Ed Balls and George Osborne attend the State Opening of Parliament on May 8, 2013. Photograph: Getty Images.
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How Labour can trump Osborne's pensions reforms

A state annuity scheme would improve the public finances, provide financial security and raise living standards.

When the hardline conference motions used to roll in calling for the nationalisation of the top 200 industries, John Smith would jest that we should replace the term "industries" with "chip shops". These days there are few opportunities for such humour in the Labour Party, but sometimes this means Labour avoids advocating an obvious state solution, even when it represents much better value than a typical annuity.

George Osborne’s Budget pension reforms are, in fact, a case in point. No one can doubt that locking pensioners into poor value annuities was no longer tenable. Giving those reaching retirement age greater freedom to make their own investment and spending decisions also makes plenty of sense. The concern is that the risks associated with such freedoms may result in some pensioners falling back on the state later in life. This not only means many living out their final years in penury but also the taxpayer having to find extra funds to cover social care or benefits such as housing benefit.
The Conservatives want to suggest that those who raise fears about the personal and fiscal consequences of Osborne’s reforms are accusing pensioners of being bad people, stupid and irresponsible to the core.  But did we accuse working age people of irresponsibility when we introduced opt-out defined contributions pensions for all?
The problem is a simple one: someone reaching retirement does not know how long they will live, and many underestimate how long they will. Someone who turns 65 this year will, on average, live to 85 (84 for a man and 86 for a woman) and annuities, for all their faults, take away the risk of failing to judge your life expectancy correctly.                    
The solution is equally simple. While continuing to offer retirees the freedom to pay down a mortgage, buy a Lamborghini or even a chip shop, the state should offer its own annuity. It has a vested interest in doing so because it will pick up the tab if Osborne turns out to be less prescient than he would have us believe. The state can offer value for money because it does not have to make a profit. If the state were raising funds through the bond market it would pay out a perfectly respectable interest rate, currently somewhat above 2.5 per cent for a 10 year bond. On this basis, someone investing £100,000 in a state annuity would be likely to do better by about £12,000 over a remaining 20 years of life than with a private sector annuity.
Indeed, because of the potential risk to the public finances the state may want to be more generous than this.  All it needs is clear and transparent actuarial calculations and payments could be made with those for the state pension. The insurance industry would howl but it would have little cause for complaint because the market failure is obvious and Osborne has already driven a stake through its less than generous heart. Besides, the state would not be a monopoly but act as a competitor to the private sector: as a spur to efficiency and innovation. And with a state annuity, freedom would be underpinned by security.  
Many suspect Osborne of alighting upon his pensions reform with more than a thought given to the short-term fillip to the public finances, as the newly retiring enjoy their unexpected freedom, and with little regard for the long-term impact on the public finances. A state annuity has the potential to provide a very substantial medium-term boost to the public finances while simultaneously warding off a potential fiscal time bomb. If the state annuity was sensibly generous, and the default position for three quarters of a pension pot, with retirees (anyone 55 or older) having to opt-out rather than opt-in to the state annuity, as many as half or more of those reaching retirement might take up the states offer and use their pension pot to pay for a guaranteed lifetime income.
With roughly 650,000 people becoming eligible in a year, and an average pension pot of close to £30,000, if half of retirees used three quarters of their pot (the remaining quarter being taken as a tax-free lump sum) to buy a state annuity, the public finances would be better off by around £7bn in the first year and still better off each year for many years to come. Over the lifetime of a parliament, the public finances might be boosted by as much as £30bn. Of course, there is a debate to be had about how we treat this on the public books, but without doubt the impact on the government’s finances would be exceedingly positive in the early years.
Where else can Labour so readily demonstrate that it can improve the public finances, provide financial security and raise living standards? And all this without nationalising any chip shops.

Nick Pecorelli is Associate Director of The Campaign Company

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Brexit confusion is scuppering my show – what next?

My week, from spinning records with Baconface, Brexit block and visiting comedy graves.

I am a stand-up comedian, and I am in the process of previewing a new live show, which I hope to tour until early 2018. It was supposed to be about how the digital, free-market society is reshaping the idea of the individual, but we are in the pre-Brexit events whirlpool, and there has never been a worse time to try to assemble a show that will still mean anything in 18 months’ time.



A joke written six weeks ago about dep­orting eastern Europeans, intended to be an exaggeration for comic effect, suddenly just reads like an Amber Rudd speech – or, as James O’Brien pointed out on LBC, an extract from Mein Kampf.

A rude riff on Sarah Vine and 2 Girls 1 Cup runs aground because there are fewer people now who remember Vine than recall the briefly notorious Brazilian video clip. I realise that something that gets a cheer on a Tuesday in Harrogate, or Glasgow, or Oxford, could get me lynched the next night in Lincoln. Perhaps I’ll go into the fruit-picking business. I hear there’s about to be some vacancies.



I sit and stare at blocks of text, wondering how to knit them into a homogeneous whole. But it’s Sunday afternoon, a time for supervising homework and finding sports kit. My 11-year-old daughter has a school project on the Victorians and she has decided to do it on dead 19th-century comedians, as we had recently been on a Music Hall Guild tour of their graves at the local cemetery. I wonder if, secretly, she wished I would join them.

I have found living with the background noise of this project depressing. The headstones that she photographed show that most of the performers – even the well-known Champagne Charlie – barely made it past 40, while the owners of the halls outlived them. Herbert Campbell’s obelisk is vast and has the word “comedian” written on it in gold leaf, but it’s in the bushes and he is no longer remembered. Neither are many of the acts I loved in the 1980s – Johnny Immaterial, Paul Ramone, the Iceman.



I would have liked to do some more work on the live show but, one Monday a month, I go to the studios of the largely volunteer-run arts radio station Resonance FM in Borough, south London. Each Wednesday night at 11pm, the masked Canadian stand-up comedian Baconface presents selections from his late brother’s collection of 1950s, 1960s and 1970s jazz, psychedelia, folk, blues and experimental music. I go in to help him pre-record the programmes.

Baconface is a fascinating character, whom I first met at the Cantaloupes Comedy Club in Kamloops in British Columbia in 1994. He sees the radio show as an attempt to atone for his part in his brother’s death, which was the result of a prank gone wrong involving nudity and bacon, though he is often unable to conceal his contempt for the music that he is compelled to play.

The show is recorded in a small, hot room and Baconface doesn’t change the bacon that his mask is made of very often, so the experience can be quite claustrophobic. Whenever we lose tapes or the old vinyl is too warped to play, he just sits back and utters his resigned, philosophical catchphrase, “It’s all bacon!” – which I now find myself using, as I watch the news, with ­depressing regularity.



After the kids go to sleep, I sit up alone and finally watch The Lady in the Van. Last year, I walked along the street in Camden where it was being filmed, and Alan Bennett talked to me, which was amazing.

About a month later, on the same street, we saw Jonathan Miller skirting some dog’s mess and he told me and the kids how annoyed it made him. I tried to explain to them afterwards who Jonathan Miller was, but to the five-year-old the satire pioneer will always be the Shouting Dog’s Mess Man.



I have the second of the final three preview shows at the intimate Leicester Square Theatre in London before the new show, Content Provider, does a week in big rooms around the country. Today, I was supposed to do a BBC Radio 3 show about improvised music but both of the kids were off school with a bug and I had to stay home mopping up. In between the vomiting, in the psychic shadow of the improvisers, I had something of a breakthrough. The guitarist Derek Bailey, for example, would embrace his problems and make them part of the performance.



I drank half a bottle of wine before going on stage, to give me the guts to take some risks. It’s not a long-term strategy for creative problem-solving, and that way lies wandering around Southend with a pet chicken. But by binning the words that I’d written and trying to repoint them, in the moment, to be about how the Brexit confusion is blocking my route to the show I wanted to write, I can suddenly see a way forward. The designer is in, with samples of a nice coat that she is making for me, intended to replicate the clothing of the central figure in Caspar David Friedrich’s 1818 German masterpiece Wanderer Above a Sea of Fog.



Richard Branson is on the internet and, just as I’d problem-solved my way around writing about it, he’s suggesting that Brexit might not happen. I drop the kids off and sit in a café reading Alan Moore’s new novel, Jerusalem. I am interviewing him about it for the Guardian in two weeks’ time. It’s 1,174 pages long, but what with the show falling apart I have read only 293 pages. Next week is half-term. I’ll nail it. It’s great, by the way, and seems to be about the small lives of undocumented individuals, buffeted by the random events of their times.

Stewart Lee’s show “Content Provider” will be on in London from 8 November. For more details, visit: stewartlee.co.uk

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage