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Portillo keeps his cards close

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&#39s 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&#39t find me


straying far from my brief in the run-up to the election. You certainly


won&#39t find me saying anything that could be interpreted as undermining or


threatening William Hague in any way. And if you do, then I&#39ll 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&#39s speech gave valuable pointers about how the


Conservatives will tackle pension and savings issues over the next few


months.


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


surround-ing annuities.


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


Oonagh MacDonald.


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&#39s 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&#39s 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&#39s 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&#39s 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


hand.

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