| Previous Section | Index | Home Page |
Mr. Ivor Caplin (Hove): I wonder whether the hon. Gentleman could explain to me, a new Member of the House, why the same guillotine procedure was used 1993?
Mr. Boswell: I think that I am right to say that we did not move straight to impose a guillotine before consideration. The Labour party says that all its proposals are entirely clear, so I am surprised that they are only just becoming apparent now.
When it comes to pensions, the Government like to play it pianissimo. Perhaps that is the only tactic that they have left to erase the cheerful assertion by the Financial Secretary on Thursday, who said:
The Government would do better to listen to the arguments than merely to assume that they have no problems. The Government would do better to listen to the experts and to give them time to consider the changes than to rush into something that they will learn to regret. After the debates on the Budget, do the Government really still believe that cancelling £5 billion of ACT credits for pension funds each year will have no effect on their ability to pay out pensions?
Each estimate varies, but it is interesting to consider those produced by Association of Consulting Actuaries, which summarises its conclusions as saying that the Budget could reduce investment and will reduce pensions for millions of people. It goes on to give illustrative figures which show that a person of 30 would face an effective reduction of 11 per cent., a person of 40 would face a reduction of 7 per cent. and a person of 50 would face a reduction of 4 per cent. I am relieved that those figures chime in with my own lay estimate of 5 to 15 per cent., which I offered at the House a week ago.
The Government's answer to those clear professional conclusions is to cast doubt on the soundness of the actuarial profession as if actuaries were fuddy-duddies who took no account of capital growth. The actuarial profession, not the Government, has the security and best interests of pensioners at heart.
I shall remind the House of some of the detailed implications of the measure. Local authority pension funds face a loss estimated to be £300 million. That will have direct implications either for council tax or for the need to top up from public spending through the revenue support grant. Some 6 million personal pension holders have no one but themselves to call on to replace the hole in their finances.
At business questions today, one of my hon. Friends reminded the House that there would be inevitable effects on our secretaries and staff. I should warn colleagues that it will not stop there. Civil servants and Members of the House with no formal fund do not automatically escape the consequences. In due course, in equity, our contributions should be aligned with those that others in the private sector would be expected to pay. As my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) said yesterday, there are important implications for the interface between occupational pensions and SERPS. Are the Government prepared to adjust national insurance rebates to keep employees out of SERPS or would they rather that people opted back into SERPS? Would they be happy to do that when the Minister for Welfare Reform is determined to phase out the SERPS system? Would they be happy to have a major hole in the public finances?
I shall now come to the peroration. I would not dream of presuming to offer my own peroration, but sometimes people are so absorbed by the tax changes in the Budget speech that they do not notice the Chancellor's words in his peroration. I thought that his peroration was worth a touch more study by the House than it was perhaps given on Budget day itself.
The Chancellor spoke movingly and firmly of measures for stability, yet that was on a day when he had just announced measures--which were not well understood because their meaning was disguised--to destabilise pension funds. His measure would affect not just a handful of fat cats, but 15 million ordinary citizens. He spoke of investment, yet the double hits of the windfall tax affecting utilities and their shareholders--including pension funds and insurance companies--and of ACT operating directly on the value of dividends, take away the means for investment and may require companies to readjust their strategies. It was no accident that we introduced the partial imputation system in 1973--in fact, I was involved at the time. It was an attempt to produce a degree of equity in an area where, I concede, equity and precision are difficult to find owing to the different levels of the tax regime and tax rates. Taking away those means without consultation will be a major blow to investment, never mind the business consequences. If the measure is a blow for investment, it is equally a blow for employment opportunities.
The Chancellor also talked about the long-term interests of the many. I wonder why he did not say anything about the overall impact on prices, which was an additional 0.8 per cent. He did not say--neither did the Financial Secretary when I invited her to do so last week--that independent estimates by the Institute of Fiscal Studies on the overall impact of the measures suggest that the biggest percentage impact is on the lowest deciles of income. Therefore the Budget measures which had Labour Members waving their Order Papers, are ultimately regressive.
In a final flourish--I am sure that Labour Members will remember this--the Chancellor said:
The Economic Secretary to the Treasury (Mrs. Helen Liddell):
I am grateful for the opportunity to reply to the debate, which has been interesting in parts. It has sometimes seemed a little lonely in the Chamber given the emptiness of the Conservative Benches for much of the evening--[Interruption.] Conservative Members may think that that is rich coming from me, but I have been in the Chamber for all but quarter of an hour and many of them have hardly been here at all.
I, too, pay tribute to those hon. Members who have made their maiden speeches. My hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard) made a considered maiden speech. Taking into account his distinguished career, it was a speech of great modesty and humility. The House could learn much from what he said. There are some hon. Members who spoke later in the debate who could have learnt a lot from the demeanour of my hon. Friend.
We heard also from my hon. Friend the Member for Upminster (Mr. Darvill). I have never visited Upminster, but, having heard his gracious recognition of his predecessor and his committed description of his constituency, I will make a point of visiting Upminster at some time.
My hon. Friend the Member for Morecambe and Lunesdale (Miss Smith) made a speech which revealed to the House why she was the recipient of a 16 per cent. swing from Conservative to Labour. It was an outstanding speech by a young Member who I know will make a tremendous contribution to the House.
The hon. Member for North Shropshire (Mr. Paterson) spoke with great lucidity and the House was most impressed by the fact that at no point did he appear to refer to notes. I know how daunting it is to speak in the House for the first time. I made my maiden speech only three years ago next week. I congratulate all those hon. Members and look forward to their continuing contribution to the work of the House.
I shall now come to the substance of the debate. What a dog's breakfast of an Opposition: they will learn that when one leaves the Chamber, they need to be sure that nobody will come in afterwards and contradict what they have just said. We started with the shadow Chief Secretary, the right hon. Member for Wells (Mr. Heathcoat-Amory), who did not know whether he was coming or going. He did not know whether the Budget was intended to increase or decrease public spending or whether it would fiscally tighten the economy.
Mrs. Liddell:
I will gladly give way to the right hon. Gentleman.
Mr. Heathcoat-Amory:
As the hon. Lady is inaccurately paraphrasing me, I shall put her right. I know
Mrs. Liddell:
We have made it clear during the general election campaign and since becoming the Government that we recognise that hard decisions have to be taken. The right hon. Gentleman and his hon. Friends fail to realise that this is a Budget not about fine-tuning the economy but about rebalancing the economy and getting it on a firm footing for the future.
"The measure is good for pensions and pensioners, not bad for them . . . People should understand that our reforms will benefit pension funds."--[Official Report, 3 July 1997; Vol. 297, c. 507.]
To me, that reveals either disturbing self-delusion, a simple misunderstanding or a deep cynicism. It is rather like suggesting in the middle of world war two that innocent civilians should have been grateful for being subjected to saturation bombing. It is not so much new Labour as Newspeak.
"It is a people's Budget for Britain's future."--[Official Report, 2 July 1997; Vol. 297, c. 316.]
In fact, it is a Budget, and now a Finance Bill, seeking to enact measures not for the people but paid for by the people. It mortgages Britain's future and we shall oppose it.
9.39 pm
| Next Section
| Index | Home Page |