NEW Labour’s mission is far from completed, Tony Blair declared yesterday as he promised seven far-reaching Reform Acts for the next Parliament.

In a speech setting out his third-term vision Mr Blair contrasted his radical agenda with the “minimalist” approach that had been adopted by the Conservatives who, he said, were now moving backwards and towards the right.

Responding to a report today highlighting a £57 billion hole in pensions provision in Britain compared with the rest of Europe, ministers will shy away from draconian solutions such as compulsory second pensions and tax increases to fund extra state spending. They will, however, say that they recognise the need to improve incentives to people to save for their retirement and to find measures to help people to work longer, but only if they wish.

One idea being mooted is allowing people to carry on working beyond the pension age of 65 unless their employers can show their age is a barrier. Another is giving workers the right to appeal against mandatory retirement.

Today’s report from Adair Turner, chairman of the Pensions Commission and former Director-General of the CBI, will say that the pensions problem is becoming so serious that taxes will have to be raised to pay for better provision; people will have to be encouraged to save much more than they do now; or workers will have to be persuaded to postpone their retirement.

Mr Blair shrugged off criticism from within his own party about reforms of health and education, saying that free and equal access to quality services mattered more than the nature of the provider, be it public, private or voluntary. While promising that services would remain “funded on a sustainable, progressive basis”, he said there would be “new and imaginative ways” of paying for some of them.

Instead, he identified tackling the “growing inadequacy” of the old welfare state as the focus of “the reforming passion of Labour in power for a third term”. He said that this meant reinventing the contract between citizen and the State so that individuals recognised that they have responsibilities, as well as rights, across the seven policy challenges facing Britain in the next century.

He said: “In the first two terms, we have successfully made radical improvements to the existing 20th-century welfare state and public services, and we have begun to alter its structures. But now, on the foundations of economic stability and record investment, the third-term vision has to be to alter fundamentally the contract between citizen and State at the heart of that 20th-century settlement; to move from a welfare state that relieves poverty and provides basic services to one which offers high-quality services and the opportunity for all to fulfil their potential to the full.”

PENSIONS

What is Blair’s challenge? “Help people to provide security for retirement.” The UK has an ageing population in which the current workforce is not putting enough away for their retirement. Mr Turner’s report is expected to conclude that we should be saving another £57 billion a year to close the gap with the rest of Europe.

What did Blair say? Turner is just an initial analysis and “specific proposals” in the commission’s final report will (helpfully) not be published before the next election. But he also talked about “moving ahead by consensus”, giving “more choice” and changing the “culture that can write people off at 65 if not 60 or 55”. He said that the means-tested pensions credit needed to be developed so that a “decent provision” for the poorest is combined with “incentives for all in work to provide for themselves”.

Where is Blair going? He will reform the current system to eradicate the perceived disincentive to save. More widely, he wants to duck drastic or draconian action, preferring measures designed to help people to work longer if they want and make informed decisions about what they should save.

What does this mean? Employers could be prevented from forcing people to retire at 65, with workers allowed to carry on unless they were proved incapable of doing so. More likely, employees would be given the right to appeal against mandatory retirement. This would be combined with “anti-ageism” legislation and retraining opportunities to help people in their 50s and 60s to remain in the labour market.

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