Conservative Diary

Pensions and retirement

18 Jul 2013 06:43:36

IDS, the one-man labour party - in the real sense of the word

By Paul Goodman
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Duncan Smith September 2011The formidable Conservative backbench support for transferable tax allowances shows how crucial marriage is to Tory thinking about social policy.  It's often accompanied by a preoccupation with the position of one-earner couples within the tax and benefit system, and a certain sympathy for universalism and hostility to means-testing: hence the Daily Telegraph and Daily Mail's hostility to George Osborne's treatment of child benefit.  Iain Duncan Smith's support for marriage is well-known.  And although he isn't in charge of family policy - no-one is: a glaring weakness - he is central to its formation as delivery in his role as Work and Pensions Secretary.

At first glance, it might be assumed that Duncan Smith's position is aligned to his backbenchers, the Mail/Telegraph axis, and right-of-centre social policy writers such as Laura Perrins and Kathy Gyngell - who have recently set out similar views on this site.  But I have been discovering recently that it ain't necessarily so.  The Work and Pensions Secretary is carving out his own distinctive view, shaped by his experience with the Centre for Social Justice and evident in what his department is putting into practice.  He is certainly an enthusiast for transferable allowances, which he sees as helping to level the taxation playing-field for one-earner couples.

Continue reading "IDS, the one-man labour party - in the real sense of the word" »

1 May 2013 15:52:10

David Cameron faces more opposition to pensioner perks. For once, let’s hope he gives in

By Peter Hoskin
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We don’t normally start ToryDiary posts by highlighting the words of a Labour frontbencher. That stuff’s generally reserved for LeftWatch. But there was a fairly striking moment in Harriet Harman’s Today Programme interview earlier – and it probably caught the ears of No.10, too.

It was her admission that Labour will review their policy on pensioner benefits ahead of the next election. Ed Miliband, you’ll remember, said last week that the current set-up, by which wealthy pensioners receive benefits such as Winter Fuel Allowance and free TV licences, “needs to be looked at” – before his party’s spokespeople swarmed out to reassure folk that no decisions had yet been made, that their leader didn’t like the idea of means-testing, etc, etc. But, listening to Mrs Harman, it seems as though something really is afoot. “You always have to look at everything,” is how she put it, “to make sure the provision is right for the income distribution at the time.”  

As the Telegraph’s Benedict Brogan suggests, there could be a strong dose of politics in Mrs Harman’s remarks. She’ll know that the Lib Dems are opposed to these universal benefits, and that – as Nick Clegg implied yesterday – it’s likely to be one of the sorest points of intra-Coalition discussion ahead of this summer’s Spending Review. Perhaps Labour are hoping to line up with the Lib Dems against the Tories, in this case.

Continue reading "David Cameron faces more opposition to pensioner perks. For once, let’s hope he gives in" »

26 Feb 2013 06:48:58

Tory Cabinet ministers and Lib Dems have one message for Osborne: Cut the ring fences

By Tim Montgomerie
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ImagesGeorge Osborne is getting a very similar message from his Conservative and Liberal Democrat colleagues: Lift the ringfences.

Liberal Democrats are telling the Chancellor that they won't accept further cuts to welfare if he isn't willing to cut richer pensioners' benefits and, potentially, also "gently trim" the budgets for the NHS, schools and aid. Unlike the Tories, the Lib Dems' 2010 manifesto did not promise to ringfence key Whitehall budgets or the perks paid to better off pensioners.

And from his Right, Tory Cabinet colleagues are also saying that the next round of spending cuts will only be acceptable if the whole of Whitehall shares in the pain. Cabinet ministers like Theresa May feel that she's already achieved the near impossible. She has cut the budgets of the police for the first time ever and without a breakdown in law and order. On the contrary, crime has actually fallen by 10%. Eric Pickles is equally proud of the cuts he has made. Cuts to local government have been frontloaded but there hasn't been a meltdown for Tory councillors at the ballot box. Public opinion polls suggest that voters are seeing through Labour attempts to 'shroud wave' while, for example, maintaining reserves.

Continue reading "Tory Cabinet ministers and Lib Dems have one message for Osborne: Cut the ring fences" »

10 Feb 2013 06:53:30

Tories and Lib Dems agree on capping costs of long-term care. No elderly person will have to sell their homes in order to meet care bills.

By Tim Montgomerie
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"From April this year, no one will have to sell their home to fund care.
Those unable to afford fees will get the right to defer paying."

That's the Coalition's big promise to the elderly as made in today's Sun and across the Sunday newspapers. Proving that the Coalition parties can still work together Jeremy Hunt will announce tomorrow that, from 2017, the elderly will have to pay a maximum of £75,000 towards their care costs before the taxpayer starts to help them.

The £75,000 cap - double the amount recommended by Andrew Dilnot's Commission - is said by Tory spindoctors to strike the right balance between supporting those who've saved without imposing heavy new taxes on working families.

One of the ways in which the Coalition will fund what is expected to be a £1 billion reform is a further three year freeze in inheritance tax thresholds. In opposition George Osborne famously promised to abolish inheritance tax for all but millionaires. This second three year freeze - following one already introduced by Alistair Darling - will raise about another £200 million per year for Treasury coffers.

Continue reading "Tories and Lib Dems agree on capping costs of long-term care. No elderly person will have to sell their homes in order to meet care bills." »

15 Dec 2012 13:29:13

Cameron risks the revenge of "the elderly of the earth"

By Paul Goodman
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Screen shot 2012-12-15 at 13.02.46Not so long ago, people were both more free and more orderly.  For example, there were no race relations laws: you could say what you liked about ethnic minorities (as they usually weren't called then).  The English always drank: "He gives your Hollander a vomit ere the next pottle can be filled".  But - again by way of example - fewer illegal drugs were available, so the policing and health and social costs of substance abuse were far lower.  And since there was no internet, it followed that there was no online porn.  Although the churches were emptying, Christianity was woven deep into the nation's culture, like the threads on the Bayeaux Tapestry.

Today, people are less free but more disorderly, or at least more diverse.  You must watch what you say about ethnic minorities or gay people.  But illegal drugs, once consumed only by the elites, are available to the masses. And you can say pretty much what you like about Christians, or at least people with socially conservative views.  (Though Nick Clegg thought it prudent to claim that he doesn't believe that those who oppose same-sex marriage are "bigots).  Where once the presence of the Church of England floated like some universal fog, today there lumbers health and safety...or the European Union.

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2 Dec 2012 08:58:26

The Sunday papers offer Autumn Statement hints: a small benefits increase, a raid on wealthy pensions and more fracking

By Matthew Barrett
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1pm update: On the Andrew Marr programme this morning, George Osborne said:

"I’m very clear going forward we’ve got to deal with this deficit, it is going to take longer – that means more difficult decisions and it’s got to be done fairly, and that means yes, the richest need to bear their fair share – and they will. That means more than they’re paying at the moment. There’s not going to be a mansion tax – we made that clear – you’ll just have to wait and see, wait until Wednesday. But there is another conception of fairness – there is the fairness for the individual who goes out to work and the next-door neighbour is living a life on benefits, and it is also unfair for that individual. So we are also going to tackle welfare bills, and that is the Conservative approach to fairness – make the rich pay, but also make sure you’re tackling welfare, the welfare system which is deeply unfair for working people"


Osborne-HeadshotGeorge Osborne's Autumn Statement, which will be presented to the House next week, gets plenty of previews in the Sunday newspapers. If the various reports are to be believed, there is a fairly coherent story of the Lib Dems blocking any significant welfare reductions, and insisting on some form of anti-rich measures. I have pulled together the various stories below.

In the first story, the Sunday Times (£) tells us that George Osborne has agreed a new "raid" on higher earners with the Lib Dems. The "raid" will consist of lowering from £50,000 the amount people can pay into their pensions each year with tax relief. Mr Osborne could reduce the figure to £40,000 or even £30,000, saving £600m or £1.8bn respectively. This would, the Sunday Times suggests, buy Mr Osborne the political goodwill from the Lib Dems to tackle the welfare bill.

However, the Mail on Sunday contradicts this, saying that the welfare bill will continue to rise after Vince Cable blocked any reduction in benefits spending. Whereas the Chancellor - and Iain Duncan Smith - had wanted a freeze, the paper says, the Lib Dems will force a 1% increase in spending. This would "save" only £2bn, as opposed to the £4bn the Chancellor wanted. It compares to a 5% increase last year.

The MoS also reports that Nick Clegg decided to insist on the welfare increase as payback for David Cameron not agreeing to a mansion tax. The Chancellor had been in favour of some "watered-down" form of a mansion tax, but the Prime Minister was sensitive to the fact the tax would hit natural Tory supporters the hardest, and would not consent to it. Further welfare news comes from the Observer, which reports that Mr Osborne has dropped his plan to withdraw housing benefit from under-25s, again thanks to a Lib Dem revolt.

Continue reading "The Sunday papers offer Autumn Statement hints: a small benefits increase, a raid on wealthy pensions and more fracking" »

4 Nov 2012 16:23:30

IDS urges Eurosceptics to give Cameron more credit (while flirting himself with leaving EU)

By Tim Montgomerie
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Duncan Smith MarrMaking an argument that was also made on ConHome's Deep End on Friday, Iain Duncan Smith urged Tory Eurosceptics to give more leeway to the Prime Minister on Europe. Interviewed on Andrew Marr's programme this morning he said "I just honestly feel that sometimes we do not give enough credit to him - the first man to veto a European treaty". Twenty years after rebelling against another Tory Prime Minister, John Major, over Maastricht, the Cabinet's most senior Eurosceptic was protecting Cameron's patriotic flank. The Work and Pensions Secretary said that the PM had used tough and strong words about the forthcoming EU budget negotiations. "The Prime Minister is on our side," he said and "wants to get the best deal... If he can get that freeze that would be a pretty significant start, so I would be satisfied."

Three weeks after Michael Gove appeared to open the door to leaving the European Union if renegotiation failed, IDS also refused to reject Britain leaving the EU. He was, I think, asked three times to say whether he supported continuing British membership and three times he gave somewhat convulted answers. "I am an optimist about the UK," he said, continuing:

"We have been involved in trade with our European partners, which we will always be doing whatever this relationship is. We are a member of the EU. That gives us benefits. But we have to figure out where that is going. In the world, we are a global trader already. We are more of a global trader than any country in Europe. I hate this argument that says little Britain or something outside, or Britain is part of a wider Europe. We can both be within our trading relationships within Europe but we can also be a fantastic global trader."

The Spectator's Isabel Hardman has more quotes.

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3 Oct 2012 16:42:10

Give NI tax breaks to employers of TA volunteers — and other morale-boosters for reservists

By Matthew Barrett
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Last week, the Duke of Westminster retired from his position as Deputy Commander Army Reserves. The Duke had previously served as the Assistant Chief of the Defence Staff with responsibility for Reserves and Cadets, and had served in the Territorial Army for many years and several wars - first enlisting as a Trooper in 1970, before going to Sandhurst and working his way up to being a two star Major-General (and the TA's first two star Major-General). In his words, "I have been serving for nearly half of the entire life of the Territorial Army – and if there is anybody who knows how it ticks, it has got to be me."

It is alarming therefore, to learn that the Ministry of Defence was so dismissive of his advice on how to help cure a quiet but distressing injustice being done to Reservists. The Duke complained about the fact that British companies routinely discriminate against potential employees who are serving in the TA:

"There is undoubtedly positive discrimination against someone who at interview says he is in the Territorial Army... These days when you have to tick the boxes on the interview sheet, one of the questions is ‘Are you in the Territorial Army’. [But] we are not allowed by legislation to say: ‘Are you pregnant? Are you about to be pregnant? Are you black? Are you white? Are you Muslim?’ That we have got to get over."

It's a cultural problem, the Duke suspects: "Our overseas employers are better than the English employers – I am talking about French, Japanese, Americans and others. All those countries had national service or its equivalent right up to two or three years ago, so there is a service culture built in." Employers are unwilling to take on new staff who are likely to go off on months-long tours of Afghanistan. The Duke's suggestion to encourage British firms to take on more TA staff was to offer tax breaks to firms through a "National Insurance surcharge relief".

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24 Aug 2012 08:29:28

Iain Duncan Smith prepares to cut winter fuel payments - by temperature-testing them. Why not means-test them?

By Matthew Barrett
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DUNCAN SMITH AITWIain Duncan Smith has found an interesting way to trim spending on winter fuel payments. The Daily Telegraph today reports the Secretary of State for Work and Pensions' decision to impose a "temperature test" on pensioners (his exact words were that he would "protect taxpayers’ money and bring in a temperature criteria").

The idea of this test was first reported in the newspapers yesterday, when it was reported that IDS was rebelling against "ludicrous" European rules that meant that winter fuel payments had to be made to the more than 400,000 British pensioners living abroad. Quite apart from the principle of having to pay benefits to those no longer living in the country, there was also the fact that many of those British pensioners are living in countries with less severe winters - thus negating the need for them to receive the payment anyway. Payments to British pensioners overseas was reported as costing £100 million.

Mr Duncan Smith's solution was to consider the aforementioned temperature test in order to measure the need (or lack thereof) for winter fuel payments amongst those in hotter climates. However, the Telegraph this morning reports a slight twist to the temperature test: it will also apply to those in the United Kingdom.

Iain Duncan Smith has, for some time, wanted to base the extra £10billion cuts needed from his budget on changing universal benefits so that the middle classes and higher earners do not receive unjustified handouts (child benefit for higher earners, for example), rather than balance his budget on the backs of the poor and vulnerable. 

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16 Aug 2012 07:49:14

Government now plan to proceed with Dilnot cap on £35,000 care bills

MailfrontBy Harry Phibbs
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In July, the Government published a Social Care White Paper.  It apparently decided against a cap on the amount that an individual will be charged by the state for social care. Now we have a u-turn. The newspapers this morning have been briefed that there will be a cap after all. It will be £35,000 - the figure proposed by the economist Andrew Dilnot.

There are strong advantages to bringing in a cap. It will encourage people to save. At present those with savings of over £23,250 have to pay for their care. Often this means people are forced to sell their homes. There were 24,500 people who had to do this last year.

Thus the current arrangement punishes home ownership. Imagine, for example, somebody considering whether to exercise their right to buy their council home. Even with the boosted discount this would involve them paying more in  mortgage payments then they typically would with heavily subsidised rent.

Yet what is the reward if, instead of having an asset to pass on to their offspring, they are forced to sell to pay for care?  The current system makes the thrifty into suckers.

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