Would Cameron vote to leave the EU today? He needs an answer

After Gove and Hammond's interventions, the Prime Minister will find it harder to sit on the fence at his press conference with Obama today.

Whether or not they would vote to leave the EU in its present form is rapidly becoming a eurosceptic virility test for Conservative cabinet ministers. After initially hesitating on The Sunday Politics, Philip Hammond followed Michael Gove last night and confirmed that he would vote "out" if a referendum was held today. He told Radio 5 Live's Pienaar’s Politics: "If the choice is between a European Union written exactly as it is today and not being a part of that then I have to say that I'm on the side of the argument that Michael Gove has put forward."

Unsurprisingly, Downing Street is said to regard Gove's intervention as "unhelpful". The Education Secretary's public confirmation of last year's Mail on Sunday report means every cabinet minister can now expect to be asked how they'd vote - and that includes David Cameron. With impeccable timing, the Prime Minister is in Washington today to help negotiate an EU-US trade deal and is holding a press conference with Barack Obama at 4:15pm. If asked whether he would vote to leave the EU today (as he surely will be), Cameron will find himself caught between the europhile US president (who regards Britain's flirtation with withdrawal as a form of madness) and the thought of his eurosceptic backbenchers. The contorted answer he produces should be worth waiting for. 

As for the rest of the cabinet, Tim Montgomerie lists Iain Duncan Smith, Theresa Villiers, Chris Grayling, Justine Greening, Oliver Letwin and Francis Maude as other "definite or probable EU Outers", all of whom, if they wish to maintain the favour of the Tory grassroots, will be tempted to say they'd vote to leave today. 

Gove and Hammond's remarks also revive the question of how the Prime Minister will respond if his renegotiation strategy fails (as europhiles and eurosceptics alike predict it will). Both ministers made it clear that they would only vote to stay in if Britain's terms of membership are substantially reformed. The question that will again be put to Cameron is that which shadow foreign secretary Douglas Alexander has continually asked: what percentage of your demands do you need to secure to support a Yes vote? 30 per cent, 50 per cent, 80 per cent? The PM's response is to say that no one goes into a negotiation "hoping and expecting to fail" but the pressure will now rise on him to say what would constitute failure. 

Yesterday's events are a reminder of why the referendum, if it ever comes, could lead to the biggest Conservative split since the reform of the Corn Laws. If Cameron's renegotiation attempts are seen to have failed in the eyes of eurosceptics, some ministers will want to vote to leave, while others (including, undoubtedly, Cameron), will want to vote to stay; the cabinet will be split down the middle. 

It's worth recalling how the last (and only) government to hold an EU referendum - Harold Wilson's Labour administration in 1975 - dealt with a comparable problem. With europhiles like Roy Jenkins on one side and eurosceptics like Tony Benn on the other, Wilson took the unprecedented step of suspending collective cabinet responsibility in order to allow his ministers to support either side in the campaign. Seven Labour cabinet ministers - Benn, Barbara Castle, Michael Foot, William Ross, Peter Shore John Silkin, Eric Varley - went on to unsuccessfully argue for withdrawal from the EEC (the vote was 67-33 in favour of membership). If and when the referendum comes, the most elegant way for Cameron to respond to a split party may be to invoke the Wilson precedent.

David Cameron and Barack Obama will give a joint press conference at 4:15pm today. Photograph: Getty Images.

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: www.oldmutualwealth.co.uk/ products-and-investments/ pensions/pensions2015/