Summing up: Five more years of government inaction

Jeff Salway

Jeff Salway

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IT WAS their willingness to talk about “hard choices” and “tough decisions” that helped the Conservatives tighten their grip on power in West­minster, or so we’re told.

One day, however, we may look back and marvel at their uncanny ability to avoid doing just that. Because the last five years have proved once again that few governments have the courage or foresight to take the decisions really needed for our collective and indiv­idual financial well-being.

They claimed that cutting the deficit by slashing spending demonstrated an appetite for “hard choices” (which it certainly creates for those left with the food-or-heating dilemma), but most decent academic economists have now dismissed that as ideol­ogically driven, econ­omically illiterate nonsense.

Instead, it may ultimately prove that the coalition’s most lasting success in terms of our longterm financial wellbeing was the implementation of reforms that had been kickstarted a decade earlier.

Automatic enrolment into workplace pensions was a result of the independent Turner Commission that was set up in 2002 and tasked with producing longterm policies addr­essing the pensions crisis.

The eventual Turner Report, published in November 2005, was the most comprehensive analysis of UK pensions in a generation and set out bold recommendations that could only have been generated by a body separate from both industry and politics.

The proposals included a flat-rate universal pension – taking effect next year – and automatic enrolment. The latter, set out in the 2008 Pensions Act, began in October, 2012, and will see millions of people saving into a pension for the first time over the coming years.

Automatic enrolment was introduced because the commission concluded that people were either unwilling or unable to save for their future. The pension reforms that took effect last month rely heavily on a very different (and flawed) assumption – that people are in fact more than capable of making good pensions choices.

Which of these initiatives is more likely to be of long- lasting benefit? The one instigated by an indep­endent commission, or the one launched by a chancellor with one eye on the grey vote and the other on tax takings?

The same thinking is evident in housing policy. Neither Holyrood nor Westminster have demonstrated any real appetite for tackling the housing shortage crisis, despite the hugely damaging consequences of failing to do so.

With the latter preferring to bolster its core vote by driving up house prices, it’s a safe bet that the housing shortage will still be on the to-do list when we go to the polls again in 2020. On that list it will be joined by the chaos that is welfare reform and universal credit, as well as the fallout from deepening inequality and demographic change.

There’s simply no political appetite for tackling such complex and unsexy challenges, no matter how urgent. Whether that’s the fault of the system, the culture or this particular political class isn’t important, though it’s likely a combination of all three.

Fast forward to 2020, then, for another chance to reflect on five more years of missed opportunities to do what really matters for our future financial well-being.

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