‘What matters is what works’: Labour's journey from ‘national superannuation’ to ‘personal accounts’
A key element of Labour's response to the Pensions Commission's recommendations for ‘a new pension settlement for the twenty-first century’ is a system of ‘personal accounts’ that will be administered and invested by the private sector. The contrast with 50 years ago, when Britain faced similar pressures, is striking. Then, Labour presented to the British public proposals for a state-run scheme embodying redistribution between higher and lower-paid workers and the accumulation of a very large fund that would be directly invested in stock markets by the state to promote faster growth. Today's scheme embodies neither redistribution nor collective control of the scheme's assets, and investment and risk-taking will be the responsibility of individuals rather than the state. This article explores the differences between Labour's proposals in 1957 and the scheme it proposes today. It considers what these differences tell us about the party's changing conception of social democracy, and highlights the irony that, with consumers’ faith in financial markets shattered by the most severe financial crisis since 1929, New Labour's embrace of a private sector solution on the grounds that ‘what matters is what works’ now seems badly mistaken.
Keywordssocial democracy labour party New Labour pensions personal accounts
This article has benefitted from conversations with many people but I extend particular thanks to Paul Bridgen, Nicholas Hillman, Pat Thane, Noel Whiteside and Mark Wickham-Jones. Comments made by the two referees helped to sharpen the analysis. I also owe a debt of gratitude to the Financial Times, the only newspaper to cover recent developments in pensions policy in depth, and particularly to its Public Policy Editor, Nicholas Timmins whose reporting has been outstanding. All errors are, needless to say, mine not theirs.
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