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‘What matters is what works’: Labour’s journey from
‘national superannuation’ to ‘personal accounts’
1
Hugh Pemberton,
Department of History, University of Bristol, Bristol BS8 1TB.
Email: h.pemberton@bristol.ac.uk
Note: this is a postprint version of the following article:
H. Pemberton, ‘“What matters is what works”: Labour’s journey from “national
superannuation” to “personal accounts”’, British Politics, 5:1 (2010), 41-64.
http://dx.doi.org/10.1057/bp.2009.2
Abstract
A key element of Labour’s response to the Pensions Commission’s
recommendations for ‘a new pension settlement for the twenty-first century’ is a
system of ‘personal accounts’ that that will be administered and invested by the
private sector. The contrast with fifty years ago, when Britain faced similar
pressures, is striking. Then, Labour presented to the British public proposals for
a state-run scheme embodying redistribution between higher and lower-paid
workers and the accumulation of a very large fund that would be directly
invested in stock markets by the state to promote faster growth. Today’s
scheme embodies neither redistribution nor collective control of the scheme’s
assets, and investment and risk-taking will be the responsibility of individuals
not the state. The article explores the differences between Labour’s proposals
in 1957 and the scheme it proposes today, considers what these differences tell
us about the party’s changing conception of social democracy, and highlights
the irony that, with consumers’ faith in financial markets shattered by the most
severe financial crisis since 1929, New Labour’s embrace of a private sector
solution on the grounds that ‘what matters is what works’ now seems badly
mistaken.
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 2
We can now begin to see the final shape of the government’s response to the
cogently argued case made by the Pension Commission (2005) for ‘a new
pensions settlement for the twenty-first century’. When the Pensions
Commission reported, received opinion was that we faced a ‘perfect storm’
(see, for example, Langley 2004), an unprecedented combination of an ageing
population, changes in the labour market resulting from globalization, a failure
to cater for those unable to contribute towards a pension due to caring
responsibilities, and already inadequate state pensions in a world in which
voluntary provision remains the preserve of a fortunate minority.
2
A situation
worsened by the relative lack of success of private pensions
3
, and by
employers’ flight from occupational pension provision for their workers.
4
It has
been widely noted that the Pensions Commission played an important part in
creating a consensus that radical change in Britain’s system of old age income
provision was essential: to equip the country to meet the future financial
challenge of an ageing population; and to meet the present challenge of an
already inadequate state pension. Few, however, acknowledged that in many
ways we have been here before. Half a century ago British politicians woke up
to a ‘crisis’ in British pensions: the financial implications of an ageing population;
a minimalist state pension failing to match rising living standards in an economic
boom; an ever-increasing reliance on means-tested supplementary assistance
to the aged poor; and the growing inequity between those with and without top-
up private pension savings (the parallels with today are highlighted by
Whiteside 2003). Then, as now, Labour produced radical proposals for
legislation to address the problems. Then, as now, a key element of those
proposals was a new system, then dubbed ‘national superannuation’, now
termed ‘personal accounts’, designed to extend the benefits of occupational
pension provision to all workers, with contributions invested in stock markets to
maximize returns.
Beneath the superficial similarities of the pressures driving reform then and
now, however, there are important differences between ‘old’ and ‘new’ Labour’s
policy responses. The starting point for this article is that analyzing these
differences can reveal much about the party’s changing conception of social
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 3
democracy over the past 50 years. To this end, I begin with a short
consideration of the literature on New Labour and social democracy. I then go
on to set out the context within which Labour put forward its national
superannuation proposal in 1957 before outlining significant features of the
scheme and the key aims of its architects, not least the hope that the national
superannuation fund would at once increase pension savings and undermine
the increasing financial power possessed by private pension funds. I then
examine Labour’s recent response to the Pensions Commission’s proposed
National Pensions Savings Scheme. In doing so, I highlight a series of key
differences between the 1957 approach and the legislation proposed today.
Most notably, the analysis emphasizes the ways in which New Labour from the
start accepted a central role for the private sector in the new scheme and the
assumption that the pensions received would be directly related to contributions
paid, with no redistribution between higher- and lower-paid contributors. It also
explores the very different reactions of the insurance industry and of the unions
to the final form of New Labour’s legislative proposals. We conclude with a
meditation on the different ways in which social democracy was conceived by
Labour then and now, and on the implications of the recent financial crisis for
this key plank in New Labour proposed solution to the pensions crisis.
Labour and social democracy
At the time of writing, New Labour has been in government for twelve years and
we are two years into the ‘post-Blair era’, yet agreement on what exactly ‘New
Labour’ is and was remains elusive. As Wickham-Jones (2007, 237) has
recently noted, ‘we still know remarkably little about the theoretical core or
defining principles of New Labour’. Some argue that it essentially repudiated
social democracy in its eagerness to accept and accommodate itself to
Thatcher’s neo-liberal revolution (Coates and Lawler 2000; Hay 1999;
Heffernan 2001; Lund 2008; Rubinstein 2006). Bogdanor (2007, 182) talks
about ‘the emasculation’ [sic] of social democracy, inasmuch as the party broke
with one of its fundamental tenets; that processes of social and economic
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 4
change can be controlled by government. Some are less persuaded, but
nonetheless see New Labour’s policies as working with the grain of a
traditionally liberal market economy (Hall 2002; Smith 2001). Some see it as a
‘post-Thatcherite’ party: much less rooted in social democratic ideals of equality
of outcome and the importance of state intervention to secure both economic
growth and social welfare; heavily influenced by Thatcherite verities on the
desirability of globalized free markets, the importance of individual initiative,
supply-side economics, and so on (Driver and Martell 2006). In this view,
Labour has become a party that embraces social justice and economic
efficiency, rights and responsibilities, a successful market economy and social
cohesion; a party that has not capitulated to neo-liberalism quite as much as its
critics suggest, but which nonetheless has plainly moved quite sharply
rightwards. Hindmoor (2004) has made a persuasive case that this was more
than just a shift rightwards in policies, it required the party to persuade the
media, voters, and other parties that it had made such a shift (see also
Wickham-Jones 2005). It also required the party to undertake a difficult
balancing act. Andrew Glyn and Stewart Wood (2001, 64), for instance, found
that New Labour’s ‘concern for improving the position of the most
disadvantaged coexists with policies that reflect a tolerance for (and even
actively encourage) the further acquisition of wealth by the most advantaged.’
They noted that many on the left find the approach ‘both unacceptable … and
unconvincing.’ Lister (2001), for one, has expressed her doubt that genuine
equal worth and opportunity are actually possible in such an unequal society.
Though many highlight the degree to New Labour has broken with traditional
social democracy, others, emphasise revisionist continuities between ‘old’ and
‘new’ Labour (Fielding 2002; Meredith 2003 and 2006), arguing that it is the
means rather than the ends of policy that have changed (Diamond 2004;
Hickson 2007). New Labour politicians have themselves often made this claim,
reaching back to the work of fifties revisionists, most notably Anthony Crosland,
to establish social democratic credentials (for good overviews of these appeals
to a revisionist heritage see Meredith 2006 and Wickham-Jones 2007). Peter
Mandleson (2002, xxix) wrote that there was ‘much of Croslandism that is still
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 5
relevant to Labour thinking’. Gordon Brown (1999) identified Crosland as the
‘starting point [and] compass’ for any discussion of equality. In this way, New
Labour is being consciously presented as a modernized social democratic party
that has caught up with ‘new times’. The argument is that economic and social
changes since the 1970s have required Labour to update its conception of
social democracy but, in the process, necessarily to change that conception
significantly (Allender 2001; Bevir 2005).
Smith (2001, 267) probably came closest both to defining New Labour, and to
defining the problem we have in defining it, when he described New Labour as
‘essentially ambiguous and Janus-faced’, characterized by ‘the often
contradictory and conflicting traditions of social democracy, social conservatism,
Thatcherism and pragmatism’ on which it draws. Until recently, it could certainly
chalk-up significant successes in terms of economic growth and getting people
into work (though less success at dealing with long-term dependence on
invalidity benefit). It could also reasonably claim to have reduced the proportion
of those living in poverty by more than 2.5 million since 1997 (though it had less
success in reducing inequality), to have improved health care, and to have
raised spending on education and training (Hills and Stewart, 2005; Toynbee
and Walker 2005; Coates 2005). Giddens (2007, 23-31) has suggested that,
taken as a whole, Labour has shifted the UK in a more social democratic
direction since 1997. But in its preparedness pragmatically to embrace new
ideas, to accept constraints, and to dilute its traditional ideological commitment
to social democracy, is it in danger of ‘losing its soul’ as Eric Shaw (2007)
alleges?
Any judgement on New Labour’s changing relationship with social democracy
requires us not just to assess what exactly its conception of social democracy
is; it also requires us to judge how ‘old’ Labour conceived it. Plainly, New
Labour has been keen to distance itself from the perceived failures of Labour in
the 1960s and 1970s (Cowell 2001; Cronin 2004; Fielding, 2004). But it
consistently tries to have it both ways. On the one hand, when it suits it, New
Labour seeks to place itself in a revisionist tradition, (Meredith 2006; Wickham-
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 6
Jones 2007). On the other hand, from the start New Labour conceived ‘the
project’ as involving a ‘year-zero’ break with the past in general, and with the
‘failed’ policies of ‘old’ Labour in particular (Thompson 2000; Thomas 2007). At
best, these parallel readings of history require a tendentious assumption that
revisionism had little practical effect on Labour policy in the postwar period. At
worst, it involves a deliberate misreading of ‘old’ Labour and of its relationship to
social democracy (Fielding 2000).
In short, we must beware the danger of accepting too readily New Labour’s
portrayal of pre-1979 Labour (O’Hara and Parr 2006). As Leggett (2007) points
out, social democrats aspired to ‘third way’ politics long before New Labour. For
example, in his first reading of New Labour (before his Damascene conversion
to the idea that New Labour had forsaken social democracy), Rubinstein (2000)
persuasively argued that in its desire to forge cross-class alliances, New Labour
was simply following in the footsteps of the Attlee and Wilson governments,
albeit with some adjustment to reflect economic and social changes since the
1970s. And whilst New Labour has plainly become a profoundly pragmatic
party, a party that has in some ways moved beyond ideology in its emphasis on
‘what matters is what works’ (Allender 2001; Lister 2001; Page 2007; Powell
2000; Shaw 2004), we should not underestimate the pragmatism of ‘old’ Labour
(Temple 2000).
However, any answer to the question ‘is New Labour a social democratic
party?’ depends to a degree on how exactly one defines social democracy. As
Leggett (2007, 349) notes, ‘Traditionalist social democrats assess New Labour
against a supposedly enduring benchmark of social democratic values and/or
practices’. In this paper, I too propose this as my starting point; not because I
necessarily agree with the proposition, but because it is by adopting such a
benchmark definition of social democracy that I think one can most effectively
interrogate the differences between Labour’s policies in the 1950s and those
today. Thus, for the purposes of this analysis, I define social democracy on the
lines proposed by Hay (1999, 57): i) a commitment to redistribution to increase
equality of life outcomes; ii) a commitment to social protectionism (i.e. to the
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 7
welfare state), again to increase equality; and iii) a commitment to the idea that
the market is inherently inefficient and requires state intervention to ameliorate
its failings. It is this definition that informs the analysis that follows, firstly of
Labour in the 1950s, and then of developments in the last three years.
Then
By the mid-1950s the inadequacies of the Beveridgean flat-rate pension were
becoming manifest (Baldwin 1990, 232-47; Bridgen 2000; Glennerster and
Evans 1994; Whiteside 2003). There were concerns about the financial
consequences of an ageing population and of dropping Beveridge’s 20-year
‘golden staircase’ to full pension rights. The Treasury was also only too aware
that periodic increases in the pension to reflect rising prices (something
unforeseen by Beveridge) were creating substantial unfunded future liabilities.
But the Treasury was also painfully aware that its ability to reduce these
liabilities by raising the national insurance contribution was limited because a
flat rate system of contributions and benefits tied the level of the contribution to
that which was affordable by the poorest worker - the ‘Beveridge straitjacket’
(Fawcett 1996). Thus the finances of the national insurance pension were being
squeezed from two directions; its costs were rising but its capacity to offset
those costs through higher contributions was severely constrained.
The state pension, which had been set below subsistence at its inception in
1948 at Treasury insistence (Harris 1997, 398-404; Macnicol 1998, 371-84;
Thane 2000, 367), persistently fell in real terms as a result of rising prices in the
buoyant postwar economy. As a result, it fell below the rate of National
Assistance and by 1954 the number of claimants had reached 1.8 million (Lowe
2005, 154). The result was mounting political pressure to deal with the growing
problem of poverty in old age. But the inadequacy of the state pension also
created a growing tendency for employers to provide earnings-related pensions
to their workers (Hannah 1986, 31-45; Whiteside 2006). By 1954, the Phillips
Committee’s report on the economic and financial problems of provision for old
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 8
age revealed that the rapid increase of occupational pensions provision meant
that some seven million workers were now covered (compared with one and a
half million before the war), around a third of the workforce.
By the second half of the 1950s, therefore, there were significant pressures
building up in the system. Politically, there was mounting pressure not just for
an improvement in the state pension to ‘subsistence’ (i.e. to a level at which
pensioners could live on without the need for means-tested supplementation)
but for that pension to be comparable with the superior benefits offered by
rapidly expanding occupational schemes. Financially, however, any increase in
the state pension would plainly require some rethinking of the flat-rate principle.
The ‘need for new initiatives’ was palpable, and of those new initiatives the first,
best thought-out, and most radical was that brought forward by Labour (Hill
1993, 57).
In 1957 Labour published its proposals for a new system of ‘national
superannuation’. Championed by Richard Crossman, its real architects were the
‘skiffle group’ of academics that advised him: Richard Titmuss, Brian Abel-
Smith, and Peter Townsend. For Titmuss, the most important aim of national
superannuation must be to bring an end to the ‘two nations in retirement’ being
created by a growing divide between a ‘privileged minority’ lucky enough to
benefit from generous occupational pension schemes and the ‘unprivileged
majority’ who continued to be dependent on the Beveridge pension (Labour
Party 1957, 13-16). However, the plan for state earnings-related national
superannuation, crafted by Titmuss and his LSE colleagues for a party study
group on old age, was not to be a simple copy of private schemes; Labour
proposed to give it a socialist dimension by incorporating within it an element of
redistribution from high- to low-wage earners. Most revolutionary, perhaps,
Labour proposed that the considerable fund that earnings-related contributions
would generate should be invested in stock markets. The figures were huge –
the scheme’s architects estimated the fund would reach £7.8bn by 1980
(around £450bn today when revalued in terms of GDP). And it would be ‘boldly
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 9
invested’ with a view to modernizing British industry, raising economic growth,
and accelerating the rise in living standards (Labour Party 1957, 29 and 100-1).
This, therefore, was a self-consciously ‘socialist’ plan, albeit one that accepted a
degree of inequality of post-retirement income by virtue of linking benefits paid
to earnings received. The more so because an unstated aim of its architects
was, by providing benefits superior to those available in occupational schemes,
to begin a process of ‘nationalization by attraction’ that would see private
occupational pension provision wither away. Thus national superannuation, as
those involved in the devising of the proposals privately acknowledged, also
represented a deliberate attack on the ‘investment and political power’ of the
insurance industry in general, and of the pension funds in particular.
Not surprisingly, as soon as it got wind of Labour’s developing ideas on national
superannuation, the insurance industry began to campaign against them
(Pemberton forthcoming). The joint Life Offices engaged an advertising agency
to oversee a lobbying and public relations campaign aimed at discrediting
Labour’s proposals. The campaign hammered home the message that Labour’s
scheme could have a catastrophic impact on existing occupational pension
schemes and that the proposed investment fund heralded the effective
nationalization of much of the economy. In this, of course, the life offices were
working with the grain of widespread criticisms by Conservative ministers, by
City spokesmen, and by many newspapers and journals, that national
superannuation amounted to ‘nationalization by the back door’.
5
This claim was,
of course, given added credence by the almost simultaneous publication by the
party of Industry and Society which, whilst endorsing the relatively positive
attitude towards the private sector of may Labour revisionists, defended the
principle of nationalization. By linking national superannuation with
nationalization, the life offices were able to capitalize on popular opposition to
the latter to help discredit the former.
6
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 10
The insurance industry also quickly identified trade unionists as important allies
against Labour’s pension proposals and began discussions with the head of the
TUC’s social insurance and industrial welfare committee and with individual
unions.
7
Two aspects of Labour’s plan were used to mobilize union opposition.
Firstly, the ‘socialist element of support of the low-paid workers by the higher-
paid’ would operate to the detriment of many trade union members. Secondly,
Labour proposed to require any schemes contracting out of national
superannuation to match its benefits, but any truly funded scheme would find it
impossible to do so. This might lead employers to wind those schemes up,
raising the prospective loss of workers’ accrued benefits, not to mention hoped-
for future benefits.
8
The strategy was successful and it helped to shape union
resistance in joint Labour-TUC discussions before and after the publication of
National Superannuation.
Indeed, whilst opposition from the insurance industry had been expected,
though Labour underestimated just how sophisticated and effective it would be,
the party had not anticipated the strength of trade union opposition. In a major
battle with the TUC, Crossman had one major success. Ultimately the TUC was
reluctantly forced to concede the adoption of earnings-related contributions was
the only means by which the state pension could be raised (though the quid pro
quo was the retention of the basic pension, the raising of its level to £3 from £2,
and its indexation to the cost-of-living).
9
This was a significant achievement,
albeit also an important break with the rigorously flat-rate approach to welfare
benefits that had hitherto been seen as central to Labour’s conception of social
democracy.
Where Crossman encountered a major problem was in the TUC’s reaction to
the implications of its national superannuation proposals for fast-expanding
occupational pension schemes. From the start, the party recognized political
realities and accepted that existing members must be allowed to remain in their
company schemes. Compelling new entrants to the labour market to enter
national superannuation was, however, essential to national superannuation’s
financing, and to the long-term aim to ‘nationalize by attraction’ the occupational
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 11
pension funds.
10
But whilst national superannuation’s architects saw national
superannuation as attacking the pension funds, they failed to appreciate the
extent to which it was also an attack on the pension rights of many unionized
workers. This was a fatal misjudgement.
Labour’s study group frankly conceded to the TUC that compelling new entrants
to enter national superannuation was essential to the financial viability of the
new scheme.’
11
But its frankness laid bare the financial cost of redistribution for
better paid workers– a point being hammered home to them by the life offices in
their advertising and in their booklets aimed at occupational scheme members.
Moreover, the TUC’s social insurance committee feared, and again this reading
was being pressed on them by the life offices, that the loss of new entrants
might make many existing occupational schemes actuarially ‘unsound’ and
‘break’ the system by leading such schemes inevitably to ‘wither away’ – indeed
this was the essence of ‘nationalization by attraction’.
12
In its essentials, therefore, the TUC’s analysis was identical to that of the City:
Labour’s proposals as they stood would herald the nationalization of
occupational pensions. This was not just a matter of occupational pension
scheme members risking the loss of current and prospective pension rights,
serious though that obviously was. There would be job losses in the insurance
industry, something inevitably opposed by the insurance unions. The Co-op, a
significant player in the market via the Co-operative Insurance Society, was also
opposed. Privately, members of the TUC’s social insurance committee were
livid at the way in which Labour was trying to bounce them on an issue dear to
the hearts of many union members.
13
The result was that the TUC General
Council made it clear that compelling new entrants to join national
superannuation would be seen by the General Council as a ‘mistake’.
14
Within
weeks the compulsory enrolment of new workers into the new scheme had
disappeared from the draft of National Superannuation.
15
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 12
The Labour Party conference in October 1957 unanimously endorsed national
superannuation but its reception at that year’s TUC conference was lukewarm.
Rhetorically, there was enthusiasm for the principle of better pensions for the
low paid, and for existing pensioners, but worries about the impact on higher-
paid union members with company pensions were clear. Crossman’s concern,
expressed in his speech to Labour’s conference, that the plan might actually be
‘too socialist’, in that better-paid workers might jib at the amount of redistribution
it involved, was therefore a frank acknowledgement of political realities.
The opposition of the unions to redistribution, and their desire to protect existing
occupational schemes did indeed blow a hole in Labour’s pension plan. The
result of the many concessions forced on Labour by the unions was, as Tony
Lynes brutally put it in an internal minute, that ‘whatever words we may use to
conceal the fact’ national superannuation became ‘essentially a pay-as-you-go
scheme’ offering benefits that could not be actuarially justified.
16
This made it
that much easier for the life offices to question national superannuation’s
financial viability, and to discredit the scheme further. The result was that,
though Labour had hoped that its national superannuation proposals would
appeal to a wide cross section of voters, the party found that its national
superannuation played well only with the old and the poor in the 1959 general
election, and then only because it was also offering a significant increase in the
basic pension (Butler 1960). Generally, the election came to be dominated by
the issue of nationalization, with which national superannuation had become
indelibly linked in the minds of voters.
Thus, in response to Britain’s first postwar ‘pensions crisis’, Labour
pragmatically crafted a scheme that accepted a degree of inequality in old age
retirement income. In every other respect, however, it was thoroughly social
democratic; being redistributive, state-run, envisaging a marked extension of
effective state control of British industry, and amounting to a major attack on the
power of private capital. But the policy failed to catch the public imagination, not
least because Labour failed to anticipate or to defeat a cross-class alliance
between the insurance industry and the trade unions against the scheme.
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 13
Labour learned important lessons from these events that informed its ensuing
development of policy: that the interests of the still expanding private sector
must necessarily be taken into account; and that on no account must it ever
again advocate a state-owned equity-based investment fund for fear of being
accused of ‘nationalization by stealth’. When the concept of ‘national
superannuation’ was revived by Crossman in 1968, after he became secretary
of state for social services, he found he now had to fight not just the unions and
the industry but his own ministry and the Treasury (Thornton 2009, 109-68).
Both of the latter were opposed to a ‘funded’ scheme, not least because it
would take so long to build up and thus would not relieve the short- to medium-
term pressure for better pensions. The result was that a decision was soon
taken effectively to adopt the pay-as-you-go principle for the proposed scheme
(Crossman 1977, 176). A fund would still be accumulated but it would be much
smaller than in 1957, and the expected return implied investment in gilts. There
would be no ‘bold investment’ in equities for the modernization of Britain (Heclo
1974, 274-5; Thornton 2009, 131). When Labour’s white paper was published in
January 1969 it was also clear that there was to be no question that national
superannuation should replace occupational provision (Department of Health
and Social Security 1969). Negotiations with the industry were about the price
of contracting out, not the principle (Hannah 1986, 59-60; Fawcett 1995;
Thornton 2009) and a second white paper set out the terms Labour would
‘make it easier for occupational schemes to live alongside the new State
scheme’ (Department of Health and Social Security 1969b, 14).
Labour’s revised version of national superannuation foundered with the party’s
ejection from office in 1970. However, when the party returned to power in 1974
better pensions were an important part of improvements to the welfare state
that formed part of the party’s ‘social contract’ with the unions. The mantle of
‘national superannuation’ was taken up by Barbara Castle, now secretary of
state for social services, and in 1975 she successfully piloted the Social
Security Pensions Bill through Parliament, thus inaugurating the State Earnings
Related Pension Scheme (SERPS) in 1976. This was in many ways a
praiseworthy measure, not least in giving women a better deal, via a measure of
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 14
‘home responsibility protection’ of social security contributions missed whilst
caring, but it also represented a further watering down of the ‘national
superannuation’ model, indeed that term was now notable by its absence (Ellis
1989, 46-56). Most obviously, the terms under which occupational schemes
would be allowed to contract out were even more generous than those
proposed in 1969, not least in that such schemes were required only to provide
a pension of 25 per cent of earnings (the ‘guaranteed minimum pension’). In
what Castle described as ‘a unique form of partnership between the State and
private schemes’, rather than ‘whittling down the standards of provision to a
level that private schemes can afford’ the state would give ‘help to private
schemes to enable them to meet the targets we have laid down’ (quoted in Ellis
1989, 53).
In short, the lesson learned by Labour from its experience with national
superannuation was that a generous state pensions scheme financed by
earnings-related contributions with a substantial state-controlled investment
fund that could be used actively to shape and enhance the country’s economic
development was simply not on the cards. By the 1950s the private sector had
become too powerful to be defeated, employees in occupational schemes were
not prepared to sacrifice their benefits, and the Treasury was not prepared to
underwrite the risks involved.
Now
Half a century on from the 1950s, Britain faced another major crisis in its system
of old age income provision. Again, an ageing population was one aspect of the
problem. But, unlike most other countries facing a so-called ‘pensions time-
bomb’, the biggest problems faced by Britain in the first decade of the twenty-
first century was the manifest inadequacy of its state pension system, the
growing gap between those with and without some form of private pension
savings, and the increasing reliance of the latter on means-tested
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 15
supplementation (Pemberton et al 2006, 2-11). Plus ça change, plus c'est la
même chose.
In 2006, New Labour published two white papers setting out its response to the
Pension Commission (2005) proposals for ‘a new pensions settlement for the
twenty-first century’. The first, published in May, set out a series of reforms to
state pensions (Department of Work and Pensions 2006a). Of these, the most
important were a phased increase in the state pension age from 65 to 68
between 2026 and 2046; a commitment to re-link the basic state pension to
earnings at some point between 2012 and 2015 (though with the proviso that
this should be ‘subject to affordability and the fiscal position’); and a reduction to
30 in the number of years of contributions required to qualify for the basic state
pension (the latter of particular benefit to women who, undertaking a
disproportionate amount of caring, often have relatively patchy contribution
histories).
These were significant reforms to the parameters within which Britain’s system
of state pensions operated. To help pay for them, the white paper proposed
that, whilst contributors to the State Second Pension would continue to be
earnings-related, its benefits would become flat-rate from 2030 (thus
redistributing from the higher- to the lower-paid). In addition, £4-5bn in rebates
paid to millions of contributors to private ‘defined contribution’ pensions would
end in 2012, and changes to means-tested pension credit would gradually
reduce its generosity and target the benefit on the most needy pensioners.
Overall, the proposed reforms were widely judged to amount to the effective
implementation of Lord Turner’s proposals, albeit with some tweaking at the
edges. Whilst the proposed changes to the state system were extensive,
however, this was clearly a solution for future pensioners, though even then
around a third of all pensioner households were still expected to qualify for
means-tested benefits in 2050 (hitherto the figure had been expected to reach
around 70 per cent).
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 16
The government acknowledged that the proposed changes to the state system
would far from entirely solve the future problem of low replacement income in
old age. To deal with this, responding to the Pension Commission’s suggestion
of a new national pension savings scheme, a key element of New Labour
proposals was a system of ‘personal accounts’ whereby British workers (and
their employers) would be encouraged by ‘auto-enrolment’ to save towards their
future pensions (Department of Work and Pensions 2006a),. In the process of
devising this scheme, on which this section will now focus, the government had
to consider fundamental questions that were left unanswered by Turner. It had,
for example, to consider whether the state or the private sector should be
responsible for the collection of workers’ pension contributions. Most notably, it
had to consider how and by whom the investment of those contributions in stock
markets, as proposed by Turner, should be undertaken. This in turn
necessitated deliberations about whether the ultimate control of those assets
should reside with the state or with the City.
Feasibly both collection and investment could be done by the state. Potentially,
therefore, the Pension Commission’s national pensions savings scheme could
be have been used both to redistribute wealth and income and to extend public
ownership of British industry and commerce, as in Labour’s 1957 proposal for
national superannuation. This led a number of commentators to see Turner’s
proposal as a repudiation of market solutions in the field of pensions. One
academic critic wrote that ‘Turner has found a way back to social democracy
rather than promoting innovation in the private sector’ (Clark 2006), 146). In the
City, it was not uncommon for the Pension Commission’s proposal, like the
1957 national superannuation scheme, to be denounced as ‘nationalization by
the back-door’.
17
Moreover, how the proceeds of these investments would be divided amongst
the scheme’s contributors had not been finally determined by the Pensions
Commission (2005). Certainly, it proposed an individual account-based NPSS,
a ‘defined contribution’ approach in which the pension paid would be a function
of an individual’s contributions over time and the return obtained on their
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 17
investment. There was nothing, however, to prevent the government from
relaxing the link between contributions and benefits so as to allow the possibility
of redistributing investment returns from higher- to lower-paid workers (Grieve
Smith 2006, Pensions Reform Group 2006).
In the event, although the government’s second white paper on ‘personal
accounts’ fleshed out the details somewhat it too was lacking when it came to
the crucial questions about how the new scheme would actually be
administered, and by whom (Department of Work and Pensions 2006b). Even
when the government’s legislative proposals were published in the 2007
Pensions Bill they did little more than confirm that a duty would be placed on
employers automatically to enrol employees into the new system of ‘personal
accounts’ if an alternative approved occupational pension scheme was not on
offer. The detail of what exactly those accounts would look like, and who would
run them was again lacking, with responsibility for defining answers to these
questions handed on to the new personal accounts delivery authority.
18
Plainly, the government was finding it hard to devise a solution, and one can
divine that a key problem here was New Labour’s wish to maintain the
consensus for change, and thus to avoid a confrontation with entrenched
special interests. In contrast with the 1950s, these did not include the TUC. In
its response to the Pensions Commission, the TUC (2005) strongly endorsed
fundamental principles underlying the proposed national pension savings
scheme.’ On publication of the personal accounts white paper, it hailed the
proposals as ‘another important building block in a new pensions settlement.
Compulsory employer contributions are a major gain for people at work’ (TUC
2006).
Why was the TUC in favour of the NPSS and of compulsion given its spirited
opposition to national superannuation in the late-1950s? The answer almost
certainly lies in two factors. Firstly, from the start New Labour accepted that
workers would not be compelled to join unless their employer failed to offer a
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 18
company pension, thus ensuring that the proposals did not work to the
detriment of occupational schemes. The extraordinary change in the fortunes of
such schemes had also done much to change minds. In the 1950s such
schemes were expanding rapidly and appeared to offer the prospect of
markedly higher pensions than any competing solution on offer. By the turn of
the century, however, they were in rapid decline, and their benefits appeared
less and less secure. A combination of rising longevity, government intervention
to protect members pensions in the event of a change of job, inflation, or
scheme default, and the collapse of stock markets after the pricking of the
dotcom bubble in 2001 meant that the traditional final salary occupational
pensions was a ‘house of cards’ (Turner 2007). By 2007, two-thirds of UK final
salary pension schemes had closed to new members, and a third of those were
considering winding up the scheme to get the liability off their balance sheets
(Johnson 2007; Timmins 2007a; see also Clark 2006). As Brendan Barber
(2007) noted, ‘The sharp decline of occupational pensions means there are
millions of people in work today who are not saving for retirement. The
compulsory employer contribution and automatic enrolment at the heart of
personal accounts offers a real opportunity to reverse this trend.’
Secondly, it was also clear early on that New Labour’s response to Turner was
not going to embody any redistribution within the earnings-related scheme.
Thus the TUC’s (2006) response to the personal accounts white paper noted
that only 35 per cent of workers benefitted from occupational provision but ‘that
most employees would rather build up their own pension pot, rather than rely on
the future vagaries of state pension benefits’ (emphasis added). Its ‘one
disappointment [wa]s that the administration of the new scheme will take place
in the private sector’.
In short, the TUC had come to the view that for those not
in a secure occupational scheme the best way forward was an individualized,
though preferably state-run, quasi-compulsory earnings-related scheme.
As in the 1950s, however, it was the financial services sector that was the most
significant lobbyist shaping Labour’s developing proposals. Two groups in
particular fought hard to limit the scope of personal accounts: the National
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 19
Association of Pension funds sought to secure a lower upper-limit on
contributions than initially proposed, in order to secure a future for occupational
pension schemes covering better-paid workers; likewise, insurers pushed a low
upper-limit to defend the group personal pension schemes they run for smaller
firms, though they also lobbied hard to secure a role for themselves in the
investment of contributions, and preferably in collection as well.
This industry lobbying campaign is the most likely reason why an exact
description of how personal accounts are to operate has yet to appear.
Nonetheless, it is not hard to delineate the broad outline of the government’s
intentions. Firstly, it has been clear from the start that it is not interested in
redistribution within personal accounts. Even before the publication of the
Pension Commission’s second report, John Hutton, then secretary of state for
work and pensions, made the promotion of ‘personal responsibility’ one of five
key tests that any long-lasting settlement for the 21st century must meet (Hutton
2005). Whatever the exact nature of the personal accounts system we can be
sure of one thing; they are to be personal. There will be no interaction between
accounts. Thus there can be no redistribution.
It was also apparent that the opposition of the pension funds and the insurance
industry to a state-run solution (i.e. a scheme on the lines of national
superannuation) was at the front of Hutton’s mind. By April 2006, it was clear
that the government wanted the insurance industry rather than the state to run
the new scheme (Inman 2006). On the investment side, one suspects a re-run
of 1957 – a fear in the Treasury that in a system in which investments were
overseen by the state the Exchequer would effectively stand as guarantor in the
event of disappointing financial returns. On the collection side, one detects a
desire to shield the government from accusations of ‘misselling’ and claims for
compensation (if it turned out that low-income earners would have been better
off discharging debts, or saving money in a more accessible form, or if they lost
out on means-tested benefits, or because risky equity investments might simply
be inappropriate for low-earners).
19
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 20
One way of simultaneously appeasing Treasury concerns about writing an
effective blank cheque to personal accounts members and assuaging the
industry would have been to create a hybrid model in which the state was
responsible for collection (thus keeping collection costs down) but the private
sector took control of investment. But such a solution would nonetheless still
have important implications for the industry, not least that it would force them to
compete for access to the scheme’s investment stream. They would much
prefer to adapt their existing collection mechanisms (see Hillman 2008), though
to do so would inevitably be to lose an important economy of scale that had
been central to Turner’s original conception whilst simultaneously reinforcing
the monopoly power of the industry (Skypala 2006).
By the time the white paper on personal accounts was published at the end of
2006, the industry had made considerable headway. Branded funds were now
to be made available ‘for those who want them’, with a default fund provided for
those who did not (Department of Work and Pensions 2006b, 11 and 27-8). For
the ABI, the concession on branded funds was a significant achievement. It had
not yet won the battle but, as its director general put it, it had ‘lived to fight
another day’ (Timmins and Hall 2006). Thereafter this battle was to focus on
three questions: 1) the number of workers likely to be covered by personal
accounts; 2) who should collect their contributions; and 3) who should be
responsible for the investments of this default fund, into which the government
thought it likely that most of the annual £4-5bn of contributions from up to 10
million workers would be directed. On all these issues, decisions were deferred,
this time to be answered by the new personal accounts delivery authority
proposed by the white paper. Whilst it is too soon definitively to answer any of
these questions, it is clear that the industry has won its battle to restrict the
maximum value of individual contributions to personal accounts – the
government setting the figure at £3,600, below the £5000 originally suggested
by the Pensions Commission, higher than the industry wanted, but appreciably
lower than the unions and employers had campaigned for (Timmins 2007b-e).
This was clearly an acceptable outcome for the insurance industry.
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 21
The direction of travel is therefore clear. There will be no redistribution. To all
intents and purposes the industry has won its battle to secure a privately run
state superannuation and to limit its scope in order to protect occupational
schemes and other private pensions. John Hutton could not have put it more
clearly: ‘This is not nationalization. It is the opposite of that. It will be private
sector run.’ And, whilst there would be an overriding duty of trustees to act in
members’ interests, there would be no state control of the scheme’s assets. As
Hutton unequivocally stated, ‘the best people to fix these operational details are
the experts and the industry, not ministers or politicians’ (Timmins 2007f).
Conclusions
This article has argued that are similarities between the political and financial
imperatives driving pension reform in the 1950s and in the first decade of the
twenty-first century. Thus in both the late-fifties and the early-‘noughties’ Britain
faced an impending crisis in its pension system partly as a result of an ageing
population, but more particularly because of an increasingly inadequate state
pension and the growing gap between those with and those without top-up
private pension provision. In both decades, a key element of the Labour Party’s
response was to extend the benefits of earnings-related occupational pensions
to all workers. In both decades, the party accepted that this would entail the
persistence of inequality, though with increases in the basic state pension to
ameliorate this.
It is in the variations between the detailed content of these policy responses that
we can identify important changes in the party’s conception of social democracy
over the past 50 years. In 1957, ‘Old’ Labour concluded that the ‘equal shares
in deprivation’ approach embodied in the Beveridgean flat-rate state pension
had reached a dead-end and that there was a limit to the degree to which
workers, particularly middling- and higher-paid workers, would accept increases
in taxation to improve pensions for all. In other words, the party accepted that
better pensions for the poor could only be financed by higher contributions, but
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 22
that the support of higher income earners would only be obtained by offering
‘something for something’, even if this meant endorsing inequality in the
incomes of the retired. Plainly, therefore, pragmatism is not the preserve of
‘New’ Labour. Crucially, however, in the 1950s ‘Old’ Labour assumed that any
‘socialist’ solution must nevertheless necessarily embody some element of
redistribution between contributors within the earnings-related scheme and
state control of its assets. By 2006, ‘New’ Labour’s conception of redistribution
and the role of the state was much more limited.
Looking back on his prime ministership, Tony Blair (2007) highlighted pensions
as a field of policy in which he had leant that an affordable pension system
required citizens to top up their basic pension from their own finances. This is
essentially the raison d’être of personal accounts. The redistribution on offer in
this conception of pension reform is via a shift to a wholly flat-rate state pension
set at a higher level, reindexed to prices, and financed from earnings-related
contributions, and via means-tested supplementation targeted on the very
poorest pensioners and financed from general taxation. This is a more
collectivist approach than New Labour 1997-8 certainly. But the continued
importance of means-testing means that well over a third of workers, particularly
older workers, low-earners, and those likely to rent in retirement (i.e. those likely
to claim benefits), would be better off if they opted out of personal accounts,
and thus opted out of voluntary topping up (Pensions Policy Institute 2006;
House of Commons Work and Pensions Committee 2007, 22-27; Price 2008,
63). Even before we consider other reasons why people might opt out,
therefore, personal accounts will fail to address the problem of poverty in old
age.
In terms of state control, in crafting its proposals in 1957 the Labour Party then
saw a very clear imperative for its national superannuation scheme to be state-
run: contributions would be collected and invested by the state and the
pensions they would generate would be paid out by the state. By 2006,
however, whilst the Turner Commission’s proposals did allow scope for a similar
approach, it was immediately clear that Labour would prefer not to take that
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 23
road. The government has spent the last three years steadily rowing back from
the idea that there should be state involvement. In New Labour’s judgement,
‘privatizing’ responsibility for investing personal accounts offers attractive
benefits to government in that financial risks will be transferred to contributors
and pension providers. It has also consistently sought, by accepting limitations
on the scope of personal accounts, to allay industry fears that they could
jeopardize the future existence of occupational pension schemes or of the
insurance industry’s lucrative private pensions business.
We see here a marked shift in Labour’s analysis of capitalism. In 1957, the
architects of national superannuation sought to break the financial power of the
pension funds and to link their proposals to the party’s developing ideas for
state intervention in stock markets to stimulate long-term investment in the
modernization of British industry. The concept of personal accounts was
designed before the credit crunch. In it, we have a very different analysis by
New Labour. There is an acceptance of the power of private capital, and
implicitly of the idea that investment decisions are best made by capitalists. We
see a desire by New Labour to repudiate the accusation that it proposed, in
effect, to ‘nationalize’ parts of British industry and commerce via its control of
the new personal accounts fund. At a time when key figures in the party talk of
the need to ‘rebalance the economy’ as a consequence of the worst financial
crisis since 1929 we see no attempt to use that control to influence the direction
and duration of investment in quest of faster and more sustainable growth.
However, whilst Labour has eschewed redistribution with personal accounts,
accepted a key role for the private sector in their operation and investment , and
put severe limits on their scope, we should also note another key difference
between ‘then’ and ‘now’. Labour’s conception of national superannuation as a
funded but redistributional occupational scheme owned and managed by
government effectively expired with the party’s loss of the 1959 general
election. What Labour expected to be an unbeatable offering to the British
electorate proved to be a dud. In this failure, we have identified the resistance to
redistribution by the trade unions, and the resistance to ‘nationalization’ by the
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 24
insurance industry as the key variables. Labour’s 1957 proposals thus failed to
reach the statute book because rhetorical support from the trade unions for
solidarity concealed the reality of self-interested groups of workers defending
sectional interests, and because Labour utterly underestimated the power of the
capitalist interests which it sought to destroy.
There can be little doubt, however, that New Labour’s ‘personal accounts’ will
be implemented. In part this reflects the passage of time and the declining
scope and attractions of company pensions. In part it reflects the fact that
Labour today is in power, whereas it was in opposition in the 1950s. But the
concept of personal accounts was also the product of a preparedness to accept
the power of capital (greatly increased after half a century of growth) and to
adapt Labour ideology to reflect this. New Labour hoped that its reforms would
allow millions of workers to save towards their pension for the first time, with
government expenditure targeted on means-tested assistance to the poorest
pensioners rather than on all pensioners. In this sense, ‘new’ Labour like ‘old’
Labour exhibited a concern for social justice but the means by which this would
be achieved was very different, though it hoped more effective. It is this that is
perhaps the most important and most obvious difference between ‘old’ and
‘new’ Labour in the analysis presented here. If ‘New’ Labour is defined by
anything, it is its appreciation of Rab Butler’s dictum that politics is ‘the art of the
possible’, and of the ideological compromises that are required by that
pragmatic conception of politics. In the case of pensions, pragmatism trumped
ideology.
However, New Labour’s preparedness pragmatically to adjust its ideology to
reflect political ‘realities’, and to embrace a private sector system of personal
accounts on the principle that ‘what matters is what works,’ has left it badly
exposed. Firstly, there is the unresolved problem that New Labour’s continued
reliance on means-testing will undermine personal accounts by encouraging
low-earners to opt out. Then, there is the accident of timing that is the worst
financial crisis since 1929. The crisis has shattered faith in the efficiency of
markets. It has shown that a ‘hands-off’ approach to financial services cannot
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 25
shield the state from compensating ordinary citizens from the poor performance
of financial institutions; thus any hope that the government would not stand as
ultimate guarantor to the personal accounts system has been exposed as a
sham. Finally, the scale of the crisis strikes at the heart of Labour’s entire
approach to personal accounts, in which the income of future pensioners will
become dependent on underlying stock market returns. The timing could not be
less propitious. UK pension fund asset values contracted by 17.4 per cent in
2008 (OECD 2009). Private investors saw stock markets collapse, with the
FTSE down over 28 per cent in 2008. With faith in financial institutions, and in
stock markets, significantly weakened, if not shattered, where does that leave
Labour? At just the moment at which the financial crisis has exposed the
limitations of the neo-liberal model, and New Labour has been forced to accept
that market failure requires an active state and to turn back towards
redistribution and collectivism, in pensions policy its generals are still fighting
the last war.
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Submitted 3 September 2008 (9944 words including abstract, notes and
references).
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references).
Notes
1
This article has benefitted from conversations with many people but I extend particularly
thanks to Paul Bridgen, Nicholas Hillman, Pat Thane, Noel Whiteside, and Mark Wickham-
Jones. Comments made by the two referees helped to sharpen the analysis. I also owe a debt
of gratitude to the Financial Times, the only newspaper to cover recent developments in
pensions policy in depth, and particularly to its Public Policy Editor, Nicholas Timmins
whose reporting has been outstanding. All errors are, needless to say, mine not theirs.
2
The problem can briefly be summarised with a few contemporary statistics. In 2003 there were
3.3 people of working age for every pensioner in the UK, but by 2051 this was expected to
have fallen to 2.3 (National Statistics 2005, Ch.2). By that time men aged 65 were expected
to live for a further 22 years, and women for 24 (in 1981 the figures were 14 and 18 years
respectively). Around 28 per cent of pensioner households received no income from an
occupational or private pension – and those that did received on average only around £88 per
week at 2003/4 prices (National Statistics 2005, Ch.4). A similar proportion had no savings
(and of those that did the median income generated was only £4 per week). Women were in
a particularly bad position – for 3.1 million women the BSP was their only source of pension
income, and National Statistics (2009, Ch5) showed that 2.3 million of them received 60 per
cent of the BSP or less.
3
Again, figures from National Statistics (2005, Ch. 7) summarise the problem. In 2003/4, 52 per
cent of men and 40 per cent of women contributed to a personal or stakeholder pension.
However, the proportion of men contributing was down from 48 per cent in 1999/2000.
Moreover, the low level of many contributions combined with poor persistency in payment
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 33
meant that 55 per cent of men and 73 per cent of women had a total fund value of less than
£10,000. In 2009, the maximum income for a man aged 65 that could be gained from a fund
of £130,000 was only £721 p.a. (£13.86 p.w.), with no inflation protection (Pensions World
2009).
4
The number of active members of occupational pension schemes was, and is, in long-term
decline – down from 12.2 million in 1967 (about half the workforce) to 9.8 million in 2004
(National Statistics 2005, Ch.7), to 8.8 million in 2007 (National Statistics 2009, Ch. 7),
about 30 per cent of the workforce. By 2005, a marked shift away from traditional ‘defined
benefit’ (typically final salary) schemes was also under way, with the number of such
schemes nearly halving between 2001 and 2005. Typically, they were being replaced with
‘defined contribution’ schemes, which transfer all investment risk to the employee. In
addition, employers were typically making lower contributions to such schemes, with all that
entailed for future benefits.
5
The phrase is Macmillan’s (The Times, 3 June 1957, ‘Restrictive practices “out of date,” says
Mr. Macmillan’).
6
In July 1957, following the publication of Industry and Society, only 18 per cent were in
favour of more nationalisation (Gallup 1976, 413).
7
Archive of the Life Offices’ Association (hereafter ‘LOA’), Guildhall Library, London: Ms.
28376/91, minutes of the Publicity Joint Committee, 12 June 1957.
8
LOA: Ms. 28376/90 notes by the Chairman of the Publicity Joint Committee, 22 May 1957.
9
TUCA: MSS.292/161/14, ‘Labour Party Study Group proposals for superannuation scheme’,
10 January 1957; Alf Roberts, TUC Report, 1957, p. 352.
10
Labour Party Archive, Manchester: Re.92, ‘Compulsory or voluntary. A note by R. M.
Titmuss’, July 1956.
11
TUCA: MSS.292/161/14, SIIWC 10/9 ‘Report of an informal meeting with the Home Policy
Committee of the Labour Party, 27 February 1957’.
12
TUCA: MSS.292/161/14, SIIWC 10 Appendix to the minutes of the 10th meeting of the
Social Insurance and Industrial Welfare Committee, 13 March 1957.
13
TUCA: MSS.292/161/14, minutes of the TUC Social Insurance and Industrial Welfare
Committee, 13 March 1957; TUCA: MSS.292/166.21/2b, SIIWC 10/5 ‘The insurance
industry’, 13 March 1957.
14
TUCA: MSS.292/166.21/2a, General Council minutes, Item 61, 27 March 1957; TUCA:
MSS.292/166.21/2a, Tewson to Phillips, 5 April 1957.
H. Pemberton, ‘“What matters is what works”, British Politics 5 (2010), 41-64
Page 34
15
Crossman Papers, Modern Records Centre, University of Warwick: MSS.154/3/S/204-419,
Re.152 ‘Draft policy statement on National Superannuation: Labour’s policy for security in
old age’, April 1957.
16
Crossman Papers: MSS.154/3/S/1/1-203, ‘Contracting out. Note by Tony Lynes’, 20 February
1959.
17
See, for example, Martin Wolf’s (2005a) immediate reaction that ‘The Pensions Commission
wishes to nationalise a part of the UK’s financial sector’ and his (2005b) reporting of
complaints by the Association of British Insurers and the National Association of Pension
Funds that the NPSS would effectively nationalize the savings industry because it would be
unable to compete with such low costs. See also Treanor (2006), reporting the views of Peter
Butler, ‘One of the City’s most respected fund management activists’; and the assertion of
the financial editor of The Times (Seargant 2006) that the NPSS was ‘a semi-compulsory
nationalised rehash of the unpopular stakeholder pensions’.
18
Pensions Bill, 2007-08, services.parliament.uk/bills/2007-08/pensions.html.
19
A point made by several witnesses giving evidence to the House of Commons Work and
Pensions Committee (Pension Reform. Fourth Report of Session 2005-06, Vols 1-2) and
repeatedly by Frank Field (2006) who warned that the scheme posed ‘the biggest risk of the
mis-selling of pensions for a quarter of a century’. On means-testing see also Pensions Policy
Institute (2006), and on the issue of risk see Inman and Wood (2006).
