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Last Updated: Thursday, 24 November 2005, 14:48 GMT
Brown steps into pensions debate
By Nick Assinder
Political Correspondent, BBC News website

Gordon Brown appears to be in a frenzy of letter writing - slapping down demands for big public sector pay rises and apparently blasting a large hole in expected pension reforms.

Gordon Brown
Brown opposes pensions/earnings link

The fact that the chancellor is flexing his muscles on pay is no great surprise - it is the equivalent of his Christmas message, coming just before he delivers his pre-budget report in December.

What is far more significant is Mr Brown's apparent pre-emptive strike against Lord Turner's proposals for the UK pension system, said to have already been received in Whitehall and due for publication next week.

The chancellor is said to be furious that Lord Turner has gone, in his view, beyond the remit by including the state pension in his review and, it is believed, calling for a restoration of the link with earnings.

Mr Brown has let it be known that he is not having that, and has apparently threatened to do to the Turner report what he did to the review of long term care for the elderly - essentially, shelve it - or at least a big part of it.

So, on the very day the new Work and Pensions Secretary, John Hutton was insisting the government was approaching this biggest and most sensitive of issues with an open mind, Mr Brown is being accused of having already closed his.

Long grass

And, while the chancellor is calling for a consensus on the issue, he is facing claims he has already got one.

The only problem is that the consensus is made up of Lord Turner, the unions, many Labour backbenchers and both opposition parties being agreed on the need to restore the link with earnings.

Adair Turner
Turner report due next week

It is even suggested the prime minister has come around to this view, although Downing Street refuse to be drawn on Mr Blair's current view.

The prime minister's spokesman has said the pensions issue will not be kicked into the long grass, and agreed that action on the report will need to be taken "sooner rather than later".

It is almost universally agreed there is a crisis looming and that the current system simply cannot bear the strain of an ageing population.

If the chancellor is perceived to be blocking necessary - and in the case of the earnings link popular - reforms, he risks alienating parts of his party and the electorate just as he is hoping to lead Labour towards the next election.

His ex-adviser Ed Balls, now a Labour MP, has stressed that Mr Brown is not suggesting ditching the Turner report.

He says they want a system which is "fair and affordable", adding that focusing on the poorest pensioners via the means tested system would meet those aims better than linking the state pension to earnings.

And it does appear Mr Brown is enthusiastic about Turner's recommendations about how to encourage people to save for their old age.

So he is expected to welcome those suggestions, while at the same time dismissing the state pension proposals.

Ebbing away

Meanwhile, needless to say, this is being seen as another act in the long-running Labour leadership drama.

The demand for pay restraint and the intervention on pensions is about Mr Brown showing he is not prepared to jeopardise the economy with commitments the country simply cannot afford.

He is reminding the country just who is control and, by implication, where the real power currently lies in government.

With continuing claims that the prime minister's power is ebbing away and that ministers are looking towards the expected Brown premiership, the chancellor is once again being seen as the man holding the reins on key areas of government policy.

And if there really is a difference between Brown and Blair over the way forward, the outcome could prove another pivotal point in that drama.

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