New roads in Britain are badly-needed, but who should bear the costs?
Motorists, says David Cameron — and his speech today is a move in the right direction. No tolls would be slapped on existing roads, so motorists are free to drive as freely as they do now.
But if they want a shortcut, they’ll have to pay for it. What I’m uneasy about is Cameron trying to raid our pension funds to help subsidise this.
There are many ways to raid pension funds — QE is one. The National Association of Pension Funds estimates that a scandalous £130 billion has been wiped from the value of our collective
pensions because Sir Mervyn’s Magic Money Machine is artificially lowering interest rates. This allows Osborne to misrepresent low rates as the applause of global markets for his wisdom. It
radically lowers the interest his government pays on its massive debt. But the NAPF makes clear: this is crippling the value of annuities. Borrowers like me save a fortune — but people now
retiring, and forced to put their pension pot into an annuity (which pays out a fixed amount for life), are seeing that sum up to 20 per cent lower. They’ll be poorer, for life, to allow Osborne to
boast about low rates and bail out Britain’s borrowers.
I say all this because who does Cameron want to finance these toll roads? The pension funds. In his own words, ‘We need to look urgently at the options for getting large-scale private
investment into the national roads network — from sovereign wealth funds, pension funds, and other investors.’ Around 10 to 12 separate pension funds are expected to get involved in the government’s infrastructure projects, and Downing St is
eager for them to contribute as much as they can. But why? I’m all for new, private toll roads — but why can’t they be done on a basis that would attract any investor, without the continuing emphasis on pension funds?
It’s not clear to me why any pension fund manager should invest money in a project which gets lower returns the market average. Nor why the NAPF should do anything to assuage Osborne, whose
‘monetary activism’ will soon have rank him above Brown as Britain’s no.1 pensions raider. Osborne is lucky that quantitative easing are the two most boring words in the English
language — otherwise the pain caused by QE to so many would be getting more coverage than it is.
So, yes to toll roads. No to a dodgy deal with pensions funds to subsidise sub-market schemes. Cameron and Osborne have done enough harm to pensions already.
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