I went on the Today Programme last Saturday along with several other regular contributors to give one money-saving tip to our new government. Mine was to do with pensions. You can listen to what I said here(fast forward to 51 mins 45 secs), or read my full argument here: The UK's pension rules are too generous.
But the core idea is pretty simple. We should cut the amount that we allow people to save into a pension so that they are able to save just enough to prevent them from being a burden on the tax payer in their retirement, and no more. Obviously they can still save as much as they like outside a pension just not in such a way that it is subsidised by the taxpayer.
I suggested cutting the amount everyone is allowed to save every year to a not-exactly-mean £20,000. The financial industry would prefer the number to be more like £50,000: they say they like simplicity but they clearly don't want any changes to hit their margins too much. Cutting it to £50,000 would save about £3.6bn a year (on industry figures). So, given that the cost of tax relief tends to be biasedtowards higher-rate tax payers, I think we can safely say that cutting the amount to £20,000 would bring the savings up towards a good £7bn. Not bad for a money-saving measure that really would only affect the much better off and that would remove the odd anomaly of the tax payer subsidising the vast pensions of the rich without making the whole system incomprehensibly complicated.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Some of the other speakers came up with slightly more radical ideas (Simon Jenkins thinks we should dump the armed forces in their entirety) and some rather less radical. But when I then looked at the next day's Sunday Times I began to wonder why we were bothering with the out-of-the-box thinking at all. Why? Because the paper listed a horrible train of non-jobs still on offer in the public sector at vast salaries. You can read the original article here.
Read it and you will see that last Friday just after Communities Secretary Eric Pickles announced around £1bn in cuts for local authority spending councils were still advertising for the likes of a 'Health, safety and wellbeing officer' (Surrey, £34,524) to make sure that "staff take breaks, go for walks that kind of stuff". Then there was the advert for a media officer with "the skills to deliver positive stories about the council" (Newham, £36,000) and a "putting people first programme manager" (Herefordshire, £50,000 plus).
I find this really odd. The councils must know that their budgets are about to be slashed contributions from central government are going to come down, and, as recession bites, so are their own revenues from council tax, parking and the like. So why, instead of taking action, are they carrying on spending on nonsense jobs? And just as importantly, who keeps voting the kind of people prepared to spend £180,000 on a head of communications (Suffolk) back in? Totally bemusing.
So how do we bring it to an end? Let's not forget that the more we pay communications directors to issue good news, the more we'll end up cutting the NHS budget in the end. The only answer is to encourage an outbreak of common sense.
A post on the Conservativehome blogsuggests how: get someone sensible from central government (this will be the tricky bit) to visit every council and list all their non-jobs plus the cost of those non-jobs. Then add them up and subtract the total amount from each council's central funding accordingly. That should do it.
-
Private school fees soar and VAT threat looms – what does it mean for you?Rising private school fees could see more than one in five parents pull their children out of their current school. Before you remortgage, move house or look to grandparents for help, here’s what you need to know.
-
Best and worst UK banks for online banking revealedWhen it comes to keeping your money safe, not all banks are equal. We reveal the best and worst banks for online banking when it comes to protecting your money from scams
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
