Jeremy Browne's attack on Labour shows how the Lib Dems are divided on their future

While Tim Farron heaped praise on Ed Miliband, Browne says that Labour is "intellectually lazy" and suffering from a "leadership void".

With another hung parliament looking increasingly likely in 2015, the Lib Dems' thoughts are turning to a second coalition. But as the interviews with Tim Farron and Jeremy Browne in this week's NS show, the party is sharply divided over whether a partnership with Labour or the Tories is the more desirable outcome. 

When I spoke to him last week, Farron lavished praise on Ed Miliband, telling me:

First of all, he’s a polite and nice person. I think he is somebody who is genuinely of the Robin Cook wing of the Labour Party, from their perspective what you’d call the 'soft left'. Somebody who is not a Luddite on environmental issues, somebody who’s open minded about modernising our democracy, somebody who’s instinctively a bit more pluralistic than most Labour leaders and a bit more internationalist as well. 

He mischievously added:

And they’re other things too. For all that I think he could have done a lot more on the AV campaign, he did at least have the backbone to come out and back it. He wouldn’t share a platform with Nick [Clegg], so he ended up with me, poor thing. I like the guy.

As the Lib Dem president knows, should Miliband refuse to form a coalition with Clegg in 2015, he could well end up with him again. 

But Farron's admiration for Miliband is not shared by Browne, the Home Office minister and an Orange Book ally of Clegg, who told Rafael that Labour is "intellectually lazy, running on empty" and suffering from a "leadership void". Rather than acclaiming Miliband as a model progressive, he praised David Cameron for identifying "the big issue of our time" in the form of "the global race". Perhaps most significantly, he said of Labour: "I just don't think of them as equipped to run the country". 

With their interventions, Farron and Browne are offering diametrically opposed visions of their party's future. According to the former, the Lib Dems should unambiguously remain a party of the centre-left, committed to the restoration of the 50p rate of income tax and the eventual abolition of tuition fees, and seeking common ground with Labour. But in the view of the latter, the party’s best hope lies in transforming itself into a British version of the German Free Democratic Party: economically liberal, fiscally conservative and instinctively closer to the Conservatives than Labour.

At present, the Lib Dems are trying to obviate this divide by stating that they will simply align with the largest party. Farron told me that "the electorate will decide who's in power" and that "the chances of us having a choice [of coalition partner] are as close to zero as to be not even worth contemplating". But in an election that could be the closest for decades, it is conceivable that both the Tories and Labour could be in a position to form a majority government with Lib Dem support. As Clegg's europhile party knows better than most, it is not uncommon in other European countries for the second-placed party to take power (Willy Brandt’s SPD administration in Germany and the current Swedish government are notable examples). If the Lib Dems do have a choice of coalition partner in 2015, the party's ideological divisions will burst into the open. 

Home Office minister Jeremy Browne said of Labour: "I just don't think of them as equipped to run the country". 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/