Mr King rains on the PM's parade
THE PRIME MINISTER has let it be known that he "does not recognise" reports of a split between him and the Governor of the Bank of England, Mervyn King, about the shape of the Government's rescue of the economy. Mr Brown is on a whistlestop tour of three continents in the run-up to the G20 summit in London next week. Today, he fields a session at the New York Times followed by another at New York University; yesterday at the European Parliament he called on other governments to join Britain in spending their way out of recession.
But the truth is that yesterday's remarks from Bank's Governor's were quite astonishing. Mr Brown seems to believe there should be a seamless accord between the notionally independent Bank of England and the Treasury. But Mr King's blunt declaration that there is no leeway for the Government to make any "significant fiscal expansion" in next month's Budget was a real departure from the norm.
Mr King would not usually make such a pronouncement; that he did is indicative of significant concern on the part of the Bank about borrowing. Speaking to the Treasury Select Committee, Mr King said that "it would be sensible to be cautious about going forward ... to expand the size of the deficit." Yet this is precisely the message that Mr Brown is taking to the rest of the world.
The Prime Minister has been given some support by President Obama's comments yesterday to the effect that other countries as well as the US must spend their way out of the downturn - but the British choice, stimulating the economy through a cut in VAT, has not been widely followed. At the G20 summit, Mr Brown's message may be blunted by the reality that the tightness of the public finances now severely limits his room for manoeuvre.
Pensions crunch
OUR report today suggests that 800,000 young Londoners working in the private sector are saving next to nothing for their retirement. That figure amounts to two-thirds of the under-35s who are working for companies or self-employed. This is a sharp contrast with the public sector, where guaranteed, taxpayer-funded final salary schemes are still the norm.
Longer life spans are good news but they do make it necessary for governments and individuals to grapple with the implications of the pensions timebomb. A partial solution would be to delay the age when the state pension is payable: the Government has said that it will rise to 68 by 2045. And from 2012, as an addition to the state pension entitlement, employees will be automatically enrolled into workplace pensions into which they will be compelled to pay four per cent of their salary, and employers an additional three per cent.
But this is not the whole answer. The contributions will not guarantee a comfortable retirement. Many low-paid workers would do better to pay off their debts than to lock the money away until they reach 68. To enjoy a decent retirement, people will still need to put money by in addition to their workplace schemes.
It would be a disaster if those who are currently saving nothing concluded that there was no point in taking responsibility for themselves. The gulf between private and public sector provision needs to be tackled by offering new public sector employees workplace schemes, or similar, rather than guaranteed final salary packages. And we will need very clear political leadership if young people are to change their saving habits.
Golden Oldies
BLUR. Take That. Michael Jackson. Now Spandau Ballet announce today - on HMS Belfast - that they, too, are to relaunch themselves, with a new take on their music. It's a cheering return, and an opportunity for audiences under 25 to bond with their parents. This feisty approach - to keep going while you have the looks - is an example to us all.
