It is free market, it is libertarian, it is all about trusting people to run their own lives – and, as the wretched Labour party is finding out, it is very hard to disagree with. The pensions minister, Steve Webb, crystallised the Government’s thinking in a phrase that sent the Lefties round the bend – and which made me stand on my chair and cheer. It was going to be up to us to decide how to spend the money, he said, and if people wanted to blow it on a Lamborghini – well, he was “relaxed” about that.
It is the first time I have heard a Lib Dem say anything remotely liberal, in the sense of free market (I await the day when they stick up for democracy, in the face of the intrusion from Brussels, but you never know). He is making a moral point, that when people reach a pensionable age they should be allowed to run their own lives, and not be treated like children. It may well be that buying a Lamborghini is not always the right move. There may indeed be some foolish old people who end up living in a rusting and motionless Lamborghini and eating tins of dog food, because they have gone for the luxury car without making adequate provision for the rest of their needs.
There might be some pensioners who spent their declining years plying the streets with a Lamborghini minicab. As I am sure Steve Webb meant to imply, the Lamborghini option is not going to be for everyone – not when the average pension pot is £25,000. But the point is that it is their look-out; it is their savings; it is up to them to decide what to do with it. It is that sudden rush of freedom – the empowerment of millions of people – that naturally appals the left.
Though Miliband and Balls have yet to announce their precise policy response, the idea of liberating Britain’s pensioners has sent some of my favourite socialist commentators into spasm. In The Observer, Will Hutton prophesied that “This pensions 'freedom’ will be a long-term social disaster.” He argued that pension contributions were sheltered from tax, and that therefore, “We should care if the resulting money is spent on a Lamborghini: a chunk of the car belongs by right to taxpayers.”
Isn’t that amazing? By that ridiculous logic a chunk of anything that we buy with our existing pensions “belongs by right to taxpayers”. Is he seriously saying that taxpayers have a right to go around telling people how to spend their pensions? It isn’t taxpayers’ money, you Lefty bossyboots control freak: it’s the money that the pensioners have saved up themselves – out of their taxed income!
Like any elected politician, I have received loads of letters and complaints, over the years, from people who found they were sitting on this apparently huge sum of cash, in the form of their pension pot, and were only allowed to take a dribble a year – and with the risk that they might die before they had taken the yield they deserve. Of course some people will want to continue to milk the desiccated beast, and rely on the security of the annuity; and others will want to slaughter it, and use the cash as they see fit.
I don’t think many will end up blowing it on Italian cars, actually. I think the vast majority will want to put their pots into the market with the greatest yield over the past 40 years – and that is property; and I expect huge numbers of those approaching pensionable age will be thinking about how they – the baby boomers – can do something to help the younger generation with the single biggest problem they face, namely the cost of housing.
This pensions change is not a social disaster, but a wonderful opportunity. It is a chance for the older generation to find that sudden wodge of dosh that will enable them to help their children or grandchildren find a deposit and get on the ladder; and the existence of those new deposits will give developers even greater confidence to build more homes – and faster than they are now. I am not saying all pensioners will follow such a path of enlightened self-interest; but many will.
Above all, it is their own choice. That makes this policy not only right, but fundamentally Tory.