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Mrs. Angela Knight: The hon. Member for Rotherham (Mr. MacShane)--better known as the hon. Member for Geneva--is, as always, extremely entertaining. This is an important matter and I am glad that hon. Members are treating it seriously.

I am aware that it is part of Labour party policy to impose wholesale change on the financial regulatory system, but it is not something with which I agree or with which most of the industry agrees. It is important that we deal with the issues of today. If the hon. Member for Edinburgh, Central (Mr. Darling) talks to the industry with an open mind, rather than having already made up his mind on his policy, he will also hear that the industry does not want wholesale change of the financial regulatory system. The industry is looking for stability.

Mr. Darling: The Minister is right that the industry does not want wholesale change--nobody is suggesting that--but it does want significant changes in the various

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areas that I have identified. If she stays in her job for much longer and takes the trouble to speak to people, the Minister will find a growing consensus as to what form that change might take, and Labour is articulating that.

Mrs. Knight: I am sorry to disappoint thehon. Gentleman, but I have found that there is considerable concern within the financial services industry at the hon. Gentleman's proposals, which are considered to be a wholesale change.

A number of important points have been made in the debate, and I propose to reply to them. On the numbers involved, there are about 9 million personal pensions overall. Some 2 million of these relate to transfers and opt-outs, of which possibly 400,000 are in the criteria of "those to be looked at". There will be no knowing how many of those 400,000 have been mis-sold until the review is complete. I say yet again to Opposition Members that we do not know the specific figures--all we know is that people are covered by certain criteria. That does not mean that they have been mis-sold a pension.

5 pm

The date that pertains to the clause and to the review as a start point is 29 April 1988, which is when the Financial Services Act was introduced. The hon. Member for Bolsover (Mr. Skinner) made a point regarding mine workers. I can tell him that the mine workers' pension scheme is allowing victims of mis-selling to be reinstated, and miners will be put back to the financial position they would have been in had mis-selling not occurred. A number of former members of the scheme have already been reinstated. I hope that the hon. Gentleman finds at least some comfort in that fact.

The situation regarding the IFAs--the independent financial advisers--is more complicated than we have perhaps seen with life offices. The reason for that, as the hon. Member for Edinburgh, Central (Mr. Darling) outlined, is that there have been court cases relating to questions on professional indemnity insurance. Where the PIA wanted one thing and the professional indemnity insurers wanted another, the IFAs felt that they were unable to proceed with the review. That matter has now been resolved, and I welcome the agreement between the PIA and the professional indemnity insurers to enable progress to be made, as the review of personal pension transfers and opt-outs involving IFAs can now be taken forward.

The agreement clears the way for IFAs to complete a review of their casebooks and to provide redress where it is due. There is concern about the ability of small IFAs to carry out the review as it is required. Large product providers have paid for the development of computer software to enable IFAs to carry out the detailed calculations required in the review. This will be of considerable benefit to IFAs and has the added benefit of helping to ensure that the calculations are correct and compliant.

The hon. Member for Sheffield, Attercliffe (Mr. Betts) mentioned an advertising campaign. Wide coverage has been given to the Securities and Investments Board's progress reports, and similar wide coverage has been given to the matter since it started. A large amount of

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coverage has been given to the reviews, the progress report and the issue as a whole in the past few days. In addition, the SIB has made widely available detailed fact-sheets on the review, the PIA has set up a dedicated pensions unit and a helpline and a large number of questionnaires have been sent out. Therefore, we do not think that an advertising campaign going any further than the publicity that is currently taking place is required.

Questions have been asked about SERPS. As promised at the time of the October 1994 statement, the SIB has been working with the Department of Social Security and consultants to establish whether there has been a significant degree of mis-selling of personal pensions to people who otherwise would have remained in SERPS. Again, this is a complex task that requires a detailed analysis of a specially determined sample of a DSS database. It has taken longer than initially expected, but I am glad to say that the SIB should be in a position to make a statement within the next couple of months.

I must ask the hon. Member for Edinburgh, Central to wait for the SIB's statement to see the full results, but I can say with some confidence that the scale of the problem--if there is one--is a great deal less serious than in the area of transfers and opt-out cases. We will consider with the SIB what needs to be done once the findings of the review are known.

The point was raised about the cost of the tax exemption proposed by the clause. The "Financial Statement and Budget Report" published on Budget day suggested that this measure will have a "negligible effect" on revenue. The Committee will be aware that the continuing uncertainty about the price or the approximate number of cases of mis-selling mean that we are not able to provide precise figures. At a time when compensation payments are only just beginning to be made, it is not possible to give a more accurate estimate of numbers than that which I have given.

I conclude by referring to an article in the Evening Standard, which stated that there are two morals to be learned from mis-selling. The first was that if a person was sold a personal pension and had the slightest suspicion that mis-selling had occurred, he should start kicking up a fuss. The second moral was that anyone mis-sold a pension should not let that put them off purchasing a personal pension. These are points with which I, and I am sure most hon. Members, entirely agree. I hope that the Committee will agree with and commend the clause.

Question put and agreed to.

Clause 139 ordered to stand part of the Bill.

Clause 112

Returns and self assessment

Mr. Mike O'Brien (North Warwickshire): I beg to move amendment No. 9, in page 76, line 37, at end add--

'(9) In subsection (2) of section 199 of the Finance Act 1994, for "1996-97" there shall be substituted "1997-98".
(10) In subsection (3) of section 199 of the Finance Act 1994, for "1996" there shall be substituted "1997".'.

The Chairman: With this we may discuss the following amendments: No. 10, in page 76, line 37, at end add--

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'(9) After subsection (2) of section 178 of the Finance Act 1994, there shall be inserted the following subsections--
"(3) For the year of assessment 1996-97, for the words'31st January' in his section there shall be substituted the words'30th April'; and
(4) For the year of assessment 1996-97, for the words'31st October' in this section there shall be substituted the words '31st January'.".'.

No. 11, in page 76, line 37, at end add--

'(9) After section 194(1) of the Finance Act 1994, there shall be inserted the following subsection--
''(2) For the year of assessment 1996-97, for the words'5 per cent.' in this section there shall be substituted the words '2.5 per cent.'.".'.

Mr. O'Brien: Self-assessment has been described by the leading tax advisers Ernst and Young as

"the biggest change there has ever been to the tax system of this country since the introduction of Income Tax in 1803".

The firm adds that, by comparison, the introduction of PAYE in 1945 was

"simply tinkering around the edges".

Let us be clear about it--Labour supports the concept of self-assessment. We want it to succeed, but we believe that it is being rushed in at an alarming pace. The Government appear to be more interested in cutting 3,000 Inland Revenue jobs to make short-term savings than in getting it right. The result will be a confused botch-up of an introduction that will cause unnecessary burdens on business and 9 million self-employed people and will undermine confidence in the whole concept of self-assessment. It is all so unnecessary, and it need not happen. If the amendment is accepted, we can phase in self-assessment in a balanced and measured way and help business to create confidence in the whole idea.

There is much in the Government's attitude that reminds me of the introduction of the Child Support Agency. A good idea in principle is rushed through because it might provide an added cost saving bonus, but goes horribly wrong in implementation. I predict that self-assessment will be a policy debacle for the Tories on the scale of the CSA. Today, we are merely serving warning that the buff envelopes containing the self-assessment forms that thud through the letter boxes of Conservative Members' constituents will have just same the effect as the CSA assessment forms that have arrived to the anger of fathers and voters in the constituencies of Conservative Members in recent years. Self-employed business people will come along to complain to Tory Members. It will happen just before the general election and it will lose the Tories votes. It will create anger and contempt at their policies. All we aim to do through the amendment--in a spirit of charity--is to save them from themselves.

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