Has Labour given up on financial services?

Labour’s influence within the financial services industry is in danger of being wiped out in the aftermath of yet another ministerial reshuffle.

Political experts say the party failed to capitalise on “gaping holes” in Chancellor George Osborne’s freedom and choice pension reforms during the 2015 election campaign.

They are also concerned the constant churn of spokespeople in key areas such as pensions, alongside the party’s reluctance to engage in the Financial Advice Market Review, risks damaging Labour’s ability to scrutinise Government policy.

With a shadow Treasury team that has failed to ask a single question in Parliament on advice, or the potential reform of pension tax relief since the election, who is holding the Government to account?

Pensions people

Labour leader Jeremy Corbyn’s second reshuffle in just three months means there have been four shadow pensions ministers in under a year.

Newly-elected MP Angela Rayner took on the brief earlier this month from Nick Thomas-Symonds, who was promoted to shadow employment minister.

It came just months after Thomas-Symonds replaced Lord Bradley in the post in September.

The turnover is in stark contrast to the coalition era when Gregg McClymont stayed in the post for four years, notably leading the debates on auto-enrolment fund charges.

But the party was paralysed by the shock 2014 Budget which gave unfettered access to pension pots to 55-year-olds. It cautiously welcomed the principle and then shadow work and pensions secretary Rachel Reeves commissioned Pensions Institute director Professor David Blake to produce a report on the future of retirement incomes.

The Blake report was meant to be unveiled last summer but has still not been published.

Meanwhile, a statement from Rayner following her appointment shed little light on the priorities of the new minister.

She said: “With a growing elderly population, the future for pensioners must be at the top of  Labour’s agenda in opposition, so we develop successful, realistic policies for the next general election.

“I will be working hard to make sure we can offer our pensioners the dignity and security they deserve in retirement.”

Cicero executive chairman Iain Anderson says: “One of the tragedies is that pensions policy coming from the Chancellor needs an awful lot of scrutiny. Labour said during the election campaign it was going to look at freedom and choice and challenge it, but it didn’t.

“There are so many gaping holes in the policy – including a savings ratio that is set to go down rather than up and the potential for people to spend all their money – and now we’re heading towards a Budget where the Chancellor is looking to completely blow up the system once and for all.”

Tisa policy strategy director Adrian Boulding adds Labour could end up playing second fiddle to the Scottish National Party on financial services issues.

He says: “The risk for Labour if they chop and change too often is they become less of an effective opposition than the SNP. This year for the first time the SNP has decided it has an opinion on pensions at Westminster, they’re not a one-issue party any more.”

SNP pensions spokesman Ian Blackford secured a Westminster Hall debate in November on  retirement income, while fellow SNP MP Mhairi Black also led a debate on the state pension in the House of Commons earlier this month.

Boulding says: “Ian Blackford has started to raise questions about the reforms – whether there will be large numbers of impoverished people and if controls are needed – all the questions you’d expect an opposition to be raising.”

Partnership director of corporate affairs Jim Boyd says: “Increasingly, although Labour remain important stakeholders, one has to look at the select committees and back benches to act as checks on the Government, as well as some of the more switched-on SNP MPs.”

Treasury trouble

It is a state of affairs further reflected in the contributions of the shadow Treasury.

Nominally shadowing Treasury economic secretary Harriet Baldwin, whose office is leading the FAMR, Labour’s Richard Burgon has instead focused his interest on the Treasury’s disposal of assets acquired during the financial crisis.

Industry experts note a similar lack of engagement across the Labour Treasury team.

Apfa director general Chris Hannant says the trade body has only been able to meet with shadow  financial secretary Rob Marris since the election, whose responsibilities mirror those of the HMRC-focused David Gauke.

He says: “There is a problem with Labour being so inward looking, and we see that across the piece.

“You’re dealing with a party that this time last year thought they would be in government and then there was the leadership election result which shifted it to the left.

“You expect that to affect basic performance, but we also expect them to be doing the day job better than they are.”

Both Boyd and Just Retirement director of external affairs Steve Lowe say their respective firms’ lobbying efforts have met with “zero engagement” from the shadow Treasury.

Lowe adds: “We’ve have not seen them have any visible engagement with anyone else either. We are still trying with that Treasury team, but we are having more success speaking to the team on the shadow DWP side.

“I am disappointed we are not seeing more challenge to the Government agenda. You want to have an opposition that is pushing harder.”

Former pensions minister Steve Webb, now Royal London’s director of policy, says expert input is a crucial component for effective opposition.

He says: “In terms of detailed scrutiny of legislation an opposition relies heavily on outsiders. It is technical by its nature and you need to rely on trade bodies and experts. That’s another reason why the constant turnover is a bad thing, getting to know who the experts are – who has what vested interests – takes time.”

MRM head of public affairs Havard Hughes says unless the situation changes it will be the UK that is hurt by Labour’s focus on internal divisions.

He says: “It’s only a matter of time before the Government start doing the sort of thing they can only do when they have no opposition.

“They will start dropping the ball, making mistakes and applying less scrutiny to their own work because they know they don’t have to face being hauled up by the opposition.”

Adviser view

Ray Black, managing director, Money Minder Financial Services

The rules and regulations governing pensions have been in constant flux since the 1995 Pensions Act. For anybody to have a really good grasp of the current issues facing providers and members they need to be in the post for a long time. If they keep changing you are not going to get anybody who is able to challenge the Government, we need someone with the right experience to be around for a long time.

Expert view

The narrative that the Labour Party is turning its back on financial services is driven by national headlines about Jeremy Corbyn’s leadership. Remember it was Ed Miliband who threatened to break up the banks and intervene in the energy market if elected Prime Minister. A more accurate assessment is that Labour’s relationship with financial services has become even more strained.

This tone has been set from the top. Shadow chancellor John McDonnell has not moved quickly to engage with the financial services industry. But did we ever expect him to?  And the industry can expect to continue to see radical public policy proposals, such as restricting companies from distributing dividends until they pay all their workers the living wage, under a Corbyn-led Labour.

As the Labour leader is always quick to remind his MPs, his election has given him a mandate to be radical.

When you scratch the surface there is a willingness from many people within the Labour party to engage on financial services issues. Admittedly, not all these hold positions within the shadow cabinet, and so the real question is how able are they to influence the real decision-makers, Corbyn and McDonnell.

On pensions policy it is disappointing to see Nick Thomas-Symonds reshuffled just as he  was getting to grips with the brief. With the Government determined to rush through significant policy changes on the Financial Advice Market Review and pension tax relief by the Budget – before the freedom and choice pensions regime has had a chance to bed in – this does raise questions over the ability of Labour to respond adequately to this radical agenda.

Tom Frackowiak is executive director at Cicero Group