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This week in Politics

The Prime Minister and Chancellor appear to have reached agreement to restore the earnings link to the basic state pension signalling an unlikely but peaceful end to the pensions soap opera that has been raging since the second Turner report.

The basic state pension is now set to rise in line with earnings from 2012, later than Lord Turner recommended but still a significant victory for Tony Blair and Work and Pensions Secretary John Hutton.

Brown appears to have caved in to the significant political pressure calling for a marked increase in state pension benefit, following his previous obsession with targeted means tested support for the poorest.

The timetable for pension reform also became clearer this week with a Commons statement committing the Government to publishing its white paper before the Whitsun recess on 25 May.

New pensions minister James Purnell quickly found his feet on his first day on the job at work and pensions questions batting away Conservative attacks and taking in back bench concerns about future reforms.

Work and Pensions Secretary John Hutton rejected calls for some kind of universal citizens pension stating the reforms will be built on a contributory framework with special measures to take into account carers and women.

Purnell also said the Government’s response to Ann Abraham’s Parliamentary Ombudsman drubbing will be published in the next two weeks, with many suggesting it will come out alongside the white paper.

Meanwhile any lingering issues of affordability will be affected by reshuffle moves that simultaneously calm waters and stoke the flames.

Stephen Timms’ Cabinet promotion to Chief Secretary to the Treasury will hopefully forge more common ground between Treasury, DWP and Number 10 but his Blairite replacement Purnell could increase tensions between the two camps.

With the Finance Bill entering standing committee stage MPs will continue wrestling with Brown’s sweeping changes to IHT as well as looking at Budget moves on Reits and VCTs.

The LibDems are still calling for more time to understand the ramifications of the new IHT rules before their introduction while the Tories have suggested a number of amendments they believe will soften the blow to ‘hard working families’.

The Tories have been vocal and consistent critics of the changes but will have to be careful not to fall into the Labour trap of being seen sticking up for a privileged few- a criticism hurled by many on the Government benches at last week’s debate.

Such political punches could do real damage to the new Cameroon brand, especially with Cameron continuing his attack on big business and the ‘creepy’ tactics of Philip Green.

Elsewhere the promotion of Ed Balls to Economic Secretary to the Treasury may be an indication of financial services interests rising up the Government agenda.

The appointment of the arch-Brownite could mean higher priority is given this year’s Isa review and other related issues in Balls’ In-tray with the financial services industry given the attention it believes it deserves.

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