16 April 2009

Time for Gordon Brown to say "sorry" to savers

After today's belated “sorry" for emailgate, Gordon Brown went on to say that he had been “horrified, shocked and very angry indeed” about it – words that exactly sum up how I’ve been feeling about his onslaught on savers ever since he became Chancellor of the Exchequer in 1997.

This blog normally concentrates on, and with occasional exceptions like today, will continue to concentrate on making observations about speaking and communication, rather than expressing political opinions. But I’ve been “horrified, shocked and very angry indeed” about Mr Brown’s attack on savers for twelve years for the very simple reason that it occurred at a time when I was devising a strategy for my own savings and retirement.

Having decided some years before 1997 that I wanted to avoid having to sink my life’s savings into an iniquitous annuity that would allow some life insurance company to pay a pitiful rate of interest – and then pocket the lot if I happened to die the next day – I had already started to invest as heavily as I could in PEPs, on the grounds that it seemed preferable to pay the tax first and enjoy tax-free benefits later than to get tax relief on today’s pension contributions in exchange for the dubious benefits of an annuity tomorrow (not to mention to have the freedom to bequeath anything I hadn’t spent to people more dear to me than an insurance company).

Then, and people seem to have forgotten this, one of Brown’s first plans when he became Chancellor was to introduce retrospective legislation that would eliminate the tax advantages that had induced millions of us to invest in PEPs. I remember writing to him (and every other relevant politician I could think of) pointing out how unfair this was, and urging that there should be no change in the terms of reference that had made people like me opt for this particular form of savings in the first place.

Thankfully, Brown dropped that plan, but didn’t drop the even more cunning plan of abolishing one of the main incentives to put savings into pension policies, namely the tax relief on dividends earned within a pension fund that used to make them build up more quickly than would otherwise have been the case.

The first ten years of this infamous raid on pension funds bagged in excess of £100 billion from millions of thrifty savers who had been naïve enough to think it might be a good idea save for their retirement.

Even without the post-credit crunch shrinkage of interest now payable on annuities, Brown’s raid had already guaranteed us a much lower pension than we’d been led to believe we’d get when we first signed up for it. It also fired the starting gun for more and more companies to close down their final salary pension schemes.

Two other things about Mr Brown’s position on savings and pensions also leave me “horrified, shocked and very angry indeed.”

One is that he suddenly and belatedly started to sound surprised and worried that the country is now facing a major pensions crisis.

The other is that, whenever interviewers dare to raise the subject with him, he never admits that he had anything to do with it, and becomes even more evasive than the 'default' extreme evasiveness he typically displays in response to any question anyone ever puts to him.

Saying “sorry” for emailgate may or may not work as an effective piece of damage limitation in the aftermath of the recent misconduct of his inner circle.

But the “sorry” millions of us are still waiting for is for the damage he, and not his henchmen, did to our savings.

Unfortunately for us, it’s far too late to limit the damage he’s already done.

Unfortunately for him, none of us will have forgotten about it when we go into the ballot box.


Anonymous said...

Great article! As a saver I'm very concerned that Brown has his eyes on our money to bail himself out and other profligates to save his own skin. QE is already diminishing our savings along with real inflation.
I can't put into words how much I hate him.

Ross J Warren said...

A good post and yes I do agree with what you are saying. Savers have been ripped off by Labour and its wrong economic policies. Of course I am not neutral, I am committed to getting D.C. elected, but from here on I will be visiting this blog and when appropriate adding to the comments. I don’t hate Gordon but I do despise his party and its self serving wrong nature. We cannot all work in government jobs, those of us we live in the real world, have seen our money loose real value. I am a career I have a disabled wife and two children. We used to be able to take a family holiday but frankly we have not been able to save up enough cash to do that. This year the children will have a very much smaller Christmas. What little savings we have, return pennies in interest. I believe that the Conservative party can, sort out the mess but it will indeed be a painful experience for many. The Government sector cannot in good faith be protected from the coming storm, but we will deliver a far fairer society given enough time and some understanding and restraint from the public sector.

Max Atkinson said...

Thanks to you both for letting me know I'm not alone on this.

But Ross - I'm afraid I don't share your optimism about the Tories (or anyone else) being able to 'sort out the mess'. The damage to our savings has been so great over so many years, not to mention the current pitifully low rates of interest, that I can't see any of us living long enough to recover our losses - even in the unlikely event of someone trying to do something about the mess.