Ed Balls and George Osborne attend the State Opening of Parliament on May 8, 2013. Photograph: Getty Images.
Show Hide image

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

Getty
Show Hide image

Misogynoir: How social media abuse exposes longstanding prejudices against black women

After decades as an MP, Diane Abbott finally spoke out about the racist and sexist abuse she faces. But she's not alone. 

“Which STD will end your miserable life?” “This is why monkeys don’t belong here.” “I hope you get lynched”. These are just some of the many messages Seyi Akiwowo, a Labour councillor in Newham, told me she has been sent over the past three weeks. Akiwowo has received reams of violent and racist abuse after a video of her suggesting former empires pay reparations to countries they once colonised (and whose resources they still continue to plunder) went viral. She doesn’t expect everyone to agree with her, she said, but people seem to think they’re entitled to hurl abuse at her because she’s a black woman.

The particular intensity of misogyny directed at black women is so commonplace that it was given a name by academic Moya Bailey: misogynoir. This was highlighted recently when Diane Abbott, the country’s first and most-well known black woman MP and current shadow Home secretary, spoke out about the violent messages she’s received and continues to receive. The messages are so serious that Abbott’s staff often fear for her safety. There is an implicit point in abuse like this: women of colour, in particular black women, should know their place. If they dare to share their opinions, they’ll be attacked for it.

There is no shortage of evidence to show women of colour are sent racist and sexist messages for simply having an opinion or being in the public eye, but there is a dearth of meaningful responses. “I don’t see social media companies or government leaders doing enough to rectify the issue,” said Akiwowo, who has reported some of the abuse she’s received. Chi Onwurah, shadow minister for Business, Innovation and Skills, agreed. “The advice from social media experts is not to feed the trolls, but that vacates the public space for them," she said. But ignoring abuse is a non-solution. Although Onwurah notes the police and media giants are beginning to take this abuse seriously, not enough is being done.

Akiwowo has conversations with young women of colour who become less sure they want to go into politics after seeing the way people like Abbott have been treated. It’s an unsurprising reaction. Kate Osamor, shadow secretary of state for International Development, argued no one should have to deal with the kind of vitriol Abbott does. It’s well documented that the ease and anonymity of social media platforms like Twitter and Facebook have changed the nature of communication – and for politicians, this means more abuse, at a faster pace and at all hours of the day. Social media, Onwurah said, has given abuse a “new lease of life”. There needs to be a concerted effort to stop people from using these platforms to spout their odious views.

But there is another layer to understanding misogyny and racism in public life. The rapid and anonymous, yet public, nature of social media has shone a light on what women of colour already know to be a reality. Dawn Butler MP, who has previously described racism as the House of Commons’ “dirty little secret”, told me “of course” she has experienced racism and sexism in Parliament: “What surprises me is when other people are surprised”. Perhaps that’s because there’s an unwillingness to realise or really grapple the pervasiveness of misogynoir.

“Sometimes it takes a lot of effort to get someone to understand the discriminatory nature of peoples’ actions,” Butler explained. “That itself is demoralising and exhausting.” After 30 years of racist and sexist treatment, it was only when Abbott highlighted the visceral abuse she experiences that politicians and commentators were willing to speak out in her support. Even then, there seemed to be little recognition of how deep this ran. In recent years, the Labour leader Jeremy Corbyn has been ridiculed for having a relationship with her in the 70s, as if a black woman’s sexuality is both intriguing and laughable; people regularly imply she’s incompetent, despite having been in Parliament for three decades and at the last general election increasing her majority by a staggering amount; she has even been derided by her own colleagues. Those Labour MPs who began the hashtag #PrayforDiane when she was off work because of illness spoke to a form of bullying that wouldn’t be acceptable in most workplaces.

These supposedly less obvious forms of racism and sexism are largely downplayed or seen as unrelated to discrimination. They might be understood through what influential scholar Stuart Hall called the “grammar of race”. Different from overtly racist comments, Hall says there’s a form of racism that’s “inferential”; naturalised representations of people - whether factual or fictional - have “racist premises and propositions inscribed in them as a set of unquestioned assumptions”. Alongside the racist insults hurled at black women politicians like Abbott, there’s a set of racialised tropes that rely on sexualisation or derision to undermine these women.

The streams of abuse on social media aren’t the only barrier people of colour – and women in particular – face when they think about getting into politics. “I don’t think there’s a shortage of people in the black community who put themselves forward to stand for office, you only have to look at when positions come up the list of people that go for the position,” Claudia Webbe, a councillor and member of Labour's ruling body the National Executive Committee told me. As one of the few black women to hold such a position in the history of the Labour party, she knows from her extensive career how the system works. “I think there is both a problem of unfair selection and a problem of BME [black and minority ethnic] people sustaining the course." Conscious and unconscious racial and gender bias means politics are, like other areas of work in the UK, more difficult to get into if you’re a woman of colour.

“The way white women respond to the way black women are treated is integral,” Osamor says, “They are part of the solution”. White women also face venomous and low-lying forms of sexism that are often overlooked, but at times the solidarity given to them is conditional for women of colour. In a leaked letter to The Guardian, Abbott’s staff criticised the police for not acting on death threats, while similar messages sent to Anna Soubry MP resulted in arrest. When the mainstream left talks about women, it usually means white women. This implicitly turns the experiences of women of colour into an afterthought.

The systematic discrimination against women of colour, and its erasure or addendum-like quality, stems from the colonial racial order. In the days of the British empire, white women were ranked as superior to colonised Asian and African women who were at different times seen as overly sexualised or unfeminine. Black women were at the bottom of this hierarchy. Women of colour were essentially discounted as real women. Recognising this does not equate to pitting white women and women of colour against each other. It is simply a case of recognising the fact that there is a distinct issue of racial abuse.

The online abuse women of colour, and black women specifically, is an issue that needs to be highlighted and dealt with. But there are other more insidious ways that racism and sexism manifest themselves in everyday political life, which should not be overlooked. “Thirty years ago I entered parliament to try and be the change I wanted to see,” Abbott wrote. “Despite the personal attacks and the online abuse, that struggle continues.” That struggle must be a collective one.

Maya Goodfellow researches race and racism in Britain. She is a staff writer at LabourList.