Mayhem for advisers after general election

Mayhem for advisers after general election

The UK election last week and its aftermath may have surprising overtones of the mid-1970s for some people as in 1974 when we had a hung parliament and two elections. For financial advisers, there is a lot still up in the air after last week’s election.

The biggest immediate change that one can specifically pin down is that we have a new Secretary of State for Work and Pensions.

Following the promotion of Damian Green to first secretary of state, David Gauke, previously chief secretary of the Treasury, has been promoted to the top pensions spot.

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Those who have met him do not expect him to be like the pensions secretaries under previous governments when previous pension secretaries were drafted in with little pension experience.

First Secretary

Mike Morrison, head of platform technical at AJ Bell, said: “What I’ve seen when I’ve met him at the Treasury, is that he knows what he’s talking about – of all the people I dealt with when he was at the Treasury, he did understand what he was talking about and he was serious.”

Sir Steve Webb, director of policy at Royal London, said: “There are few ministers who could have been appointed to this role who know as much about pensions as David Gauke.  

“In his five years at the Treasury during the coalition government, he played a key role in developing the detail of the pension freedoms and was a keen supporter of automatic enrolment. I always found him to be knowledgeable and willing to engage in discussion and debate.”

The challenges are likely to be legion, largely because in the government’s current form, it is going to be much harder to push policy through.

Mr Morrison said there were some challenges to come first that were relatively uncontroversial, but it included policies that the industry was waiting on.

He said: “Let’s hope we get the Finance Bill that nearly went through, let’s hope that gets through.” It includes the cuts to money purchase annual allowance, which was dropped when the election was announced, and the ban on pension cold-calling.

The great area to be navigated, however, is the arrangement with the Democratic Unionist Party (DUP).

Over the next few days – at the time of going to press – the country will be looking to see what arrangement the DUP will be seeking in exchange for supporting Prime Minister Theresa May’s government.

While the DUP’s politicians have said that they would not seek to impose their socially conservative agenda on the mainland – abortion is not available in Northern Ireland except when the physical or mental health of the woman is at risk – there are other areas of policy where the two parties disagree. One example is the triple lock, a policy brought in by the coalition government which promises that the state pension will rise in line with the higher of inflation, average earnings or 2.5 per cent. 

In the Conservatives’ manifesto, the Tories sought to drop this, by bringing in the ‘double lock’, dropping the 2.5 per cent commitment.