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Paul Lewis
Brown's pension raid: the press background
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Brown study – Paul Lewis looks at the Chancellor's record
Is Gordon Brown’s economic miracle draining away as rapidly as his remaining time as Chancellor? Until recently a good majority of people polled have consistently said he had done a good job as Chancellor. Now that percentage is around four out of ten. Why?
Inflation is rising. We have got used to fairly stable prices. Inflation, which peaked at 21.9% in May 1980 has been low over the last fifteen years, generally between 1% and 3% a year. But last spring it started rising. Currently the Retail Prices Index puts inflation at 4.6% a year. A rate we have not seen since August 1991. In 1997 Brown gave the Bank of England the job of keeping inflation down by adjusting interest rates. Today it is struggling to do that.
Taxes are rising. Taxes of all sorts now take about 42% of the national income. This proportion has been growing over the last four years, though it is still lower than it was for twelve Conservative years 1980 to 1991. But the perception is that taxes are going up. Council tax now takes more of low and fixed incomes. Inheritance Tax catches a growing number of estates. And Stamp Duty Land Tax (SDLT) – a pure Brown invention – now costs nearly £2000 on an average priced home - and starts at £7500 for those costing more than £250,000.
House prices are out of control. Many of us with a home gleefully say we are half or even full millionaires as our neighbour’s house comes on the market for monopoly money. But we also see the desperate struggle of our children and younger relatives who borrow four, five or six times their annual pay to buy a small home barely big enough to swing a cat never mind a baby. And prices will not fall while we build 160,000 homes a year and the demand is for 223,000.
Personal debt is rising. It now seems an age since our total debt topped the trillion pound mark. Now it is up to more than one and quarter trillion. In some ways it does not matter. As a nation we have nearly five times saved up in cash as our total consumer debt. Our homes are worth three and a half times our collective mortgages. So our debts as a nation are covered. But when we learn that our children owe a year’s salary on their credit card or see our grandchildren leave university with officially sanctioned debts of £15,000 it is natural to feel appalled.
Pensions are falling. Perhaps the worst blow for the Chancellor is the fact that someone retiring today needs four times as much saved up in their pension pot as they needed ten years ago to get the same pension. Even Gordon Brown is not responsible for rising life expectancy or falling investment returns. And you cannot blame any government for making the rules of company pensions fairer – which means more expensive. But the bottom line is that he did take around £4 billion a year out of pension funds at what turned out to be just the wrong time. The public is not forgiving him for that.
Which is why the same polls now indicate that nearly six out of ten say he is “not fit” to be Prime Minister. There is a tide in the affairs of men. And voters seem to be saying Gordon Brown has missed the boat.
Written by Paul Lewis
What do you think of Gordon Brown's economic record? Have your say in our lively discussion forums at Saga Zone or make a comment below
This article was created: 11 April 2007.
This article was last edited: 23 April 2007.
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