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Shadow Chancellor George Osborne's proposal to increase the retirement age to 66 by 2016 presumably achieved his objective when it got headline treatment in the news bulletins and morning papers, which is the yardstick by which party conferences are measured these days.
Unfortunately, like so many of his good ideas, it is not good enough and if implemented would neither deliver the savings in public spending he is looking for, nor significantly ease the pensions problem.
Osborne deserves credit for forcing the public to confront the issue of retirement ages — it being one of the most pressing we face. One hopes, however, that the Conservative party as a whole has the wit to realise that the man who highlights the problem is not necessarily the man competent to solve it.
As pension expert Ros Altmann points out, piecemeal tinkering with one part of the pensions edifice merely creates problems elsewhere, and these complications will undo many of the intended savings.
There are things the Tories could do that would save more, act quicker and cause less social upheaval — though they don't fit into the space newspapers allocate for headlines, so probably will not appeal.
Osborne could, for example, remove the right of employers offering a work-based pension to contract its employee members out of the state system. That, says Altmann, could save £6 billion a year straight away — so £30 billion by 2016 when the age hike is proposed to start.
A second thing he could do is end tax relief on pension contributions — something that would no doubt initially cause uproar in the industry but which in fact would probably be a good thing. Much of the legislation and consequent complexity that surrounds pensions is there to stop them being used for tax avoidance.
Remove the tax relief, and you remove the need for the complexity. It would take out a massive amount of the cost administration and allow much more flexible forms of saving. Who knows, but with so much less of the money being eaten up in costs, the investment performance might actually improve.
How much this would help the Exchequer depends rather on whom you ask but I was taken with a TUC paper of a few weeks ago which pointed out that the cost of public-sector pensions (which has unfortunately and in many ways unfairly become a fashionable whipping boy) is rather less than the cost of the tax relief given on private-sector savings. It follows that it too would swamp any savings that would be achieved from a simple one-year rise in the retirement age.
None of this is to say that the retirement age issue should not be tackled. The cost of this financial crisis will probably ultimately be that we all have to work until 70. But any such radical change needs to be planned in a coherent way, which includes making the pension people receive when they do finally retire something they can decently live on.
It needs to be part of a solution — a deal, if you like — that also lifts the retirement age in public and private-sector work-based schemes so the financial challenges facing them are also mitigated.
It needs in short to recognise that the system we currently have cannot do the job for which it was intended and its problems will not be solved by an idea that amounts to little more than a sticking-plaster soundbite.
Odds against a Tesco Rock buy
It is a sad reflection of our times that the City seems to think it is impossible to build a business other than by acquisition.
Thus when Sir Terry Leahy announced that Tesco's personal finance business was to be renamed Tesco Bank and would soon start offering current accounts to its customers, the rumour immediately flew round that he would put in a bid for the profitable part of Northern Rock.
Nothing is impossible but it is highly unlikely. Tesco is tempted to go into financial services because it has an edge, and that edge is that for more than 10 years it has been collecting data via its loyalty cards. It knows what millions of people have bought and in what quantities, and by knowing what people buy it is possible to build a pretty accurate picture of them as consumers — an idea of their income, whether married or single, the number and likely ages of children. In a consumer society such as ours, we are what we buy.
Thus when Tesco comes to offer financial services to these people, it has a much clearer picture than any bank does of how much they could afford to save, how much they could safely borrow and so on. This is what gives it the edge — plus the fact that it can locate the service in its existing stores, so does not have a huge infrastructure cost — and third that whereas the reputations of banks are rock bottom, Tesco's customers like and trust it.
So why would it buy Northern Rock, whose customers it does not know, which has the costs of a High Street presence, and whose reputation is, to say the least, not what it was?
When I first wrote a year ago about Tesco's plans to expand into financial services, I indirectly quoted a musing Sir Terry as seeing this move as perhaps his greatest legacy to the business. Buying Northern Rock does not quite square with that ambition.
