The business - Patrick Hosking would like a firefighter's pension

The firefighters were right to call off their strike. When the public finds out how much their pensi

My contribution to the debate on the firefighters is this killer figure. A typical firefighter with 30 years' service will have accumulated a pension worth £507,000 by the time he retires. That is what it costs in the private sector to buy an inflation-protected annuity of £16,000 a year (the pension income given in the brochure for the firefighters' scheme) for a 50-year-old man, which is the age when firefighters can choose to retire.

Rising longevity and falling investment returns have dramatically slashed annuity rates and therefore increased the value of guaranteed final-salary pensions. As such pensions disappear from the private sector, the vast majority of employees - even those on far higher base pay than firefighters - won't have a chance of accumulating even a fraction of half a million pounds.

Admittedly, firefighters pay much more than the typical private sector employee into their scheme - 11 per cent of gross pay. But this doesn't remotely cover the cost. Taxpayers have to foot the widening difference. The 40 per cent sought by the firefighters would add another £200,000 per retiring firefighter to the pensions bill, which the Audit Commission warned seven years ago was a time bomb.

In a high-inflation world where men died in their sixties and early seventies, the firefighters would have a point. But demographics and the stock market have changed everything. Firefighters are much more fortunate than they think. They were right to call off their latest strike. Public support for them can only dwindle as the pensions reality sinks in.

Offset banking is an inspired idea. By linking up your different bank accounts, including your mortgage, you end up paying much less for your borrowings and in effect get a top rate of interest on your savings. Better still, you (perfectly properly) avoid paying tax on any savings income. Consumers are catching on. From a standing start, Intelligent Finance, the offset banking arm of the Halifax group HBOS, is now responsible for one in every ten new mortgages. Other banks are piling in, too.

Explaining the concept is the hard part. Thinking of your finances as one giant, constantly changing overdraft is a bit alarming at first. That may be why only the British do it. Apparently offset banking is as alien in America and on the Continent as toad-in-the-hole and bread-and-butter pudding.

HBOS wants to change all this. Jim Spowart, who founded first Standard Life Bank and then IF, and a man never knowingly underhyped, has now been charged with flogging the concept overseas. Let's hope he succeeds and that offset banking does not become another example of a great British invention that we gave away to others to exploit commercially, alongside the jet engine and the brain scanner.

Mervyn King's appointment as the next governor of the Bank of England has been almost universally applauded. King is razor-sharp, courageous and highly articulate (he explains and defends monetary policy in much more vivid terms than the incumbent, Steady Eddie George, ever manages).

So I concur with the majority. Which King never seems to do. He has been in the minority on the Bank's interest-rate-setting panel, the Monetary Policy Committee, more times than anyone. David Laws, the Lib Dem MP and Treasury select committee member, got it wrong earlier this year when he accused King of sacrificing his beliefs on the altar of personal ambition - as minutes of the relevant committee meeting later showed. The committee has its poodles, but King is not one of them. If he has a weakness, it is that he is intellectually arrogant, and is not a natural consensus-seeking chairman. He leans on the hawkish side, too. The relationship between the Bank and the Treasury during his tenure will be a lot less of a love-in than during the Brown-George years.

The industrialist Sir Nigel Rudd the other day pinpointed precisely why top pay has got out of control. He should know: he chairs the boardroom pay committees of two FTSE companies - Boots and Barclays Bank. It was, he said, all down to the "tyranny of benchmarking". Everyone wants to hire the best people, so they all decide to offer top-quartile remuneration. This by definition is impossible. Only a quarter of chief executives can be in the top quartile. The result is an unstoppable escalation in pay. The problem is then exacerbated by the remuneration consultants, says Rudd.

Too right. These shadowy figures design impossibly complex pay schemes, which bamboozle shareholders and end up rewarding mediocre performance. I hope Rudd takes his own advice and fires the lot of them.

Patrick Hosking is deputy City editor of the London Evening Standard

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