That age-old reason why we can't afford to stop grafting

Britain's Pension Crisis
May 18, 2007

Those who cannot remember the past are condemned to repeat it, as an old proverb has it. That could also be a fitting motto for this excellent contribution to the pension debate in Britain. The authors focus on the historical context that led to our current pension system and the dilemmas policymakers have faced for 50 years.

There is a fascinating account by Jose Harris of how Beveridge lost his arguments against the Treasury that the post-war pension system should include an incentive to delay retirement to cope with the future ageing of the population. Pat Thane also traces back to Beveridge many of the often futile efforts to achieve better pension provision for women who were not in work or only in part-time work. To this day, less than a quarter of women going into retirement are receiving the full basic state pension and are therefore dependent on means-testing.

Frank Field takes these historical accounts forward, arguing that today's pension debate is all about renegotiating our post-war settlement, what we mean by government and how collective action gets delivered. And Noel Whiteside alerts us to the similarities between Labour's 1957 plan for a national superannuation scheme and Lord Turner's new national pensions savings scheme.

One conclusion one could reach from all this is that modern efforts to resolve Britain's pension crisis have failed to learn from the past. For example, Turner underestimated the Treasury's long-standing reluctance to increase public spending. He also seemed surprised by the contrast between the more positive reaction of large employers and the hostility from small companies towards his proposals. Paul Johnson provides an interesting critique of Turner's proposals from a historical perspective, especially as far as the provision for women is concerned.

But we should also be careful not to be too negative. The last section of the book looks at the wider international experience. It clearly shows how not only Western countries but also the new democracies of Eastern Europe are struggling with underfunded pension systems and arguments about entitlement. In Western Europe especially this is further compounded by often very strong public and institutional resistance to reforms, yielding often only incremental and, arguably, too timid change.

Karl Hinrichs is right that pension policy in the UK has been erratic and characterised by political bickering and disagreements. But at least Britain's discursive and flexible political system has enabled experimentation and the delivery of substantial reforms. If we could just add to that a greater awareness of how pension policy has evolved historically, we might be able to avoid many of the mistakes of previous generations.

This book should therefore be compulsory reading for every pensions politician and civil servant in the Department of Work and Pensions, but it is also highly accessible to the layperson and offers fascinating lessons about the pitfalls of policymaking in general.

Philip Hammond is Shadow Secretary for Work and Pensions.

Britain's Pension Crisis: History and Policy

Editor - Hugh Pemberton, Pat Thane and Noel Whiteside
Publisher - Oxford University Press
Pages - 0
Price - £14.99
ISBN - 978 0 19 726385 3

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