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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


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



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