By the time you read this, it is likely that the results of Sandler and Pickering will be available to all and, no doubt, a lot of ink will have been used to analyse their impact.
Unfortunately, I find myself writing before we know the results of both, so I will limit myself to just one observation. If nothing else, the Pickering and Sandler proposals should do one thing and one thing alone – energise pensions and long-term savings in the near term.
If they do not have that effect, they will have failed on two counts – encouraging savings for all (a stated Government aim) and energising the financial services industry to provide greater product innovation as a means towards stimulating savings.
Many product providers have clearly been shying away from new launches as a result of the state of markets but also while waiting for the outcome of Sandler and Pickering.
But another important milestone in Government thinking, one which many people have been ignoring, is just around the corner – the Treasury's strategic spending review.
The results of the review will be available in a couple of weeks but the decisions made by Gordon Brown and his team will have far-reaching implications for the rest of this Parliament.
The review – a model put in place by this Government from 1997 – is the equivalent of a New Labour five-year plan, or at least a Brownite version of it. It is designed to put in place the Government's spending priorities until the 2005/06 financial year – a test for Brown which might make or break his chances of ever being Prime Minister.
The key determinant of success among the electorate will be especially for health, education and transport – whether or not we collectively decide “things are going to get better” over the remaining life of this Parliament.
Brown has also put in place “public service agreements” which are designed to set departmental targets and benchmarks and judge the effectiveness of public spending.
All Government departments have been lobbying hard for cash for the past 12 months, knowing this clear set of priorities. Brown has already hinted that Education Secretary Estelle Morris should get a big boost for schools and colleges in the review while the health service has been already granted extra billions in the Budget – much of it from the £9.5bn to be raised from the hike in NI contributions.
Speculation is mounting over just who will get what – but the main losers from the review appear to be figures such as Home Secretary David Blunkett, who may not get the extra resources he wants to tackle crime and immigration. Of course, it goes without saying that Blunkett is Brown's strongest rival for the leadership.
So with the priorities of education, health and, perhaps, transport, just what will the spending priorities do for Government policies for the coming two to three years? And what impact will those policies have on the challenges faced by the financial services industry?
The Chancellor has already made clear that health remains his first priority. The Wanless report and the April Budget have changed the political outlook on health – cash is king for the foreseeable future.
However, health expectations continue to grow. The Conservatives have on their agenda the need to develop private cover as the dominant form of provision for the health service.
But growing expectations remain. While the Conservatives are failing to capitalise politically, the challenge for the Government in the coming two to three years will be to ensure there is delivery.
But the reality of using the NHS means there will be considerable scope for private provision. Already this Government has moved to using private as well as EU resources for healthcare needs. The likelihood is that the new spending on the NHS will be presented politically as targeting primary needs. Wider or less essential healthcare needs will not be the “acute” operating theatre of need.
The demands on the National Health Service will continue to grow exponentially as the population continues to age. IFAs need to remember the desire for improved healthcare provision can only continue to increase as time goes on.
As part of Government thinking, the workplace will remain the most efficient mechanism to generate a savings culture – pensions being the current example. But this will increasingly apply to thinking on health provision.
Recent developments within the NHS with the development of primary care trusts mean that many of the designated 35 specialised services, such as cancer, cystic fibrosis, haemophilia, spinal services, will find their budgets under increasing pressure – a phenomenon we are likely to witness to increasing effect in the coming year.
The effect of this will be manifold. Government will be forced to look at the workings of the new PCTs anew and healthcare product providers should start to develop products relevant towards a new NHS regime that will increasingly focus only on urgent patient needs.
Which brings me back to personal provision. Regardless of Pickering or Sandler, the incentives to save or make personal provision at the moment are extremely low. Markets are not encouraging but neither is there any renaissance in terms of the delivery of private sector product options.
Where the financial services industry does not make reference is towards social exclusion – a big policy imperative for this Government. And yet the opportunities for making mass workplace provision clearly exist.
What needs to happen is just that – a meeting of private sector service delivery with Government spending objectives. At this crossroads both the Government and the financial services industry can achieve their objectives. On healthcare, on pensions, on savings the time is ripe for innovation. July 2002 can provide the political route map for such change.
Iain Anderson is a director and chief corporate counsel at Cicero Consulting