Ed Miliband speaks at Senate House on November 13, 2014 in London. Photograph: Getty Images.
Show Hide image

PMQs review: Miliband comes out swinging for the mansion tax

The Labour leader has doubled-down on his strategy of painting Cameron as the friend of the rich and himself as the friend of poor. 

Rather than being unnerved by Ed Miliband's clash with Myleene Klass over the mansion tax on The Agenda, Labour aides regard it as a valuable opportunity to make the case for a popular policy. At today's PMQs, Miliband did just that, contrasting his support for the mansion tax (backed by 72 per cent of the public) with David Cameron's support for the bedroom tax (opposed by 59 per cent). In response, Cameron sought to defend the latter as the removal of the unjustified "spare room subsidy" but he was fighting a battle lost long ago. 

Aided by the proximity of tomorrow's Rochester by-election, and the Tories' now certain defeat to Ukip, Miliband had opened by dryly remarking: "Let’s see if they’re still cheering on Friday". He later declared: "Two of the people behind him have jumped ship. And the other people are waiting for the result to see if they should follow." Cameron predictably sought to turn Miliband's encounter with Klass to his advantage, deriding his "pasting from a pop star" and quipping: "We’re not seeing a Klass act". But his jibes only served to demonstrate how unwilling he was to make a principled defence of the mansion tax. 

In response, Miliband threw populist punch after populist punch (evidence of the fire inserted in the leader's belly by the newly-promoted Jon Trickett and Lucy Powell) . "He only feels the pain of people struggling to find a £2m garage. That is this Prime Minister," he declared (a reference to Klass's moan that it was impossible to afford more in London). He went on to turn to the NHS, Labour's strongest suit, and the promised recipient of the £1.2bn the party hopes the mansion tax would raise.

But it was Miliband's last line that will live longest in the memory. "We all know, Mr Speaker, why this Prime Minister thinks the bedroom tax is great and the mansion tax to fund the NHS is terrible. If you’ve got big money you’ve got a friend in this prime minister. If you haven’t he couldn’t care less," he cried. It was a reminder of how sharp the dividing lines will be at this election and a demonstration of Labour's belief that its best hope lies in framing the Tories as the friends of the rich and themselves as the friends of the poor. It is a strategy antithetical to that of New Labour, which sought partnership, rather than confrontation, with the elite. But defying the dissenters within and without of his party, it is one that Miliband has doubled-down on. Should he achieve victory on these terms, decades-long assumptions about the "centre ground" of British politics will be blown apart.   

George Eaton is political editor of the New Statesman.

Show Hide image

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: www.oldmutualwealth.co.uk/ products-and-investments/ pensions/pensions2015/