Coffee House

Yes to new roads, no to a pensions raid

19 March 2012

New roads in Britain are badly-needed, but who should bear the costs?
Motorists, says David Cameron — and his speech today is a move in the right direction. No tolls would be slapped on existing roads, so motorists are free to drive as freely as they do now.
But if they want a shortcut, they’ll have to pay for it. What I’m uneasy about is Cameron trying to raid our pension funds to help subsidise this.

There are many ways to raid pension funds — QE is one. The National Association of Pension Funds estimates that a scandalous £130 billion has been wiped from the value of our collective
pensions because Sir Mervyn’s Magic Money Machine is artificially lowering interest rates. This allows Osborne to misrepresent low rates as the applause of global markets for his wisdom. It
radically lowers the interest his government pays on its massive debt. But the NAPF makes clear: this is crippling the value of annuities. Borrowers like me save a fortune — but people now
retiring, and forced to put their pension pot into an annuity (which pays out a fixed amount for life), are seeing that sum up to 20 per cent lower. They’ll be poorer, for life, to allow Osborne to
boast about low rates and bail out Britain’s borrowers.


I say all this because who does Cameron want to finance these toll roads? The pension funds. In his own words, ‘We need to look urgently at the options for getting large-scale private
investment into the national roads network — from sovereign wealth funds, pension funds, and other investors.’ Around "">10 to 12 separate pension funds are expected to get involved in the government’s infrastructure projects, and Downing St is
eager for them to contribute as much as they can. But why? I’m all for new, private toll roads — but why can’t they be done on a basis that would attract any investor, without the
"">continuing emphasis on pension funds?

It’s not clear to me why any pension fund manager should invest money in a project which gets lower returns the market average. Nor why the NAPF should do anything to assuage Osborne, whose
‘monetary activism’ will soon have rank him above Brown as Britain’s no.1 pensions raider. Osborne is lucky that quantitative easing are the two most boring words in the English
language — otherwise the pain caused by QE to so many would be getting more coverage than it is.

So, yes to toll roads. No to a dodgy deal with pensions funds to subsidise sub-market schemes. Cameron and Osborne have done enough harm to pensions already.

  • Graeme Stewart

    No money for the roads but 12 billion plus for foreign aid!!

  • TomTom

    “all inflation is a gift to the young (whose pay increases) and a disaster for the old. “

    You are off the wall. Inflation is hedged by Property which becomes ever more costly to the young. Acquiring ASSETS from depreciating Income is very hard; it is easier to run down Mortgages as Assets appreciate.

    Inflation eats people alive especially with Educational Debt and Credit Card interest

  • 2trueblue

    We pay already twice so for the life of me fail to see why we should pay again. Any tax currently goes into a pot and is used willy nilly for whatever. It is bad budgeting and planning. If we ran our households in such a manner we would be BROKE. I thought this lot were going to sort it. I am totally fed up of the attitude that the frugal should continually pay for everybody.

    Germany coped with low interest rates because they were selling their goods at Greek prices.

  • Fergus Pickering

    Fraesr, all inflation is a gift to the young (whose pay increases) and a disaster for the old. I knew this in the 1970s when inflation was 20%. But that doesn’t make it bad. The old, people like me, are going to die soon, and not bloody soon enough, mutter the young Gonerils and Regans. And the old can cope with poverty. They don’t go anywhere or eat much or indeed consume much at all. It’s hard on the old who are poor to start with, but why should they get to go on cruises and all that? Shuffle off gently, wrinklies. You’ve had your innings. It’s somebody else’s turn now.

    And saving, though it may be prudent, is not consistent with the Christian message. Lilies of the field and all that. You can’t take it with you, though many an oldie thinks he can.

  • TomTom

    “legal fiduciary responsibility to the benficiaries of the scheme to invest wisely”

    That is obviously why they are stuffed full of Gilts … have no idea.

    As for Nickle, I think you are potty. In this country The State has socialised everything and seized savings to bolster Banks 0 it might as well seize pension funds it has destroyed them. This IS a Socialist Republic but dolts like you cannot see it.

  • Trapped

    Trident delivery to one of the terrible courier services who can never find you, wonderful concept…

  • martin alexander

    I have a much better idea…Why don’t we charge every motorist a tax and call it a road fund tax..That should bring in about 40 billion a year….We should also consider introducing a fuel tax on each litre of fuel we buy….Problem solved… Vote for Cameron..You have to be joking…

  • (Romantically) Heartless Curmudgeon

    In the olden days (pre-Heath), when there actually was a Tory Party, – not a pile of platitudes, – people recognised worth, decency, and honour in a Leader. They may not have agreed, but there we go.

    Now, this transmogrified H2B, the Spirit incarnate of his ridiculous Hero, spins his second rate nonsense to a (too often) awestruck, expectant, and gullible party and public, who will gladly supply excuses and justifications for the scams heaped upon us.

    Well, good luck to them and their ridiculous posturing. One hopes that they have the wealth – as do many champagne socialists – to weather the resulting storms of wave upon wave of Bliarist crap and pretension. Oh, – and good luck Speccy, – especially if you too are veering leftwards.

  • Mirtha Tidville

    While we are it, lets guess how many new roads we could have built if we didnt have to pay for the friggin useless Olympics and their fireworks!!!

  • TrevorsDen

    You want higher interest rates? !!

    It is the point of a pension fund to
    invest its money. No one is putting a gun to their heads.

    How did Germany manage with low interest rates for all those years?

    Which do you prefer – the tyranny of high rates or the tyranny of low rates? High interest rates are a siren voice singing a song of false promises.

  • Rhoda Klapp

    Danger, did you miss the motorists pay pleny bit? The point being that motorists pay, reputedly £43bn per annum. Far more than is spent on roads. The government proposes to..what? Build no new roads? Not maintain the ones we have? Squeeze more money from those who drive on the new roads they talk about, but cannot name? Now, there may be a point to all this. It may even be a good idea. But it is currently not even half-baked, so what they have achieved is to upset a lot of people for no good reason. Basically this is a Tony Blair tactic. Run it up the flagpole to se if it is popular. Do they not remember the road-charging fiasco? Or has that EU-inspired plan not really gone away? Announcing this in this way is a bad idea. Explaining how the government of a major country can’t really manage vital infrastructure investment is an admission of inadequacy, when we have money to waste in stupid things. It makes them look bad. It is bad tactics and bad strategy. Next, Trident delivery to DHL and national security to Group 4.

  • Tiberius

    And as Frank Further says, pension fund managers will choose their investments. Where does raid come into the discussion?
    I’ll bet you wouldn’t have written this piece in your shiny DT column. Green grass, eh?

  • Tiberius

    Brown, on the other hand, specifically targeted pension funds for ideological purposes. To mention Osborne in the same breath as Brown when discussing pension raids is cheap.

  • Tiberius

    As Charlie Harper would say, Fraser, “whoa back up”!
    QE is an unwelcome but necessary evil to deal with the awful economic problems we have. It has adverse effects in a number of areas and pension funds may well be one of them. But it is not a raid.

  • Archimedes

    There is nothing singularly more annoying than speeding down a French motorway on a summers day, the wind blowing through your hair, Simon & Garfunkel’s Cecilia on the stereo, the vineyard is nigh, times are good, you chuckle. Then, a toll booth, and it’s nightmarish summer queue, and that old man that you sped passed ten minutes with the cheesy beard in his rover pull up in the queue just behind you. I was going somewhere. I left these people behind. Have I achieved nothing! Times are bad. The Swiss have a much better system of charging for an annual pass and no toll booths.

  • charles hercock

    It is absolutely not clear to me why you feel that there is some hidden agenda here.
    Most would interpret the phrase including the pension funds as rhetoric. And as for why you feel the investment should incur lower interest rates beats me. Pension fund managers are not fundamentally stupid people or do you know something we dont.

  • It doesn’t add up…

    You’re right about pensions: it’s the Willetts “pinch” that will leave baby boomers impoverished.

    You’re wrong about toll roads. There are very few locations where tolls make any kind of sense in our small island. M6 Toll is losing money: it’s a Chaika lane for the local well-to-do. We’ll see enough of Chaika lanes for the nomenklatura during the Olympics. There’s a tonne of tax already levied from motorists. There’s a need to properly resurface the motorway network and for some debottlenecking, now that more of it is reaching 50 years of age. Toll roads won’t do this. Ask those who don’t pay the M6 toll.

  • Nickle


    We could of course just renege on all public sector pension workers pensions. That brings in 1150 bn’s worth of savings, all available for investment.

    I can’t see why people like you who think the government is the saviour would object.

  • Nickle

    Quite right on HS2.

    For the cost, you could have 180 DLRs built across London. Apart from the problem you couldn’t fit them in. So Manchester, Liverpool, Bristol, … could have them too.

  • Frank Furter

    This is silly. Cameron cannot force pension schemes to invest This is not a ‘raid’ on such schemes. If the investment offers an economic return, then funds should be free to invest in them as they do for any proposal with potential . The trustees are given professional advice, and have a legal fiduciary responsibility to the benficiaries of the scheme to invest wisely. If this road proposals offer a prudential investment why should pension scheme avoid or be prohibited from them?

  • whatawaste

    Cameron wants the pension funds to do fund the roads huh? Hmm, so if they all switched out of equities to do “brainbox’s” bidding what would happen to the FTSE100 index? I thought Brown and Balls were dysfunctional: This just takes it to another level.

  • Mr Danger

    “but there is no end to the greed of government”

    How is making the users of new roads pay to er… use them “greedy government”?

    “Inviting foreign sovereign wealth in to buy bits of the UK makes it worse still.”


  • Mike Barnes

    “No tolls would be slapped on existing roads, so motorists are free to drive as freely as they do now.”

    If you believe that then frankly you will believe anything. While at first you may have a choice to use the free roads, the private companies will soon get very annoyed if their brand new tolls roads are empty.

    That’s when the government will step in.

    Maintenance on the old roads will be neglected. The old roads will be narrowed or have bus lanes added. The old roads may even be forcibly closed down for ‘health and safety’ reasons.

    Then, hey presto, you are forced onto the new toll roads.

  • TomTom

    Pension Funds should be brought under State control and used for Government objectives, they depend upon tax subsidies anyway. It is time to bring most of the pools of capital under public control for national objectives. We live in a Fascist system with the Treasury basically funding Banks through the Bank of England so they can fund the Treasury through Gilts.

  • mirtha tidville

    A very thoughtful article, Fraser and food for thought for many I hope.This really does show the greed and stupidity, of Governments, for many years regarding Motorists.They provide revenue inexcess of somthing like 30odd billion and get back less than 13. Many call that theft!!

  • Rhoda Klapp

    Fraser, any chance of going back to the idiots and telling them just how unpopular this is with people who they expect to get a vote from next time? We can all stay home on polling day, you know. Yes, it will let Labour in, but what real difference will that make when it is clear that control rests between the dpeartments and the EU?

  • Rhoda Klapp

    and how can we afford HS2? This road plan is nonsensical and uncalled for. Motorists pay plenty, but there is no end to the greed of government. It is a bad plan. Stealing pension money just makes it worse. Inviting foreign sovereign wealth in to buy bits of the UK makes it worse still. Bad. Unpopular. Courting unpopularity for what? What the bloody hell is going on in their brains?

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