… and hello Adam Smith.
Decided under a Labour government, I know (which is a separate point to the one I’m making) and in increasing circulation for the last four years already – but what better zeitgeist for these free market ConDemNation times could there be?
Much talk about yesterday’s BBC proposals to cut the deficit in the BBC pension scheme by addressing the scheme’s benefits structure, including not least to redefine the annual growth in final pensionable pay from 1 December next by a maximum of 1%. The BBC is not a public service organisation, in terms of the terms and conditions of employment, and it is not covered by the Hutton Commission review but its presence in public life means that the review itself provides part of the essential backdrop. As BBC blogger Robert Peston commented – from the perspective of a member of the scheme – this creates a huge differential between members of the scheme, whose final salaries are rising by no more than 1%, and former members, whose salaries are fully inflation protected. This creates a major disincentive to remain a member of the scheme – which, as Peston comments, might well be the aim.
It’s not quite as simple as that: at a time of very low inflation, each additional year’s membership of a final salary scheme, coupled with some level of growth in final salary, is likely to mean people are better off remaining in a final salary scheme. Of course, we don’t know what’s likely to happen to inflation (and you can’t tend to switch into and out of a final salary scheme), though this may be an important consideration if the ConDems budget cuts do indeed merrily lead us ‘unavoidably’ into a double-dip recession over the next few years, especially for workers coming up to retirement. At the same time, the so-called ‘fringe’ benefits of final salary scheme membership – such as ill-health retirement and death in service benefits – are likely to prove an additional attraction to remaining in a scheme.
It needs to be borne in mind that the BBC proposals are just that: subject to consultation, and they may well change, not least as a result of discussion with employees as represented through the BBC’s trade unions.
However, the level of attack represented by such moves is significant. Inflation as measured by the Retail Price Index has, over the past, ohh, forty years between 1970 and 2009, grown by an annual average of 6.47% although that includes some periods of high inflation in the 1970s and 1980s; the more recent history over the last twenty years shows annual inflation standing at 2.81% (figures from measuringworth.com). This is clearly a sizable comparative loss, not least since annual wages tend to rise faster than inflation (the BBC scheme, for instance, seems to use a real growth in wages of +2% in its actuarial assumptions).
Any switch to CPI rather than RPI for indexation of benefits – which may well cover some private schemes which draw on old definitions of inflation – will have a further impact on lessening the margin of difference between existing and former members of a scheme: as I commented below, CPI tends to be lower than RPI (on this data set, by about 0.67% per annum).
In any review of pensions provision over the next few years, it is to be hoped that the mantra of ‘fair and affordable’ doesn’t lose sight of the first half of such a phrase.
Note to my fellow England fans here:
Football is a human game, based on human decisions; it is a game that can be debated, is controversial, is subject to chance. When you concede that technology has the upper hand, not only does football lose the human interest but it becomes little more than something to place a bet on. Elements with an interest in the game may well want that – but the minute football concedes that decisions are no longer subject to human error is the minute that it, finally, concedes its soul to the money men.
Yes, it hurts, right now. But football is a game, not a business.
And at least now we can now enjoy the World Cup, properly. And, importantly, we should recognise that this is a cracking, classic counter-punching German side.
[Edit 29 June: Not really worth a new post, but Sepp Blatter, the FIFA President who has previously turned firmly away from using technology in football, has today apologised to England (and to Mexico) – and I’m sure we all feel better as a result of that. Ultimately, however, and on the key assumption that refs are neither biased nor deliberately making bad decisions, and I don’t think that either of those are really in question, these things do tend to even themselves out: you gain from some decisions; you lose from others. Usually, you tend to remember the ones you gain from and forget the others, mind. But that’s football and it’s also life itself, for which football continues to be a decent metaphor – you can’t iron out all the creases which make life worthwhile and it’s controversy and the resultant struggle which forces people to grow: remember this? How would that be reffed in the light of video replays and how would Beckham’s career have evolved subsequently?]
Despite the attractions of Glastonbury, just one tune in my head all weekend, really.
And as for the result, I’d definitely take this.
Today’s BBC ‘quite interesting’ quote of the day is a thematically appropriate, given the coincidence with this year’s Glasto, reference to a piece of wisdom attributed to Captain Beefheart:
The largest flying land mammal is the absent mind.
Now that is quite interesting.
Talking of Glasto, just thought I’d echo the comments about The Edge on stage with Muse last night: now I quite like Muse – you can’t deny the virtuosity of Matt Bellamy (despite a somewhat disturbing resemblance to 80s synth king Howard Jones in his pomp, the drummer has a class drum kit and how can you not admire a bass player who smokes a pipe on stage – but I’m not sure I could eat a whole gig and I have to confess I was flagging until those opening notes of ‘Where The Streets Have No Name‘ – electrified the whole place, I thought, and clearly inspired Bellamy into attacking his guitar with even greater gusto on ‘Plug In Baby’, which followed.
Same old played out scenes 