CITY AND SUBURBAN
Taped the money-saving plan to keep steam out of the Chancellor's trousers
CHRISTOPHER FILDES
I, too, have trouble with my tape- recorder. I was playing it back the other day, expecting to hear a discussion of monetary aggregates, and instead picked up a sardonic voice which sounded strange- ly familiar — saying: 'Pensions? Yes, I know it seems out of character for me to be hinting about a new benefit — after all, here at the Treasury we're trying to stop public money being spent, not to dream up new ways of spending it. But you've got to look at the thing from our point of view, and since we're on deniable lobby terms I can explain. We are privately jolly pleased with the way we've kept the cost of state pensions down. (There, that sounds more like us.) The numbers are enormous — £19 billion this year — but they'd have been far worse if we hadn't decided, when we came back to power ten years ago, to tie pen- sions to inflation and not to incomes, which of course have gone up much faster. Our other success was to get Norman Fowler to take a chop at Serps — the state earnings related pensions which our predecessors cooked up, a real blank cheque on poster- ity if ever I saw one. I wanted Norman to kill the Serps, but at least he scotched it. . . . Well, it's not as if all pensioners are doing badly, what with occupational pen- sions and savings and what's happened to the price of their houses. Our figures show that the average pensioners' income is higher than the average household income. But, obviously, someone who only has the state pension has been lagging further and further behind people who are still in work. What worries us is that, if that goes on, we shall come under pressure to jack up the pension and tie it to incomes, and that cheque is even blanker. Out in the next century it would cost an extra £24 billion a year in today's money, or more than the whole pension costs now. Well, the Treasury can't just sit on the safety valve, or sooner or later we'll get our trousers full of steam. So we need a way to jack up some pensions but not all of them, and that's the new idea. All in the interest of public economy, but I naturally can't quite say so — but, gentlemen, maybe you can?' After this the tape seems to record nothing but the chink of glasses. I have sent it off to Number 11 Downing Street in case Nigel Lawson is looking for it, and, unless he wants to bone up on monetary aggregates, perhaps he will send me mine back?
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