A cool head in a ‘crisis’





In his first article for Personnel Today, David Cracknell, political editor at the Sunday Times, talks to new pensions minister Alan Johnson

Alan Johnson has two vested interests in succeeding in his new job as pensions secretary: his sons.

By the time Jamie (a talented musician and record producer in his twenties) and Oliver, aged four, are both ready to spend more time doing the gardening, the decisions that their father takes will have determined whether they can get by when it’s their turn to tend the rhododendrons. It’s as if Johnson – a Beatles fan – has been put in post to test the proposition: ‘Will you still need me, will you still feed me, when I’m 64?’

But Johnson isn’t one to shirk the big decisions. Especially when, at the age of 54, he’s got little more than 10 years until he collects his own bus pass.

When he became the universities minister in June 2003, in charge of solving the biggest political dilemma of the time – top-up fees – I recall his reaction was something like “Oh, my god, what a poisoned chalice!“. But he succeeded, and saved Tony Blair’s bacon by mastering the arguments and using his charm to win over hostile Labour MPs. Now, he has been rewarded with the Prime Minister’s other big domestic headache – solving the so-called ‘pensions crisis’.

He was relaxed and optimistic about the new post when I spoke to him on the day that his colleague, trade and industry secretary Patricia Hewitt, announced strengthened parental leave rights – something Johnson, as the father of a toddler, wholeheartedly backs.

“Fifty years ago, on average, you were educated for 15 years, you worked for 50 years and, generally, you were so exhausted you could only manage 10 years in retirement. Now, the equivalent figures are 18 years and 42 years, with 22 years in retirement,” he said.

“It is something we should all be celebrating, but the ramifications are that fewer people are working and being productive and, therefore, [one of the big challenges is] ensuring that people cannot just exist in retirement, but that they have a reasonable quality of life.”

This is what we know: most people are not saving enough for their own provision; the assets of those who have, have shrunk since 2000; raising the basic state pension is very expensive for a government and would mean much higher taxes; and introducing compulsory pensions would be politically risky.

Which appears to leave the Government with three options: raise the state pension to a liveable level; make some retirement saving compulsory; or raise the eligibility for state pensions. How does Johnson intend to square that circle?

“I don’t think they are the only three options, and I don’t think they are mutually exclusive,” he said. “In the Pensions Bill, we have said that we are not going to insist that people retire at 70 instead of at 65.”

Johnson believes the Confed-eration of British Industry is being “inconsistent” in its argument that the state retirement age should be raised to 70, while at the same time insisting there should be no interference in a company’s right to set a mandatory age for the old gold clock.

There will, however, be incentives in the form of a “hefty”, cash-free lump sum for those who defer retirement. “We think that is the right balance to strike. That is an acceptance that people will need to work longer,” he said.

That seems to rule out the last option. And we know, from Barbara Castle’s fruitless battles at Labour conferences past and seven years of Blair-Brown budgets, there will be no significant rise in the basic state pension.

“If people were to save much more, much earlier, then the retirement age could stay around the level it is now,” Johnson explained. “You can’t have it both ways: there needs to be a recognition that if you are going to spend fewer years in work, and longer in retirement, then that balance between how long you work and save has to be looked at again.”

Reading between the lines, everything points to some form of compulsion. Which brings us to Adair Turner’s pensions commission on private pensions and long-term savings, which is due to issue its interim report on 12 October.

No decisions yet on that, however. “I haven’t got my mind round that yet,” Johnson admitted. “There is a big question mark over whether we actually know how much people are saving. It is a notoriously difficult issue to analyse.”

Johnson is no stranger to the new brief, of course. When he worked under Hewitt at the DTI, as minister for employment relations, he was already grappling with the age discrimination directive.

He is undoubtedly ambitious, but he doesn’t wear his determination on his well-cut sleeves, unlike some pushy ministers. Already he is being talked of as a potential future deputy prime minister. Having only become an MP in 1997, reaching the cabinet so soon makes for a pretty meteoric rise, but I can honestly say, in this dog-eat-dog world of politics, I have never heard a bad word said about him.

Johnson was educated at Sloane Grammar School in Chelsea, but didn’t go on to university, instead becoming a postman. But politics was never far away, and his beat included delivering letters to Dorney Wood, the chancellor’s official residence. He eventually became general secretary of the Communication Workers Union. And he likes to support the underdog, being a fan of Queen’s Park Rangers football club.

Newspapers report that he is a Blairite. And yes, as a lad he was in a band, just like the PM – although his was successful enough to release a single, unlike Blair’s ‘Ugly Rumours’. (He keeps up his interest in the latest music and, being a moderniser, does not dwell on the past. The last CD he recommended to me was The Boy With the Arab Strap by Belle and Sebastian).

And while he doesn’t dally with what is best described as the “luvvie-dom” of Tony and Cherie, there can be no doubt that Johnson’s appointment represented a major challenge to the chancellor’s focus on the poor elderly and means-tested top-ups.

But to call him a Blairite is to underestimate the man. He is a Labour moderniser who understands the trade unions and can do business with them, but he is not sentimental about the ‘brothers’, unlike some ministers. He is a loyalist, though, and leans more to Number 10 than to Number 11, but you could see him just as easily in a Gordon Brown cabinet. Watch this space.

 

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