Labour’s response to the biggest announcement of the Budget, on pensions reform, was never going to be snappy. It would be unfair to expect an Opposition to deliver an immediate response to such a surprising and complex reform. But that’s not to say that the way the party has responded has been exemplary. They were not helped by John McTernan’s Newsnight interview on Wednesday night in which he framed the debate about the pension reforms as being about whether or not governments should trust people to manage their own money. He’s a former party adviser so he doesn’t get the lines to take (which, according to Adam Boulton, were not all that inspiring), but saying ‘you can’t trust people to spend their own money sensibly’ immediately made the debate about whether Labour has any faith in the voters it hopes will elect it into government next year, rather than the details of the policy. As James said yesterday, this is the sort of debate that George Osborne should relish.
Ed Balls distanced himself from those comments, and as Sam Coates reports in The Times, the party is prevaricating over its official policy on these pension reforms, but there was one thing that Balls said that betrayed something very interesting about the Labour mindset on personal finance and trusting people. He told the Today programme:
‘Will there be proper protections and proper financial education so people don’t make the wrong choices and end up running out of their pension pot well before their retirement ends?’
There is a good reason for a party not to trust people with their own money: if they haven’t been offered any education to understand complicated personal finance issues. Oddly, it was under Labour that this gap became quite clear, but it was not until the Coalition formed did personal finance make its way onto the national curriculum.
Personal finance had always been part of PSHE, but under the new curriculum which starts in September, there is provision for financial mathematics for KS3 and KS4, including lessons on managing money on a day-to-day basis and planning for future financial needs. KS3 pupils will be taught the functions and uses of money and the importance and practice of budgeting, while KS4 pupils will be taught about savings and pensions. In the citizenship curriculum there is explicit mention of pensions, which means that at least students are aware of some of the issues around pensions provision. More widely, lessons on personal financial management will help people to trust themselves with their money – and politicians too.
But given Labour never got beyond saying it planned to include personal financial education in the curriculum, no wonder some of its former advisers think you can’t trust people with their own money.
P.S. Ed Balls’ excellent and assiduous adviser Alex Belardinelli argues in response to this blog that his boss did try to legislate for this when in government, but that it was blocked by the Tories. His point underlines how useless most politicians of all creeds have been on personal finance until recently, and many children have been left in a fair bit of ignorance about money management as a result.
More Spectator for less. Subscribe and receive 12 issues delivered for just £12, with full web and app access. Join us.