In defence of the Freedom Pass

Leaving a question mark over the future of the Freedom Pass will strike a blow to Labour’s electabil

Of all the things conceived and delivered by the London Labour movement, it is the work to implement the Freedom Pass that makes me most proud.

The future of the Freedom Pass has given Labour members in London an important decision to make about the future direction of policy in the city.

An honest difference of view between myself and Oona King has opened up over this issue at members' debates in Croydon and Brent. Asked if the Freedom Pass should be means-tested, Oona has argued that "If there is a choice, then I want the money to go to the poorest, not to pay for the richest like Prince Charles to go free" and "If you are the mayor and you have got less money coming in, you need to ensure the average pensioner can have the same experience or better than those richer ones . . . you need to accept means testing."

I disagree. On such a fundamental question, it is necessary to give a clear answer: that the Freedom Pass is safe. If I am selected as Labour's candidate and then elected as mayor, I will oppose any attempt to means-test the Freedom Pass. I will defend the concessionary schemes.

I never expected to hear in a Labour mayoral selection that we should consider means-testing the Freedom Pass. It is a catastrophic mistake, a gift to our opponents, including Boris Johnson. We must have a clear bottom line -- and a universal Freedom Pass should be part of it.

This strikes at the heart of electability. A London Labour candidate going into an election with a question mark over the Freedom Pass, such as being open to the idea of means-testing it, would damage Labour. Either Boris Johnson will use it as a stick with which to beat Labour, posing to the "left" of the Labour candidate, or it will open up territory that assists those who want to erode travel concessions.

In both circumstances, it is a direct blow against Londoners and would make it harder to win.

I will oppose any attempt to means-test the Freedom Pass and defend the Freedom Pass.

The Freedom Pass unites people across London. It is particularly crucial in the outer boroughs, one of the areas where its take-up is greatest. The latest figures show 51,691 Freedom Passes issued in Barnet for older Londoners and 5,903 for disabled people, for example. Another 43,791 in total have been issued in Bexley, 63,671 in Bromley and 48,827 in Havering.

Older people make up a significantly high proportion of voters and are therefore vital to our support.

There is already concern that the national bus concessionary scheme may be under threat from government cuts.

It is not the super-rich who would be affected by means testing. You are unlikely to find billionaires or members of the royal family taking advantage of the Freedom Pass. To save any meaningful amount of money, the cut-off point for the means test would not be for multimillionaires, but for individuals on much lower levels of subsistence.

The cost of administering means testing could only be offset by placing the cut-off way below the richest. The question for anyone toying with the notion of means-testing something like the Freedom Pass is: where would you draw the line?

And why stop at the Freedom Pass? There are many universal services and benefits that could also be threatened, such as free bus and tram travel for under-18s -- which the Tories have already previously tried to remove.

It is a more profound issue even than that. Some services are best delivered universally or with universal concessions for key groups. That ensures broad support for services -- such as public transport -- that would otherwise be much easier to cut by right-wing governments.

The more widely people use public transport and see the benefits, the more the city moves freely and the biggest number of people possible will have a stake in maintaining those services.

The Freedom Pass is so popular with older and disabled Londoners and their families that Boris Johnson was forced to adopt our plan to extend the Freedom Pass to 24-hour operation (though he has failed to secure its 24-hour operation on many rail services).

For Labour to succeed in 2012, it must have a strategy for winning based on protecting Londoners from the combined assault of the economic situation and a government whose policies will worsen its impact.

That is why I will not toy with ideas like means-testing the Freedom Pass, and why I will support other universal services and benefits that make our society fairer and stronger.

Ken Livingstone was mayor of London between 2000 and 2008, and is currently campaigning to be Labour's candidate in the 2012 London mayoral election.

Ken Livingstone is the former Mayor of London.
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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: products-and-investments/ pensions/pensions2015/