Pensions: Brown is the one to blame

THERE was one shameful moment during the 1997 election campaign when Tony Blair told an outright lie. He accused the Conservative government of planning to abolish the state pension.

Blair put out the false scare story the day after a rogue ICM poll suggesting that John Major might win the election. It worked really well.

Some voters, who made the mistake of believing Blair, were terror-struck. One soon-to-be Labour minister found a credulous old lady in tears on the doorstep. Stricken with remorse, the future minister assured the elderly lady that Blair's warning was quite untrue.

In fact, it has been Labour who has wrecked our pensions. Seven years ago, British national pension provision was the envy of the world. Today it is in ruins. Private pensions schemes have collapsed, but the state cannot begin to afford the gigantic future sums it must pay to a population that is growing older all the time.

This desperate state of affairs is the direct result of Labour decisions. It is almost as if the Government has set out to destroy the future security of the nation. The first assault came just after the election, when Gordon Brown announced that he was abolishing the tax advantages enjoyed by pension funds.

As Tom Bower reveals in his new biography of the Chancellor, actuaries actually sent warnings to the Chancellor that his plan would plunge company pension schemes into a £50bn deficit, forcing employees back into the arms of the state, which could ill afford the burden. Brown ignored the advice, but suggested that companies should shore up their assets by investing more in the dot.com boom, then on the verge of a catastrophic collapse.

The second attack on pensions came two years ago, and was even more insidious: the introduction of the pensions credit. The idea sounded good at the time, because it guaranteed a minimum income to all pensioners. But its medium-term effects are disastrous, because it made it economically mad for ordinary people to save. The more money we set aside for our retirement, the less we get from the pension credit.

The Chancellor's scheme might have been invented to encourage profligacy, punish prudence, and increase the burden on the state. Blair knew this at the time. He tried to prevent Brown going ahead, but as usual was too weak to stop him.

To do them credit, the Tories also spotted the problem. Social Security spokesman David Willetts has promised to end means testing and bring back a universal state pension for some time.

Privately, Downing Street supports this idea, but is too frightened to tackle the Treasury. The trouble is that the only way Blair can tackle the pensions crisis is by sacking his own Chancellor - and he still lacks the guts to do that.