Johnson fires another warning shot at Miliband

Shadow chancellor calls for major reform of the Labour leadership voting system.

Having elected Ed Miliband as leader less than two months ago, now may seem an odd time for Labour to re-open the debate over its arcane voting system. But that's what the increasingly outspoken Alan Johnson has done. He tells the Times (£): "I would like to see a full one-member one-vote system for leadership contests. At the moment it can be one-member four votes and that's wrong."

Had Johnson's man won (he was a key supporter of David Miliband), one suspects that he may not be so preoccupied with the rule book. But, regardless of his political motives, he makes a convincing argument. As I've pointed out before, the party's tripartite electoral college (divided between MPs/MEPs, party members, and affiliated trade unions and socialist societies) means that some votes are worth significantly more than others. The vote of one MP is worth the votes of 608 party members and 12,915 affiliated members. The vote of one party member is worth the votes of 21 affiliated members. The electoral college system puts Labour out of step with the Tories and the Lib Dems, both of whom elect leaders using a one-member-one-vote system. It would be a mistake for Labour to adopt this system in its purest form; it is both just and necessary for affiliated trade unions, as the founders of the party, to have a say over the leadership. But the extraordinary power held by the PLP can no longer be justified.

There's also no reason to think that Miliband wouldn't be sympathetic to reform. Liam Byrne, who is overseeing Labour's policy review, says that he now expects the party's leadership rules to be "on the table" in discussions. But what's troubling for Labour's leader is that some of those calling for the system to be reformed are, in effect, declaring his election illegitimate. Simmering resentment at the fact that Miliband wasn't the choice of party members and MPs has burst into the open. Alan Milburn and Margaret Hodge both call for the party to deprieve the unions of a say in the leadership election, without whom, of course, Miliband would not have won. Meanwhile, David Blunkett and Charles Clarke issue some of the strongest criticisms we've heard of the Labour leader.

"The problem for Ed is that he got dipped in the Gordon paint pot," says Blunkett. Clarke comments: "Ed Miliband is back to the comfort zone. I don't think he's 'Red Ed' particularly but he hasn't so far shown that he's into challenge." Of the above, Clarke and Milburn are, of course, no longer MPs. But the fear for Team Miliband is that they speak for a significant Blairite constituency in the party. As Dan Hodges reports in this week's magazine (out today), sections of the party remain in a state of unease and unrest following Miliband's repudiation of New Labour.

One shouldn't exaggerate the dissent we're beginning to hear. After all, by historical standards, the Labour Party remains remarkably united. But it looks like Miliband will have some firefighting to do when he returns to Westminster.

George Eaton is political editor of the New Statesman.

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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/