Paul Maynard: One iron rule of politics is that anything which is everybody’s problem ends up being nobody’s
Never has so much ink been spilt over so little. Headlines came and went – but the big moment when politicians finally confronted the progressive unaffordability of the triple lock has turned out to be nothing of the sort. And certainly not the solution to how we fund any expansion in the provision of social care.
I am sure you know this. I am hardly the only one to write the above paragraph. But the ‘why' really matters. Note the fact that even the prime minister's language by the day after his speech had shifted to ‘adjusting the triple lock' – implying, indeed, that a triple lock will still exist.
So yes, the current government is now going to legislate to downgrade the triple lock to whichever is the higher of either CPI inflation or 2.5%. The earnings lock, at least in legislation, will no longer be relevant. The Institute for Fiscal Studies (IFS) stresses that the biggest contributor to the ratchet effect of the triple lock has been removed by taking this step.
But we're forgetting the politics. Look at petrol. Every year the Office for Budget Responsibility forecasts do not take into account the freeze in petrol duty – because it is a temporary freeze. Yet everybody knows that, due to political pressure, chancellors have fought shy of initiating any increase knowing the public outcry that will ensure. That would be as nothing when hybrid drivers like me find themselves paying twice for those miles they drive when the engine rather than the battery is engaged, mind you!
Similarly, chancellors will face immense media speculation in the run up to any budget when earnings growth exceeds CPI or 2.5%. The tabloid newspapers will say pensions are being cut if earnings growth is ignored. Restive backbenchers will rise up. The argument that it will even itself out in the long run will cut no mustard. Analysts will need to decide whether any prime minister feels powerful enough and strong in the polls to withstand the fury.
Even if we get greater clarity over what time frames and review points will be used to assess whether an earnings link overall has been maintained will not suffice. The triple lock now moves out of the legislative domain into one of annual political calculation – requiring strong, determined government in an era of five party politics and therefore fine electoral margins.
What they ought to do, to provide certainty, is do what the IFS proposed when I was in office. This is to legislate to fix the value of the state pension to a fixed proportion of average earnings – 30% was the suggestion. Politicians can argue if they wish for that to go up or down – but there is legislative certainty rather than annual speculation.
The foundation of adequacy
So why does this matter? Because as the Pensions Commission's Baroness Jeannie Drake has said, we all need to take responsibility for adequacy. And the state pension is the foundation of any discussion of adequacy.
This comment was aimed at the pensions industry – she was speaking at a Pensions UK conference after all – but it did make me wonder what more the sector could do.
I can't recall a single event where I engaged with the sector where at least one person didn't raise the issue of levels of auto-enrolment and the commencement of legislation Parliament had already passed to lower the threshold for starting auto-enrolment contributions.
For those who think deeply about how the sector influences public policy, it is an important case study in failure. Notwithstanding my own personal agreement with the issue, it highlights an important point about who does the influencing and at what level.
I used to find it slightly irritating as aviation minister when the big players went to Number 10 to plead their case – but I equally understood that they would be more persuasive in Number 10 than little old me. Pensions sector engagement seemed to go in the other direction, with government exhorting them to do things such as signing up to the Mansion House agreement. Maybe behind closed doors the sector was urging the Treasury to address increasing contributions, maybe they weren't – but one thing is for sure, it never happened.
There should always be a quid pro quo. As rail minister, I wanted rail companies to succeed, not least as it was in the passenger's best interest. But that was part of a wider give and take relationship where I expected some progress on my own priorities from them, at the same time as taking on board and acted upon their concerns equally. I never quite got to that stage with the pensions sector. Why? Not completely sure, though I could write 1,000 words on my suspicions – answers please!
And one iron rule of politics is that anything which is everybody's problem ends up being nobody's. When a politician says that, it means they have run out of ideas. And maybe that is the problem when it comes to adequacy. It should not be – it is a matter of political willpower and breadth of vision. It's a national challenge that requires true leadership.
The Pensions Commission's final report is due next year. But this was not commissioned by this government, it has been pre-empted by Mr Burnham ‘thinking aloud' about the triple lock and care costs. Will he really be receptive to something he did not set the terms of reference for? Please don't let him send them off to think about a few other questions!
More pertinently, there is no time for properly thought-through and drafted legislation to meander its way through the Commons, let alone cope with the endless consultations that is the necessary preparatory work.
I fear pensions will remain everyone's problem, with the inevitable stasis that flows from that.
Paul Maynard is a former pensions minister
