UK

April 19, 2007

The great clunking fist swung into action on Tuesday when Gordon Brown convincingly crushed a Conservative attempt to convict him in parliament of leaving Britain's pensions system in meltdown. But there certainly has been a crisis for those people whose savings for old age disappeared when the firms they worked for went bust. Yesterday, in the Commons, opposition parties and rebel Labour MPs rallied to their defence.

Ministers point to the new insurance scheme they introduced to make sure that similar losses do not arise in future. But insurance cannot help people who have already suffered the loss of their pensions; 125,000 people have been affected. Opposition parties raised their case yesterday. But as they did so they showed scant appreciation for the important concessions that trade unions and campaigners have already secured. The victims are no longer being left out in the cold, but are entitled to 80% compensation, which is not that far off the 90% insurance protection that is being made available for the future. Delays in getting payments flowing have been a problem, although pension wind-ups are a protracted business, even when the government is not involved. And there were few credible suggestions of where extra money should be found to provide more generous assistance.

David Cameron condemned the chancellor last month for "building up a pile of debt". Against that, the Tory demand for a £600m Treasury loan does not look serious. Suggestions that cash can be found by raiding unclaimed final-salary pensions are fanciful - that would tax other schemes that are already overstretched. The precedent would have implications not just in pensions but for other investments too. And even without these, the immediate demands for help are already an increasingly heavy millstone around the chancellor's neck. The financial assistance scheme's stated costs have risen from £400m (over 20 years) to £8bn, hardly small beer, although quibbles over the exact figure remain.

This extra cash is welcome, but costs are galloping ahead of what was expected. A firm grip is needed, at least until these costs stabilise. The point is not a partisan one. When a much younger Gordon Brown pressed Conservative ministers to assist those who had lost out investing in Barlow Clowes they insisted that the help must be discretionary, and refused to sign a blank cheque. Oppositions can make popular demands for cash to help voters without worrying too much about where the money will come from. But any government that did that would not be trusted with the nation's purse strings for long.