Paul Sellers
With just days to go until the Diamond Jubilee , some companies are rethinking their decision to treat this one-off bank holiday as a normal day. Most notably, major retail employer Marks and Spencers have just concluded a deal with the GMB trade union that will mean a premium rate for staff who have to work on Tuesday’s bank holiday. This is a welcome development - there is still time for employers to do the right thing when it comes to paying staff properly.
Craig Berry
The Pensions Regulator (TPR) is making friends. At its annual stakeholder conference on 30 May 2012, the regulatory body for the pensions industry promised to be much more pro-active from now on in helping pension funds with problems before they arise, rather than only when crisis hits. For example, the Regulator intends to walk through the valuation process with around 40 or 50 pension funds, so it can learn about how the process is tackled by funds at the sharp end.
One area where relations between TPR and the industry have yet to thaw, however, is on the impact of quantitative easing (QE). TPR’s April 2012 statement on QE essentially ruled out any suggestion that pension funds might be able to ‘smooth’ asset and liability fluctuations to mitigate the short-term jolt of QE on pension fund valuations.
QE impacts pension funds by reducing gilt yields – arguably this is what QE in its current form is designed to do. Invariably pension funds are heavily exposed to gilts so their deficits will increase. There is an additional impact on pensions more generally, in that insurance companies, who provide annuities for defined contribution (DC) pension savers, are also exposed to gilts, and therefore annuity prices are driven down by QE.
Duncan Weldon
The Government has repeatedly argued that low interest rates on government bonds are sign of market confidence.
The Prime minister has recently claimed that:
Those who argue we should spend more want us to borrow more, driving up our deficit and our debt and putting our hard-won credibility and low interest rates at risk.
I argued last year (at tedious length) that this was not the case.
Duncan Weldon
An opinion poll from new think tank Class this weekend found that, when asked about the priorities for economic policy, 95% of the public thought that ‘creating jobs and reducing unemployment’ and ‘encouraging economic growth’ were either fairly or very important.
However 85% of the public also thought ‘reducing the deficit’ was either fairly or very important. (It’s worth noting at this point that whilst only 46% of the public thought ‘reducing the deficit’ was very important, ‘creating jobs and reducing unemployment’ was rated as very important by 77% and 72% believed that of ‘encouraging economic growth’).
Duncan Weldon
The release of last week’s GDP data provides as good a time as any to ask an important question, what’s happening to the government’s hopes of ‘export-led growth’?
Moving towards exports being a more important driver of growth has been a goal of government policy since the formation of the Coalition. It is a crucial part of the much heralded strategy of ‘rebalancing’ towards ‘investment & exports’.
The outlook for business investment, according to the OBR itself, is much less rosy than was once assumed. As I’ve noted before, the forecasts of rapid growth in private business investment keep being pushed back:
Craig Berry
On Friday the government published its response to the Work and Pensions Select Committee’s report on automatic enrolment in workplace pensions. To a large extent the government’s response held steady to existing policies, although it must be said, the Committee’s original report was itself largely supportive of how policy has developed in this area. So the post-Turner
Commission consensus remains intact. The response did, however, give rise to one or two comments from the government that suggest reforms – on issues like early access, charges and NEST restrictions – might not be too far off.
On early access, the Committee had asked the government to consider allowing individuals to withdraw pensions saving early – which is generally prohibited – in order to buy their first home. In its response, despite reiterating evidence that early access could undermine rather than encourage pension saving, the government nevertheless recognised that the inflexible nature of pension saving could encourage some people to ‘opt out’ after automatic enrolment, and therefore suggested that the early access issue would be revisited.
Owen Tudor
There’s lots of interesting material in the opinion poll released to mark the launch of the new CLASS think-tank today, and there will no doubt be a lot of further analysis of the resuts. But I have a special interest in the Robin Hood Tax, so the question which asked whether voters would support or oppose “a tax on financial transactions by investment banks” was particularly interesting. It’s not surprising that overall, 61% supported the tax (half very strongly) with only 19% against (mostly in the “tend to oppose” category). So of those who expressed a view one way or the other, that’s three to one for the Robin Hood Tax – surely an idea whose time is rather overdue!
Richard Exell
The TUC’s new Charter on work experience and workfare sets out just why we are opposed to workfare and draws a distinction between bad work experience and good.
Workfare – making unemployed people do unpaid work in jobs that would normally be done by paid workers – is triply unfair. Firstly, it is unfair to unemployed people –unpaid work is exploitation, pure and simple. Secondly, it is unfair to workers – when they have to compete with workfare conscripts some workers will lose their jobs, others will find that their pay, overtime or other conditions deteriorate (and the workers who lose most will be the weakest and lowest paid.)
Matthew Oakley
Two weeks ago the TUC launched the pamphlet Making a Contribution: social security for the future, introducing the concept of the “nothing for something” welfare state and arguing that we should return to a system which is based more strongly on the contributory principle.
Many readers of this blog may be surprised to hear that Policy Exchange completely agrees: the welfare system must be made to better reflect contribution.
