not vote for you in the forthcoming General Election.
Signed:
|
Simple,
non-violent, protest letters along these lines on a variety of
issues could be the basis for re-vitalising our democracy and
increasing voters' interest and participation in politics. Download
a printable copy of the above letter here.
There
is another way for the voice of the silent majority to be heard,
a voice that made sure broken promises would not only be revealed,
but punished in subsequent elections.
In
the year available before the General Election expected in 2005,
many topics are available as ammunition, each one asking questions.
A weapon for our purpose will be the results of Opinion Polls
in individual constituencies using ICM, NOP, Gallop, Mori
or YouGov.
Questions
suggested for this purpose are listed here.
CAST
YOUR VOTE ON A VARIETY OF OTHER IMPORTANT ISSUES HERE.
Current
and prospective Parliamentary candidates of all Parties running
for election could share a platform at public forums in every
constituency. They would be presented with the results of
polls on this issue expressed by the majority of voters in that
constituency.
The candidates could be asked if their own views and that of their
Party manifesto corresponded with the polls, and if not, how they
intended to represent the will of the majority of local voters.
Local and National Press, Radio and TV coverage would be arranged
and the results published on this web site.
Here
is another powerful strategy for using your vote effectively in
the forthcoming General Election. Send your sitting and prospective
MPs a letter defining your requirements if they want your vote.
This example deals with the proposed
EU Constitutional Treaty.
Your
letters would end: "If you do not answer
this letter, I shall take it that you intend to follow the Government
line. I shall act accordingly in the forthcoming General Election.
Or
why not create a questionnaire that you send to all the candidates
in your constituency, getting them to give yes/no answers to questions
of your choice, and ending it with the same paragraph(above).
Download
a printable example of the questionnaire.
It
is high time for the people of this United Kingdom to stop allowing
themselves to be manipulated by politicians. We need our representatives
in Parliament to genuinely reflect the view of the majority in
their own constituency, even if this means going against their
personal and/or their party's policy. While they may argue their
case, hoping to change the minds of the majority in their constituency,
they should ultimately be obliged to reflect the majority view
of those who elect them.
It
will be argued by politicians of all parties that most voters
don't have the knowledge necessary to express an opinion on important
subjects at issue, and that our vote is a form of delegated democracy.
We should argue that it is their duty to ensure that we voters
do have ready access to such information as is necessary to form
an intelligent opinion. That, after all, is one main purpose of
Opposition Parties in our Parliamentary Democracy.
Most
important of all, such proceedings would rekindle in voters their
latent interest and obligation to cast their vote, knowing that
the candidate of their choice would be more likely to act in accordance
with their wishes. A much higher turnout in elections would be
the result.
Contact
your local Party Chairman. Gain his support for setting up public
forums in your constituency on these, as well as any other relevant
topics, well before the next General Election expected in 2005.
You should then, depending on the integrity of the candidate of
your choice, feel fairly certain that your view on any subject
being debated in Parliament will more accurately be reflected
by your representative in that assembly.
