The annual general meeting of the Centre for Policy Studies is a grand
affair. The great and the good turn up to salute a thinktank that has been
at the heart of Conservative thinking for 25 years. The guest speaker has a
gilt-edged opportunity to lay out fresh Tory thinking and to be guaranteed
extensive media coverage.
So why did Michael Portillo, who had been invited to give the coveted
address this year, choose to talk about stakeholder pensions and annuities?
Most of the audience, few of whom are financial experts and none of whom
follow the debate on stakeholder and annuities with the assiduity of Money
Marketing's readership, were clearly baffled. Indeed, Portillo went as far
as to warn the audience that his speech would be technical and dull.
But then, Portillo was obviously not talking simply to the people in the
room. He had other audiences in mind.
First off, of course, Portillo was speaking to the political editors of
the national newspapers. He was saying, in effect: “You won't find me
straying far from my brief in the run-up to the election. You certainly
won't find me saying anything that could be interpreted as undermining or
threatening William Hague in any way. And if you do, then I'll start making
even more boring speeches. So there.” He achieved that aim in spades,
securing quiet coverage in the FT and the middle pages of other papers.
His second audience was people like you and me – nerds who follow the ins
and outs of financial services with all the enthusiasm of trainspotters.
For us, Portillo's speech gave valuable pointers about how the
Conservatives will tackle pension and savings issues over the next few
Pointer number one, naturally, is that the Conservatives see stakeholder
pensions and annuities as potentially big political issues.
As people become more savvy about saving and about stockmarket inv-estment
in particular, so they are becomingdisillusioned with the restrictions
The Government appears to be doing little. There is, by all accounts, a
quiet Whitehall review, but apart from raising the compulsory purchase age,
there is little prospect ofsignificant reform. So Portillo has seenhis
opportunity and has ironically endorsed the report of former Labour MP
On stakeholder pensions, Portillo has become the friend of the
high-chargingindustry and independent financial advisers. He is firmly
against the 1 per cent charge cap and deeply in favour of advice.
To say that Portillo has been captured by the fund management and IFA
industry is the under-statement of the century. One can certainly see the
influence of Howard Flight, one of Portillo's Treasury team, at work. He is
likely to have advised on the content of the speech and he has long been a
champion of the IFA community.
Finally, of course, Portillo's speech represents the traditional dominance
of the Treasury over the Department of Social Security. As in all things,
even in Opposition, Treasury people dominate everyone else. While the
detail of stakeholder still resides at the DSS, the political will and the
broad overview remain with the Treasury. And things look like they would
remain that way under a Conservative Government.
Recent events, indeed, make the prospect of a Tory Government in the not
so distant future somewhat more realistic. To this extent, the major
disappointment of Portillo's speech was the lack of any policy solutions.
Most people agree that stakeholder is an elastoplast solution, and that
some of the fundamental issues surrounding saving have not been addressed.
They were not helped by Portillo's speech.
But then, one of the lessons of Opposition, as Portillo knows better than
most, is keep your cards close to your chest until you have to play your