Miliband must not lose control of Labour's EU referendum policy

Shadow minister Ian Austin's dramatic call for an in/out referendum next year shows how party unity is fraying.

While Westminster digested the resignation of Tom Watson, an extraordinary intervention by shadow work and pensions minister Ian Austin emerged. Writing in his local paper The Express and Star, Austin, a close friend and former flatmate of Watson's, broke ranks to call for an in/out EU referendum on the same day as next year's European elections. With no attempt to maintain any pretence of unity, he wrote:

[T]he truth is that the UK needs to decide and I would prefer it to do so more quickly. I know this isn't Labour Party policy but my view is that we should have a referendum next year on the same day as the European elections.

On the day that the Tories vote on James Wharton's private member's bill guaranteeing an EU referendum by 2017, and as they seek to frame Ed Miliband as too "weak" to lead his party, this is political gold for David Cameron. While frontbenchers, including Ed Balls and Jim Murphy, have previously hinted that they believe a referendum is inevitable (and desirable), none have gone as far as Austin. The more open Labour divisions on Europe become, the harder it will be for Miliband to mock those of the Tories. Indeed, the impression of Labour disunity has the consequence of reinforcing Conservative unity. 

The view among Labour MPs is that at some point before the next general election, Miliband will have to signal that an EU referendum would be held in the first term of a Labour government. The Labour leader has already pledged to keep the coalition's "referendum lock", which is designed to ensure a vote is triggered whenever significant powers are transferred to Brussels.

Under the 2011 European Union Act, this would be a referendum on the new treaty/powers but as Raf noted earlier this week, Nick Clegg has already signalled that, in his view, it would need to be an in/out vote. The likelihood is that Miliband will eventually do the same and, in addition, pledge to hold a referendum even if no major powers are transferred. But when this intervention comes, it will have to be at a moment of Miliband's choosing. It was the panic with which Cameron agreed to bring forward the draft referendum bill that allowed Labour to present him as a leader who had lost control. If Miliband is to avoid the same fate, he must not tolerate any more interventions like Austin's. 

Ed Miliband speaks at the CBI's annual conference on November 19, 2012 in London. 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: products-and-investments/ pensions/pensions2015/