To ask the Chancellor of the Exchequer what assessment his Department has made of the long-term financial effect of (a) reducing the basic rate of tax from 22p to 20p and (b) abolishing the 10p lower level of tax on pensions over the next (i) 10, (ii) 20, (iii) 30, (iv) 40 and (v) 50 years. (138030)

The Government do not judge there will be discernable long-term financial effect on pensions resulting from changes to income tax announced in Budget 2007. Any long-term financial effect would depend not only on the marginal rates of relief but also on the future structure of the tax system, the numbers saving for pensions and their contribution levels, the numbers in receipt of pensions and any behavioural response to the changes in rates of relief.