Leaving it all behind

2 Dec 05
PETER RIDDELL | Tony Blair is not the only senior politician concerned about his legacy. Gordon Brown is too.

Tony Blair is not the only senior politician concerned about his legacy. Gordon Brown is too.

His pre-emptive intervention in the debate about the Turner Commission’s final report on pensions and his Pre-Budget Report on December 5 are all about defending his record - and establishing his credentials to become the next prime minister.

Brown and some of his acolytes in the Commons are understandably impatient to take over from Blair. They want time for Brown to establish himself in Number 10 before the next general election.

The chancellor believes that the key is the ‘smooth and orderly transition’ that Blair spoke about in the spring. There is little sign so far of this occurring. But Brown is against talk by his more excitable supporters of trying to force Blair out. He is said by close allies to believe that a coup would be self-defeating — creating the kind of bitterness and divisions that so damaged the Conservatives after Margaret Thatcher was ousted exactly 15 years ago.

Meanwhile, his main concern is to defend his reputation. He is infuriated by suggestions that he is anti-reform, as in the skirmishing over the Turner report. The Treasury is hostile to calls for the restoration of the earnings link in the annual uprating of basic pensions. These initially came from the Labour Left, but have come recently from the Conservatives and the Liberal Democrats. He has preferred to concentrate help on the poorest pensioners through pension credits. This is partly to avoid the costs of a big general uprating, not least because he does not want to make commitments now that would narrow his options as prime minister.

But Brown’s opposition to these proposals has been attacked as ‘anti-reform’. That is a gross over-simplification. The main point, stressed by the cogent analysis in the Turner report, and accepted in part at least by Brown, is that the status quo is no longer sustainable. We will all have to work for longer/pay more if we want to meet our expectations for incomes in retirement.

No great surprise here, and the only anti-reformers are the few populists who deny these choices. The real debate is over the balance of solutions: between raising the state retirement age for payment of the basic pension (very different from the actual age at which people stop working); trying to encourage savings; and what the state provides. Restoring the earnings link would certainly be expensive, but, equally, there are big drawbacks to an extension of means-tested pension credits.

More generally, Brown argues fairly that he has been responsible for some of the most far-reaching reforms introduced since 1997, notably: making the Bank of England independent; putting decisions on competition policy at arm’s-length from ministers; an overhaul of benefits to encourage more people into work; changing the capital gains and company tax systems to encourage the creation and growth of new enterprises; and investment in research and development.

The argument about whether Brown or any other minister is pro- or anti-reform is ridiculous. As he acknowledged in his speech to the CBI on November 28, the key question is whether reforms are sensible and sustainable.

The real point is political. Brown wants to be seen as pro-reform and as New Labour as Blair. That explains the timing of his announcement in his CBI speech about making the Office for National Statistics independent of government, on the explicit parallel with Bank independence. The move itself is not surprising and is in line with suggestions made by the Statistics Commission, the Treasury select committee of the Commons, as well as by the Conservatives and, in a parallel version, the Liberal Democrats.

The reform theme is central to the Pre-Budget Report, notably over changes to planning law, reductions in regulation (more risk-based and less intrusive), the familiar raft of pro-enterprise initiatives, together with the interim report by Lord Leitch into the skills challenge facing Britain, and the report by Sir John Pattison on funding of stem cell research.

Yet the key to Brown’s reputation remains the state of the economy. He has had to reduce his forecast for economic growth this year from the 3%–3.5% range of the March Budget down to 2%, which many outside economists still regard as far too optimistic. Public borrowing is higher than previously forecast, for the fifth year in a row, largely as a result of a revenue shortfall.

With his familiar Panglossian optimism, Brown claims that the British economy has done pretty well given the instabilities of the global economy and the sharp rise in oil prices. He will need to be right, to safeguard his reputation and to ensure a favourable background to his premiership.

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