In 1997 Tory cabinet minister and leadership hopeful Michael Portillo lost his Enfield seat in spectacular fashion. Delighted Labour types stayed up to the early hours sparking the now infamous political catchphrase, were you up for Portillo?
After Thursday’s election, the Tories enjoyed their own heavy dose of schadenfreude with big names tumbling by the hour so, were you up for Steve Webb?
Ed Miliband, Nick Clegg, Ed Balls and Vince Cable were all humbled with the latter two losing their seats. It was also a bloodbath for parliamentary pensions expertise.
Pensions minster Steve Webb, shadow pensions minister Gregg McClymont and shadow Treasury financial secretary Cathy Jamieson all lost their seats. Only ex-Treasury financial secretary David Gauke remains from those who did battle over pension bills in the last parliament.
DWP select committee chair Anne Begg also lost her seat confirming an almost total wipeout of pension expertise from the last parliament.
So who will run pensions policy in this parliament? And will the new ministers actually do anything different?
Before the election, soon-to-be Baroness Ros Altmann said she would be running a new consumer protection brief spanning DWP and the Treasury focusing on a number of issues for older people including pensions and mortgages. It was even reported that she had actively turned down the pension job.
But that’s all changed as she was appointed pensions minister yesterday despite rumours that David Gauke had been appointed in the role earlier on reshuffle day.
But, as any senior MP will attest, reshuffles can get messy. For example, in 2012 Tory moderate Greg Clark was the Cities minister at the department of communities and local Government. It was David Cameron’s first reshuffle and Clark was told he would be replacing Mark Hoban as Treasury financial secretary, a promotion but one that lost Clark his passion for decentralisation to cities in DCLG.
“Could I keep aspects of my role as cities minster?” Clark asked the prime minister. A bemused and worn out Cameron appointing his junior ministers after a long day, said: “Yes, yes , of course. You are the City minister.” He meant the minister for the City of London as financial secretary not decentralisation minister, also known as cities minister.
“Thank you prime minister,” said Clark who duly walked out of number 10 and tweeted his delight at his new role and keeping part of his DCLG brief for cities. Frantic Number 10 press officers rushed to tell the prime minister about the mix-up and how it had already been announced.
It was quietly agreed that Clark could keep his cities role and the Treasury functions would be messily divided up between economic secretary and financial secretary. The financial services industry hated it because they didn’t know who to lobby and there were no clear responsibilities. At the next reshuffle in 2013 Clark was moved on and Treasury functions put back in their place.
It’s a useful lesson about how trivialities can cause chaos during reshuffles. And no doubt there was some to-ing and fro-ing around Altmann’s job that has led to the changing roles.
She is a supremely qualified minister but with little experience in the political firing line despite being an older persons champion and adviser to Steve Webb. She is also not without her critics as previously discussed on this site.
It is expected she will review whether to expand pensions guidance beyond just those reaching retirement to provide guidance at all life stages. What’s the point in the Money Advice Service then, I hear you say? Beats me.
Whilst every parliament since the war has passed some form of pensions legislation it is very possible Altmann may not. It is also an interesting dynamic that she will be in the House of Lords meaning most substantial pensions debates will take place in the second chamber. The Labour Lords pensions spokesman will be answering ministerial statements and questions so that role is crucial whoever they choose.
So what’s on her in-tray? Auto-enrolment is rolled out to small firms this month and has been a roaring success. The next stage is increasing employee contribution rates. Webb had promised to introduce auto-escalation meaning contributions rise in line with pay rises. Expect something along these lines if the Tories can bring along employers, and that’s a big if.
The pension charge cap was introduced in April at 0.75% with a review scheduled in 2017 that could see it cut further to 0.5%. With the free market Tories now in the hotseat alone a further reduction in a charge cap looks far less likely than under Webb or McClymont. Although it is worth noting the party has embraced price caps for payday lending and rail fares if not energy companies.
And there is lifting Nest restrictions by 2017. This would end the limit on annual contributions of £4,600 and allow the transfer of pots between Nest schemes and other providers. Again, will the free market Tories have second thoughts about unleashing a subsidised, state-backed provider? Rival providers will be hoping so.
But the most important pension role for the next five years is Chancellor George Osborne. He has taken ownership of radical reforms to pension access and will hope to ram them home this year.
The second stage is tradeable annuities, announced in the final coalition Budget, which was a Steve Webb brainchild and it was riddled with difficulties. It will now be interesting to note whether anyone has the technical expertise or political will in Government to drive the policy forwards. Altmann is certainly a fan but it remains to be seen how much influence she has in the Treasury.
Osborne has become infected with pension freedoms fever so may want to continue but it’s uncertain. One to watch.
And there’s pensions tax relief. A Conservative majority Government makes it far more likely there will be no new raids on pensions tax relief.
Osborne appeared to signal a £40,000 annual contribution limit and £1m lifetime allowance, rising in line with inflation from 2018, were the limits of his cuts. At Tory party conference last year Gauke said he wanted a period of calm after a frenetic parliament for pension changes. Altmann was also highly critical of the reduction in the lifetime allowance to £1m in the last Budget, before she joined the Tory party.
But cuts are coming across all non-ring fenced departments and it remains low hanging fruit. We’ll see if he can resist it when it comes to the crunch.
Osborne could opt for more wholesale savings reform with Isas and tax relief thrown together. Osborne has been the savings policy Chancellor and with no Lib Dems in the Treasury, he is unleashed.
At first glance it appears to be continuity: same Chancellor and a former Steve Webb adviser as his successor. But there are subtle changes lurk with new ministers, a new attitude and potential policy shifts on tax relief, tradeable annuities, savings policy and charge caps.