‘Scrap AE in no-deal Brexit to help businesses’, suggests home secretary

Home secretary Sajid Javid has called for auto-enrolment to be scrapped as part of a "shock and awe strategy" should the UK fail to reach a Brexit deal. Kim Kavah finds out more...

Home secretary Sajid Javid has called for auto-enrolment (AE) to be scrapped as part of a “shock and awe strategy” should the UK fail to reach a Brexit deal, according to reports.

This was one of Javid’s “huge shopping list of policies” proposed at a cabinet crisis summit last Thursday (13 September), The Times reported. The proposal was aimed at easing business activity in the event of a no-deal Brexit scenario.

The meeting, convened by prime minister Theresa May, was held to work on contingency plans for exiting the European Union without an agreement – in which both sides hope to have agreed an outline of future relations by 18 October.

Scrapping the initiative – which has brought nearly 10 million people into workplace pensions – would stop AE from reaching its full potential. For example, it could affect the progress of policy proposals outlined in the AE review last year, which included pension savings being “the norm” when most individuals start work.

 

B&CE director of policy and external affairs Greg McClymont said: “AE is a globally-admired success story, built on the basis of cross party consensus.”

McClymont, who was shadow pensions minister from 2011 to 2015, added that it seems odd then that a senior minister would float the idea of undoing all his own government’s good work.

Hargreaves Lansdown head of policy Tom Mcphail further noted that any derailment of the AE programme would be disastrous for the retirement prospects of millions of UK workers.

“The programme has been one of the great policy successes of the 21st century, but ultimately it will depend not just on getting everyone into a pension but also making sure they are saving enough.

“If the government has to look at emergency measures it would do better to look at the tax architecture around pensions and ISAs. There is unfinished business here and potentially the government could save money whilst also simplifying and improving the system.”

Additional proposals

Also included in Javid’s proposals was also to ditch environmental regulations and make sweeping tax cuts. Although, he was criticised by peers for giving a “leadership pitch”, and presenting a “personal manifesto” in what has been reported be a 10-minute speech.

According to The Times, at the meeting, work and pensions secretary Esther McVey also made a “passionate but incoherent” pitch that was also interpreted as a “leadership bid”.

The UK is scheduled to leave the EU on Friday 29 March 2019. A transition period will then be put in place until 31 December 2020 to help get everything in place and help businesses and others to prepare for the moment any new rules between Britain and the EU come into play.