Brown and Blair agree on pensions

Brown and Blair agree on pensions

	Published : Fri, 12 May 2006 17:10 By : Phil Bateman Print this Story

LONDON - Prime Minister Tony Blair and his Chancellor Gordon Brown finally reached an agreement on restoring the link between state pension and earnings. This agreement avoided what could have been a major showdown between the top two Labour Party luminaries.

This agreement was reportedly reached after a face-to-face meeting between the two at Downing Street last night. The decision to restore pensions accrued in line with earnings reverses the decision by Margaret Thatcher to separate the two around 25 years ago. This is also a deal around which the government hopes to build a new pensions' plans that is slated to be fast-tracked through Parliament.

The new deal hopes to restore the link between the two by 2012 and raise the retirement age to 68 by 2050 in order to take care of the escalating costs. Lord Turner's commission on pensions had recommended that the changes take place by 2010.

Mr Blair who is currently in Vienna for a summit of Latin American, Caribbean and EU countries, said that the deal would get a broad consensus, "And that is a significant achievement by any standards," he said. Shadow chancellor George Osborne welcomed the agreement, as did Conservative shadow pensions secretary Philip Hammond. The latter said that the deal was delayed by a number of disagreements between Blair and Brown.

"It gets back on the rails a process that should have been going on since the Pension Commission report last December, which has been derailed by this internal spat," he said. "Now hopefully we can get on with the serious business of looking at the detailed proposals the government will put forward, and trying to build a cross-party consensus."

Vince Cable, the Treasury spokesman for the Lib Dems was glad that an agreement had been reached, "If they couldn't agree on this, there was a very real danger that the Government was going to fall apart. So, you know, we welcome the fact that Gordon Brown has blinked first and has accepted the need for some compromise," he said.

The government is due to publish final proposals by May 22.