Chancer of the Exchequer’s false recovery, Part 2

Some very unpleasant consequences appear to be heading our way. Or rather, your way: I’m now on the way to becoming a French resident….a fact that seems to get up some people’s noses. I guess they think I want to be here. I’d much rather be where Britain used to be, but that’s not possible any more.

The sort of thing I’m worried about is what happens when Ebbsfleet is built, and then Prime Minister Hunt decides to frack beneath the local NHS hospital. 15,000 patients falling into a hole which then fills with water to create a new inland lake would make for an interesting PMQs session. The PM, however, would talk about “consequences nobody could possibly have foreseen”, adding for good measure “I have done nothing wrong” and rounding off the session with the claim that “A new source of fresh water has been given by fate to the brave people of Ebbsfleet, will still of course be able to use the BUPA hospital on higher ground.

Claiming an alabi is no longer an option open to George Osborne. Like many a first world war officer-class idiot, Robsone now finds himself fearful of snipers from behind as well as in front. Lord Turner for one said yesterday he was “worried that the UK is developing a recovery which is simply returning to the very issues that led us to this problem in the first place.”

It’s very hard to argue with that, but I fancy Georgie-Porgey has a cunning plan, my lord. This may well lie within his pension “reforms”…or so a Treasury leaker informs me.

I’m not sure everyone has completely taken on board just how irresponsibly sweeping the deregulation of all access to pensions really is. There is a psychographic within every population (although it varies by culture) of around 30-35% of people called by marketing folk Grasshoppers. That’s to say, they assume winter is never coming, and live for the moment.

Legal & General, one of the UK’s biggest pension companies, has said it expects the UK market for individual annuities to shrink by around three-quarters after 2015. That seems to me over the top, but if even half that number of former annuity customers choose to withdraw the pot, something very interesting may happen.

People with defined contribution pension pots will no longer be obliged to buy an annuity when they reach retirement: from next April, they will be given unrestricted access to their pension pots so they can draw what they like, when they like.

A month later, we will be going into a General Election. A lot of lower middle and working-class voters will suddenly find they have a large five (possibly six) figure sum in their bank accounts. This – and the rising “value” of their homes – is going to make them feel pleasantly wealthy: the last thing they’ll want is to have Labour come in and reverse the decision.

Having ridden back to power on the back of these two fantasies, I would expect the Rabid Right to take full control of the Conservative Party, and shift the Reverse to Victoriana gear into Top. How convenient it would be, dear reader, if at that precise moment, Britain had a retail boom based on….lots of people spending pension monies.

This is no idle thought. Most economists accept without debate that the privatisation/demutualisation fest from 1985-96 helped fuel a consumer spending boom. Nigel Lawson’s claim that he was creating a “shareholder democracy” was drivel: shareholder numbers doubled, but from a very small base: 1 in 2 share payout recipients sold the shares within a month. Today 30 years on, 70% of all shares are still owned by large institutions.

Pension holders have been Zirped for over five years now. I predict they will spend, spend, spend. Which is, I’m told, a large part of The Chancer at the Exchequer’s motive behind doing this. (And if things go pear-shaped, of course, pension pots in banks are easier to nick than pension pots in supplier companies and Trusts).

You may be interested to learn, by the way, that despite the radically foolhardy nature of this ‘reform’, it was allegedly put together over a very short period of time. I hope to bring you more on that in due course.

Earlier at The Slog: Bring Putin to book – Frack for Britain!