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Adrian Owens: Tackling Gordon’s pensions apartheid

Adrian Owens works as a business consultant. He is finance portfolio holder at West Lancashire District Council and a member of the Parliamentary Candidates’ list.

Gordon Brown’s raid on pensions in his first budget is seemingly never out of the news. However, his cowardice over public sector pensions in the face of union opposition should command greater attention given the scale of the problem he has created.

Unfunded liabilities in public sector pensions are now calculated to exceed £1 trillion. While Gordon only seems concerned about paying the £18 billion pension costs of those already retired from the public sector, Neil Record for the Institute of Economic Affairs has calculated that the annual unfunded accruals on the future pensions of current civil servants, police, health staff, teachers and armed forces is £58 billion a year – that’s 4.7% of GDP. Gordon Brown is already storing up problems for the next generation that make the arguments about the hidden costs of PFI seem trifling.

However, it’s not simply our children who will bear the financial brunt of the Chancellor’s inaction. The common cry in Labour’s years of “Where has all our tax money gone?” is partly answered by the words public sector pensions. Increasing longevity and high ill-health retirements are already draining funds from vital services and are major drivers behind the high council tax increases from fire and police authorities each year. As an example, in 2005 in West Lancashire I had to find £473,000 each and every year to fund a massive increase in our employers’ pension contributions from 12.7 to 17% of salary – money that otherwise would have been available for the frontline services our local electors deserve and expect or to cut council tax. We are already having to plan how to extract further savings to pay for a further pension cost hike when the triennial review kicks in next April.

At the same time as the public sector pension problem has mushroomed, the private sector too has been faced with rocketing costs. In part this is due to the increased pension regulation imposed by the Government, much of it ill-advised. In part though, it has the same underlying cause as for the public sector – increased longevity. However, the private sector is much more highly accountable over its pension deficits than government or local authorities. Private sector pension deficits are reported in the balance sheet each year to shareholders and the markets. So the private sector has taken painful actions to stem its rising pension liabilities.

Adrian Owens: What’s needed are effective welfare to work policies

Adrian Owens has been a Parliamentary candidate and is on the candidates’ list.  Now a business consultant he also volunteers as a Princes Trust business mentor.  He is a former General Manager of CREATE Liverpool.

The northwest of England is in the media spotlight at present.  No sooner has Condi Rice departed than we Conservatives arrive for our Spring Forum.  Coming from Lancashire, I have grown weary of the putdown comments of some party members when they visit Blackpool for party conference.  No doubt some members will be having similar negative thoughts as they approach the journey north this weekend.

However, such denigrators will no doubt be pleasantly surprised.  Manchester city centre has been transformed in recent years.  Spring Forum visitors will note the high-rise Beetham Tower changing the city skyscape at the end of Deansgate, and of course the city held a successful Commonwealth Games in a stadium that was actually built on time – Wembley please note!

However, scratch below the surface of Manchester or its rival and neighbour Liverpool, and the picture is more depressing.  In Liverpool 29% of the working population are reliant on state handouts, in Manchester the figure is 27.4%.  These figures are among the highest in the country and are not matched by levels in other northern cities.   The figure for Leeds by comparison is only 13.4%.  For whole swathes of Manchester, behind the veneer of the city centre, Labour’s welfare to work slogan rings hollow.

Finding a solution to the chronic inactivity of many in our cities promises a lasting solution to their regeneration and a more effective solution to the strains caused by immigration than anything proposed to date.  The culture of accepting state handouts is deeply entrenched among many, sapping confidence and encouraging fatalism, so solutions are not quick and may appear expensive.

There are many organisations working to tackle this supply side issue and as a party we need to understand their work and develop policies that support them while at the same time expanding provision massively.  It’s encouraging to see the party talking with organisations such as the Princes Trust that lever in much voluntary support to provide a cost-effective and personal service to support young people into employment.

CREATE in Speke in Liverpool shows what can be achieved in helping the inactive compete in the labour market.  Established in 1996 it provides a “bridge” between economic inactivity and employment for around 25 employees at a time.  The staff are employed on a 12-month fixed-term contract and paid a salary.  They undergo training in vocational qualifications while refurbishing and recycling white goods for sale to the local community.  During their time at CREATE they build confidence and apply for jobs in the local economy hopefully leaving to employment after around 9-10 months.   The results are impressive.  Speke is the 2nd most deprived ward in the entire country yet CREATE has moved more than 200 long-term unemployed people into permanent and lasting employment.  It succeeds with around 70% of its employees. 

Moreover the white goods that the enterprise refurbishes are sold with a 12-month guarantee at low cost to people in the local community who couldn’t afford a £300 washing machine. CREATE receives the majority of its income through the sale of these appliances.  Metals are recycled and CFC gases from old refrigeration units are captured for safe treatment and disposal.

A lasting memory of my time at CREATE came with the blossoming of the local automotive sector centred on the infamous Halewood plant now transformed as a Jaguar factory.  We were having increasing success placing our employees into permanent quality jobs in the automotive sector.  Then one young man of 23 years old who had never worked before since leaving school without any qualifications landed a job at the Jensen sports car factory on the basis of his time at CREATE.  He returned a week or so later in a Jensen borrowed from the factory.  A great inspiration for our remaining employees and a powerful memory about how CREATE changes lives.

CREATE is only one of many social enterprises dealing with the less glamorous side of city regeneration, ensuring people have a fighting chance in the modern labour market.  For more information visit www.createuk.com.  This is an area too long neglected by Conservatives and it’s time we took up the baton from a Labour government that has patently failed with “welfare to work”.

Adrian Owens: Time for bold policies to really help 'hard-working families'

Cllr Adrian Owens is a businessman and the Portfolio Holder for Finance and E-Government on West Lancashire District Council.

It’s rare to find a political speech these days that doesn’t refer to “hard-working families”, but does the policy menu offered provide a recipe for success?

18 months ago, a survey reported over half of working women felt like quitting work completely because of the pressure between work and home life.  A similar survey revealed that only 4% of mothers with very young children want to work full-time, while government figures reveal that more than 15% of such mothers actually have to work full-time. 

A similar discrepancy applies when comparing those who want to be full-time mothers to their young children and those who are actually able to fulfil this aspiration.  Before being accused of sexism, I should add that fathers too are increasingly working longer hours than they would wish in our long hours work culture. 

Why this difference between what people want from their lives and the daily reality?  The answer, of course, lies in the reason that most of us work – money. 

The fashionable term for this area of debate is work-life balance and in this area as in so many others, Labour have been quicker at recognising the problem than we Conservatives. 
The Government is extending maternity and paternity leave and subsidising “wraparound” childcare.  Rather than leaving it to individuals to decide how to make the difficult choice between the conflicting spheres of home and work, employers are being made to pay through the nose to sustain the fiction that no such choice need be made at all.  Meanwhile taxes rise to provide the subsidised “wraparound” childcare.  As taxes rise, parents have to work yet harder and longer to make ends meet, and so entrust their children to childcare providers for yet longer hours, and so the merry-go-round continues.

Here is a modern issue that demands a Conservative response.  Millions of working men and women with young families are looking for real solutions beyond the trite slogans thrown in the direction of Britain’s “hard-working families”. 

Of course no one can decide for families what their priorities should be. These are personal decisions.  So what role can a future Conservative Government play?

Firstly, it must eschew the social engineering mentality of New Labour.  The Government’s policies have been heavily influenced by Patricia Hewitt, whose Women and Equality unit famously said in 2003 that there was ‘a real problem’ with mothers who stayed at home to bring up their children.  Indeed the Government continues to have targets to get still more people into work.  It is ironic that we Conservatives have a reputation for telling people how to lead their lives when in fact it is Ms Hewitt and others of her ilk who hold sway.

Policies to increase productivity (stagnating under Gordon Brown) and reduce the tax burden will also help, but if we are to give people real choice over how they arrange their work and family care responsibilities we must tackle one major area – the high cost of housing in our country.

High house prices are the largest single reason preventing couples from exercising their choice to reduce working hours, or even for one partner, usually the mother, to give up work completely.  House price to income ratios are close to all-time highs – but what is different in the current context compared to the house price booms of the past is that household incomes are now based on two salaries when calculating this ratio.  Put simply, house prices are so high that in most households both partners need to work.

Where both partners make this as a free choice then that is their business.  However when, as seems clear from housing cost figures, both partners are forced to work, those in government should be concerned.  Given the social problems manifest in modern Britain relating to some young people, and given the clear evidence that increased parental commitment to child-rearing has a positive impact on these problems, then as Conservatives we need to reflect on whether some of our other cherished beliefs need to be reconsidered.

If we can increase the supply of new housing and reduce house prices in real terms we will enable more of those oft-quoted “hard-working” families to work a little less hard servicing their housing debt and spend a little more time raising their children and building the social capital of our nation.  Of course, lower house prices help those at the bottom of the housing ladder too. 

Any change would need to be gradual to avoid a severe house price slump, but it’s time to look again at relaxing our restrictive planning laws.  We should scrap Section 106 agreements in favour of direct compensation for those suffering reduction in property value; auction development rights; sell off the vast amount of surplus Government land and recognize that with only 8% of our land mass covered by built development there is plenty of scope to increase house building.

Time comes full circle.  In 1951 the Conservatives returned to power committed to tackling the nation’s housing shortage.  As housing minister, Harold Macmillan succeeded in building 300,000 new homes a year and laid the foundations for 13 years of Conservative government.  Today, the need is no less pressing, though the policy measures required might be different.