Loan voice: minister for universities David Willetts at the Conservative Party Conference 2013. (Photo: Getty)
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Cashing in pensions, the Baby Boomers inheritance tax, and the bad maths of student fees

Peter Wilby’s First Thoughts.

In 1744, two Church of Scotland ministers, Robert Wallace and Alexander Webster, considered the consequences of premature death among their fellow clergy. They decided that dependants could be provided with annual incomes or annuities if ministers paid yearly premiums during their lifetimes and the money was invested. They just had to get their figures right: costs, investment returns and, crucially, average life expectancy of ministers and their wives. Nothing like it had been done before but the two clergymen got their estimates right to within £1 and, as Niall Ferguson observes in his book The Ascent of Money, modern actuaries still marvel at the precision of their calculations.

This was the origin not only of the Scottish Widows that pays an annuity to me and millions of others but of all modern life insurance – including pensions, which, drawing on the same principles and mathematics, protect us against the risk of longevity. Scottish Widows and other financial outfits have strayed far from their Presbyterian origins and now give most annuity holders a poor deal. However, that is an argument for better regulation, not for destroying, as George Osborne has, a model that has worked well for most of the past 270 years.

The acclaim for Osborne’s Budget announcement that in future people will be able to cash in pension funds at retirement rather than taking out annuities shows how little anybody now understands the principle of mutuality. People complain that they may not “get back” what they put into a pension fund. They are missing the point. You may not get back what you put into car or house insurance; indeed, you hope not to. A pension annuity meets the costs of long life at the expense of those who die early, just as car insurance covers the costs
of accidents at the expense of those who avoid them. It is responsible collective risk-sharing, just like the original Scottish widows scheme, which all 930 ministers then alive agreed to join. Osborne prefers irresponsible individualism.

He says that we can all be trusted to use our money wisely. If so, why have banks – with payment protection schemes, missold pensions, bogus benefits on fee-paying current accounts, and so on – found it easy to rip us off? Osborne offers financial advice for everyone at retirement. Perhaps he should require them to sit a test to show they’ve understood it.

Better off dead

Far from spreading enlightenment on financial matters, the Tories’ habit is to propagate ignorance. Inheritance tax, David Cameron says, “should only really be paid by the rich”. He therefore proposes that the threshold for inheritance tax should rise from £325,000 (in effect, £650,000 for a couple) to nearer £1m (£2m for a couple). The tax was paid in 2010-2011 by only about 6 per cent of estates. At a £1m threshold, the proportion would fall to 1.5 per cent.

Is this another example of an Old Etonian being out of touch with how little most people have? Probably not. It is in the Tory interest to pretend that a tax that hits an elite affects, in Cameron’s words, “people who have worked hard”, a category that almost everybody will think includes them.

Light debts

References to graduates carrying a “debt burden” as they pay back their £9,000-a-year course fees have always irritated me. Though students technically receive “loans” to cover the fees, the government, in practice, pays upfront and later levies a graduate tax that, like most taxes, has a threshold (£21,000 a year), below which there is no liability. If you carry on earning little enough for long enough, your debt is written off. Not many debts work like that; last time I looked, Wonga wasn’t excusing repayments because debtors’ incomes were too low.

Now David Willetts, the universities minister, admits the proportion of graduates who will never repay their full “loans” is approaching 48 per cent. This is bad news for the government, because at that level the benefits of raising fees to £9,000 are cancelled out and ministers show themselves to be worse at maths than 18th-century Scottish clergymen. Surely everyone can now see that graduates don’t carry a debt burden.

Lost cause

A Channel 5 film crew left a seven-year-old and a five-year-old alone and apparently lost in a busy shopping centre to see if adults would come to their aid. With one exception, none did. Is that because we’re uncaring or because we’re scared of being branded as paedophiles? Neither, I suggest. We’ve all learned that if we see something odd in the street it’s most likely some TV or advertising stunt. 

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 03 April 2014 issue of the New Statesman, NEW COLD WAR

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Battle of the banners: how the disputes of football took to the skies

Across the top of the screen floated a banner, pulled by a little aeroplane: IN ARSENE WE TRUST.

Last weekend, during the West Brom-Arsenal game, I began to think my hearing was playing up again. I’ve been given hearing aids but don’t wear them. No, not vanity, it’s just a faff to put the things in and the quality of my life, which is excellent, is not being impaired. Anyway, as I live on my own, if the sound on the telly is too low, I put it up. No one knows or cares.

When I’m out entertaining lady friends at my local bistro, I always get a quiet table in the corner and sit facing them, all rapt attention, totally focused on them, so they think. It’s really just to help my hearing.

On the TV screen, I suddenly heard an aeroplane, which was weird, as there was no sign of it, but then hearing problems are weird. Children talking sounds deafening. Some consonants disappear. Could it be a helicopter on the Heath, taking some injured person to the Royal Free? At our Lakeland house, I often heard helicopters: the mountain rescue team, picking up someone who had collapsed on Grasmoor. So I do know what they sound like. But this sounded like Biggles.

Then across the top of the screen floated a banner, pulled by a little aeroplane: IN ARSENE WE TRUST. The score at the time was 1-1, Arsenal having just equalised. They eventually got beaten 3-1. Oh, the shame and irony.

Apparently, earlier in the game, according to newspaper reports the next day, there had been an anti-Wenger aeroplane banner: NO CONTRACT, WENGER OUT. I didn’t see it – or Sky TV didn’t show it.

Where do the fans or supporter groups get all the money? And how do they organise it? There is a theory that IN ARSENE WE TRUST was paid for by Arsène himself. Another, more amusing theory is that it was a group of Spurs supporters, desperate for Arsène to stay on at Arsenal and continue getting stuffed.

There have been a few similar aeroplane banners at football matches in recent years. There was one at Newcastle, when they were playing Sunderland, which read 5 IN A ROW 5UNDERLAND. Sunderland won, so it came true. Sent the Geordie fans potty.

Everton fans flew one in 2015 which read KENWRIGHT & CO TIME TO GO. He is still chairman, so it didn’t work.

Millwall fans did an awfully complicated one in 2011 at Wigan, during the Wigan-West Ham game, which resulted in West Ham going down. They hired a plane to fly overhead with the banner AVRAM GRANT – MILLWALL LEGEND. Now you have to know that Grant was the West Ham manager and Millwall are their rivals. And that they couldn’t fly it at West Ham itself, which could have caused most fury to West Ham fans. There’s a no-fly zone in London, which stops rival fans hiring planes to take the piss out of Chelsea, Arsenal and West Ham. The Millwall supporters who organised it later revealed that it had only cost them £650. Quite cheap, for a good laugh.

There’s presumably some light aeroplane firm that specialises in flying banners over football grounds.

I do remember a few years ago, at White Hart Lane and Highbury, walking to the grounds and looking out for blimps flying overhead – small, balloon-like airships mainly used for promotional purposes, such as Goodyear tyres or Sky’s aerial camera. The results were pretty useless, showing little. I haven’t seen any recently, so presumably blimps aren’t allowed over central London either.

I am surprised drones have not been used, illegally, of course, to display obscene messages during games. They could drag a few pithy words while on the way to drop drugs at Pentonville Prison.

The history of aeroplane advertising goes back a long way. Before the Second World War, Littlewoods and Vernons football pools were fighting it out for dominance, just as the online betting firms are doing today. In 1935, Littlewoods sent planes over London pulling banners that proclaimed LITTLEWOODS ABOVE ALL. Jolly witty, huh. 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution