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‘Maddening but still best Chancellor’

Tony Blair has laid bare his rocky relationship with Chancellor Gordon Brown.

He describes rows over the EU budget and Cabinet choices, accusations of bullying and a Brown-led press campaign against him in 2004.

He says: “So was he difficult, at times maddening? Yes. But he was also strong, capable and brilliant, and those were qualities for which I never lost respect.”

Considering the future of the Chancellor after the 2001 election, Blair says: “Moving him could have been politically achievable but who would I have put in his place? The Gordon problem – the combination of the brilliant and the impossible – remained.

“I came to the conclusion that having him inside and constrained was better than outside and let loose or, worse, becoming a figurehead of a far more damaging force well to the left.”

He says: “My failure to do so was not a lack of courage. Nor was it simply about managing a complex situation. It was because I believed, despite it all, that he was the best Chancellor for the country.”

Blair describes the “relentless personal pressure” of being repeatedly asked when he would stand down as “wearing”.

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  1. The Brown Legacy, FSA and RDR

    Gordon Brown was hopeless and the FSA was established as his private political army of the treasury as he built his rival power base:

    FACT: Gordon Brown inherited one of the best private pension savings systems in the world. Britain had more pension savings than the rest of Europe combined. We also appeared to have long-term state pension costs under control, despite our ageing population.

    FACT: Now more than half of pensioners now rely on means-tested benefits – up from 39 per cent in 1997. Since 1997 Britain’s savings ratio – including pensions savings – has halved, to 5 per cent.

    FACT: Since 1997 the once-thriving company pension system has crumbled. Most traditional final salary schemes have now closed.

    FACT: Brown abolished dividend tax relief for pension funds. This single policy has so far cost our pension schemes tens of billions of pounds and signaled the end of private sector final salary pensions (but not public sector final salary pensions which continue unabated)

    FACT: Over 100,000 people have lost most or all of their final salary pensions, when the FSA declared “safe” schemes were wound up.

    FACT: The FSA advised these scheme members that they were guaranteed.

    FACT: Brown has refused to provide sufficient money to remedy this gross injustice, despite being told to do so by Parliamentary Ombudsman and the Public Administration Select Committee.

    FACT: Brown sold 395 tonnes of our gold reserves into a rising market. It has lost £175m. It has also lost more money by investing a large proportion of the $3.3bn proceeds as a support operation for the euro. Some saw this as a method of entry into the Euro by stealth! The value of gold rose by £40 an ounce since the government’s selling started. (FT 6/3/02) Since the auctions, the value of gold has trebled, leaving the Treasury with a £2bn loss on the deal.

    FACT: Stakeholder Pension schemes, introduced in 2002 were aimed to help those on moderate incomes to gain access to simple – and cheap – pension products. Distribution costs were stripped out of the schemes and when this was pointed out to New Labour their solution was that the target market would pay fees in order to be sold the scheme! This was as daft as Marie-Antoinette (1755-93), who said when told that the French populace had no bread to eat, that they should eat cake!

    FACT: The financial services industry spent billions of pounds setting up these schemes. But given the loss of confidence in pensions – and the disincentives caused by the Chancellor’s means testing and the removal of any commission incentive to sell these plans you would not be surprised to hear the “target group” has not bought them.

    FACT: The Treasury’s latest pensions initiative – “simplification” – has been a fiasco. The book of new regulations is thicker than the old one.

    FACT: Brown keeps changing the rules, pension planning is almost impossible to advise on without fear of retrospective sanction by the FSA, Browns child. Remember the last-minute U-turn on allowing residential property in self-invested personal pensions? Or the recent change of mind on forcing annuitisation over the age of 75?

    Brown has replaced a saving culture with a debt culture. Since 1997 Britain’s savings ratio – including pension’s savings – has halved and yet as we speak Browns executive arm the Financial Services Authority (via their Retail Distribution Review) is implementing the destruction of those best able to implement a culture of personal responsibility via life pensions and investments savings – the independent adviser. Browns legacy will be the destruction of the savings culture and those best able to reverse this trend the independent financial adviser community.

    FACT: Brown FSA RDR has been accepted by Mark Rubber Stamp Hoban MP and if you look at the FSA’s own cost benefit analysis you will see that they now estimate the 10 year cost as £3.55bn!

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