Pensioners will face hard Labour

PENSIONS have never been much of a priority for Labour. From the moment they took office and removed the tax break on dividend income provided to private pension plans, their colours have been nailed to the mast.

Now the unalluring picture is one of retreat on several fronts. At Equitable Life the refusal to mention the word compensation in public speaks volumes on the way the Treasury is headed as it digests Justice Penrose's report.

In the Pre-Budget Report the promise to take a second look at the £1.4m tax-free limit on pension pots was done grudgingly and accompanied by the threat that if problems were discovered, the pensions tax simplification might be dropped altogether.

It also emerges that plans for a Pensions Protection Fund (first outlined in June 2003) could be on the slow burner.

Given the urgency of the problem, with future retirees left high and dry in insolvent companies, it was believed that new legislation would reach the Commons in mid-December. It was too late for workers at steel firm ASW, but would have ensured that if an even bigger scheme went into wind-up there would be a rescue fund.

It now appears that new legislation may not reach Parliament until mid-February, when Hutton and top-up fees are out of the way. This is a success story for the lobbyists, including the CBI, campaigning against a levy on healthy companies to bail out those who have been less prudent.

The need to put a safety net in place is urgent. One of the tricks picked up by venture capital groups, which have led the takeover charge over the last year or so, is to bundle all of the pension-liabilities of companies they take over into loss-making enterprises.

This gives them the opportunity to wriggle out of long-standing, inherited pensions obligations by using the current wind-up laws.

There is no place in the Anglo-Saxon capitalist model for such rapacious behaviour from buyout partnerships with claims to respectability.

Euro fallout

NO prizes for guessing what will be top of the agenda when the Group of Seven richest countries gather in Boca Raton, Florida on 6 February.

Expect finance ministers from euroland, led by German finance minister Hans Eichel, to be bleating about dollar neglect.

With the euro currently standing above $1.25, the highest since the launch of the single currency, there is a distinct feeling of vertigo in Berlin.

The belief in Germany is that euroland can live with an exchange rate of $1.20. Anything above that endangers competitiveness.

The response from US Treasury Secretary John Snow and the Americans may be unforgiving. It will be remembered how cool the Europeans were at the IMF meetings in Dubai last September when the US wanted to make reference to out-of-kilter exchange rates for the dollar against the Chinese currency, the renminbi, and the Japanese yen.

The G7 came up with new language demanding 'more flexibility in exchange rates' resulting in one-way selling of the dollar against the euro.

This was not intended. So the idea that Snow will go to Boca Raton full of goodwill to the Europeans is a fantasy. More likely the Americans will be encouraging euroland to cut interest rates to reignite growth.

After a 20% fall in the dollar against the euro this year the Bush team may not be entirely happy. It may fear that the weaker currency will, over a long period, depress the stock market and push up long-term interest rates.

But the betting must be that the US is happy to see the dollar at a level that will improve the trade balance. Amid the tumult Britain is on the sidelines. But the force of dollar weakness has been strong enough to push the pound to its highest level in 11 years against the greenback at $1.78.

Just right for those seeking a Florida holiday - but one that avoids becoming mixed up with the grey suits at the G7.

Greedy grocer

IT took a public flogging for Graham White and the directors at Londis to review their shameful £20m options contract.

White and his team have already been helped to £7.1m for a change in contract terms, and the chief executive pays himself £500,000 a year - nearly as much as Roger Holmes at Marks & Spencer.

KPMG, which has been called in to supervise the bidding, has only one choice. It must unwind a greedy options package and ensure that all Londis shareholders - who after all have built the group's prosperity from the ground up - share most of the bid proceeds.