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Pension Funds

Volume 460: debated on Thursday 10 May 2007

15. What the Treasury’s most recent estimate is of the cost to pension funds of the abolition of dividend tax relief in 1997. (136460)

As I told the hon. Lady and her colleagues a few moments ago, we took that action to address the historical problems of under-investment and short-termism which had held back the British economy, and following that, the assets of pension funds in our country rose.

The Economic Secretary has not replied to the simple question posed earlier: exactly how much? Does he recall the dire warnings given to the Chancellor, which were put into the public domain only after a two-year campaign by The Times? Those warnings highlighted the groups of people who would be adversely affected by the abolition of direct tax relief, and said that the lower-paid would be worse off under the new rules, that pensioners due to retire would lose out immediately, and that businesses would struggle to adjust to the change. Will the Economic Secretary apologise to those groups?

As I said a moment ago, that decision also involved the recycling of revenues back to pension funds and investors through corporation tax and other tax cuts. Some people feared that the stock market would fall in 1997; in fact, it rose. Some people feared that investment might go down; in fact, it went up. Some people claimed that pensionable assets would decrease in value; in fact, they went up. However, if Opposition Members think that that was the wrong decision, why will they not make a commitment to reverse it? The shadow pensions Minister has made that commitment, but the shadow Chancellor cannot tell us whether he agrees with the shadow pensions Minister or not. Until that is cleared up, there will be no clarity on this issue.

On Tuesday, I paid tribute to Speaker Weatherill on behalf of the House. Lady Weatherill has told me how touched she has been by the generous support given to her by Members and staff of the House. Immediately after business questions, I shall call those Members who wish to pay their tribute to Speaker Weatherill.