Douglas Carswell, who defected to Ukip from the Conservatives, with Nigel Farage. Photograph: Getty Images.
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Ukip’s rise isn’t all good news for Labour

Ukip could cost Labour several seats next year.

If Ed Miliband gets into Downing Street, he will forever be in Douglas Carswell’s debt. Such has been the reaction to Carswell’s decision to switch from the Conservatives to Ukip. Since Ukip takes significantly more votes from the Tories than anyone else, the right’s split could benefit Labour in much the same way as the left’s split benefited the Conservatives in the 1980s.

Yet Carswell’s defection poses a challenge for Labour, too. Just because Ukip will hurt the Conservatives more in 2015 does not mean that Labour can afford to be blasé about the threat. Eight of the ten seats that Ukip are most likely to win in 2015 are Labour-held, according to analysis by Rob Ford and Matthew Goodwin in Revolt on the Right. In these seats, Carswell’s manouevre is bad news for Labour: the more popular Ukip is, the more vulnerable these Labour seats are. The presence of a Ukip MP in Westminster will give the party momentum and a likely influx of donations, both of which should make a number of Labour MPs very twitchy.

Should Carswell win the Clacton by-election, it will also reveal a new phenomenon: natural Conservatives voting tactically for Ukip. It is one that has worrying implications for Labour. The toxicity of the Conservative brand – 40 per cent of voters say they would never vote Tory – has protected Labour in many seats, even as its vote has fallen and electoral turnout has collapsed. There are a lot of northerners whose views – especially on welfare, immigration and crime – chime with the Tories, but who would never, ever vote for them. This presents an opportunity for Ukip.

Take Great Grimsby. It has long been regarded as a safe Labour seat, but the party lost 15,000 votes between 1997 and 2010, when Austin Mitchell was elected with only 32.7 per cent of the vote. The Conservative brand may not be strong enough to win there, but what of Ukip? By uniting the anti-Labour vote – a coalition of normal Conservative voters and disenchanted non-voters and Labourites – Ukip should give Labour reason to doubt that they will be able to hold onto the seat. The Ukip candidate in Great Grimsby, Victoria Ayling, almost won the seat for the Conservatives in 2010. Like Carswell, therefore, she is ideally placed to get hordes of Tory voters to plump for Ukip.

Not that Mitchell thinks so. "Great Grimbsy is a safe seat," the constituency's retiring MP told me. "It’s a Labour seat." Such an attitude doesn't amount to much of a strategy to combat Ukip.

In the short-term, Ukip’s rise will benefit Labour more than the Conservatives. But, even in next year’s general election, the party could deprive Labour of several MPs – either by ousting Labour or winning a seat from the Conservatives that should be within the opposition's grasp. In Thurrock, the Tories only have a lead of 92 over Labour. If Labour are to become the largest party next year, let alone win an overall majority, such a seat ought to be turning red with ease. Yet Lord Ashcroft’s recent poll of the constituency had Ukip on course to win the seat; Ukip also lead in another top Labour target, Thanet South. As Rob Ford suggests, in seats such as these, it appears as if Ukip may be taking more votes from Labour than the Tories.

And the rise of Ukip also means that more political debate will move on to areas that Labour is uncomfortable discussing: Europe and immigration. As shadow minister Lisa Nandy recently told me: "The forces in British politics at the moment are all on the right".

If Labour is complacent to the Ukip threat, it may regret it in 2015 and beyond. Should it form a government, Ukip will be ideally placed to benefit from working class discontent with the party. In many seats, Ukip could challenge Labour more than the Conservatives ever have. Labour complacency to the Ukip threat will soon look like folly.  

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

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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/