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Companies (Millennium Computer Compliance)
Mr. David Atkinson accordingly presented a Bill to require companies to conduct an assessment of the capability of their computer systems to deal with calendar dates after 31st December 1999; and to report both on those assessments and on the actions their directors propose to take in consequence: And the same was read the First time; and ordered to be read a Second time upon Friday 28 November, and to be printed [Bill 58].
Mr. Tam Dalyell (Linlithgow):
On a point of order, Madam Speaker. As one of the sponsors of the Bill proposed by the hon. Member for Bournemouth, East (Mr. Atkinson), and having served on the Committee stage of the previous Bill, I want to warn you not to make arrangements to be in an aircraft on new year's eve 1999 or the House of Commons could be looking for a new Speaker because the computers may have gone wrong.
Seriously, when a Member moves a very important ten-minute Bill, should not there be some Government response as soon as possible, so that, when the House returns in October, we will know the state of play on this vital subject?
Madam Speaker:
On the hon. Gentleman's first point, I very much appreciate his warning. I shall put it in my diary as soon as I get back to my office.
The hon. Gentleman is a long-standing Member and he knows that a ten-minute Bill is simply an application for leave to bring in a Bill. A Bill is not actually being brought in, although the public often think that it is--hon. Members are simply asking the House for leave to do so. The House has today graciously given the hon. Member for Bournemouth, East (Mr. Atkinson) such leave.
[Relevant documents: The Minutes of Evidence taken before the Treasury Committee on Monday 21st July, Tuesday 22nd July and Wednesday 23rd July (HC169-i to iii).]
Mr. Peter Lilley (Hitchin and Harpenden):
I beg to move amendment No. 16, in page 11, line 38, after 'made', insert 'from 6th April 2004'.
Madam Speaker:
With this, it will be convenient to discuss the following amendments: No. 17, in page 11, line 41, at end insert--
No. 20, in page 12, line 42, at end insert--
No. 18, in clause 23, page 15, line 5, at beginning insert '(1)'.
No. 19, in page 15, line 6, at end insert--
Mr. Lilley:
We consider the tax to be introduced under this clause to be the biggest of the 17 breaches of promise
However, what I did not realise until recently was that it was a breach not only of a general pledge, but of a specific pledge. I understand that on 21 October last, the hon. Member for Southampton, Itchen (Mr. Denham), who is now the Under-Secretary of State for Social Security, addressed a meeting of the Institute of London Underwriters in Leadenhall street. Someone present at that meeting has written to me saying:
As we know, the primary justification that the Government have subsequently given for the tax is that the bulk will come from the surpluses of occupational pension schemes. There could not be a clearer example of breach of promise, and one for which I hope we will have a formal apology from the hon. Member for Itchen. If that is not forthcoming, we shall certainly be calling for his resignation as a junior Minister. [Interruption.] The Minister thinks that breaking trust with the electorate is an amusing matter, although Labour made trust the central issue in its general election campaign and said that greater trust was placed in it than in any other party.
The Economic Secretary to the Treasury (Mrs. Helen Liddell)
rose--
Mr. Lilley:
I will, of course, give way to the hon. Lady if she will apologise for her colleague.
Mrs. Liddell:
I am delighted that the right hon. Gentleman has given way. Perhaps the electorate will now receive an apology, after enduring the 22 separate tax rises that were introduced in the previous Parliament by the previous Government, who did not honour their own manifesto commitments. Ultimately, they suffered the consequences for that at the ballot box.
Mr. Lilley:
The hon. Lady is absolutely right. We had to face the electorate with that issue before us--but the Government will have to do the same. The electorate will
Subsequently, we have been assured that the tax will not matter because it will not hurt. To most people, it is self-evident that extracting £5 billion a year from pension funds will make those funds £5 billion a year worse off. The funds will have to be topped up by that amount if the pensions are to give the same pensions, or they will have to pay lower pensions to people retiring.
In what has become known as the "Primarolo paradox", however, we have been assured that the measure, far from being bad for pensions, will be
'(1A) Any claim made under section 231(2) for payment of the amount of a tax credit if or to the extent that the qualifying distribution to which the credit relates is income of a pension fund shall be made to the extent mentioned in Column 1 of the Table below if the distribution is made on or after the date in Column 2 and before the date in Column 3.
Column 1 Column 2 Column 3
Percentage of the amount or value of the distribution
21 6th April 1999 6th April 2000
17 6th April 2000 6th April 2001
13 6th April 2001 6th April 2002
8 6th April 2002 6th April 2003
4 6th April 2003 6th April 2004
'(4) The Treasury may by order provide for the suspension of the operation of this section if it has reason to believe that it has had or will have adverse effects upon the number of individuals expected to opt out of the State Earnings Related Pension Scheme (SERPS) or upon the number of individuals in contracted-out pension schemes who are expected to opt back into SERPS.
(5) An order under subsection (4) shall be by statutory instrument and shall be subject to approval by resolution of the Commons House of Parliament.'.
'(2) The Secretary of State may by order provide that any person providing a pension shall include in any annual statement to policyholders an assessment of the impact of the provisions in that Schedule upon the policy concerned.
(3) Any order made under subsection (2) shall be by statutory instrument and shall be subject to approval by resolution of each House of Parliament.'.
"We have no plans to increase tax at all."
Subsequently, he said:
"Our proposals do not involve raising taxes. If we have any such proposals we will make them clear before the next election."
It was therefore extraordinary that the Government should bring in a Budget containing 17 tax rises, the biggest of which involves a £5 billion a year recurring tax on pension funds.
"As Deputy Chairman of the Trustees of Lloyd's Superannuation Fund, I was concerned that taxing pension funds, many of which have substantial surpluses, would be a relatively painless way of raising significant revenue, so I asked him"--
the hon. Member for Itchen--
"to give an undertaking that any future Labour government would not seek to raise taxes from these surpluses. He replied that it was no part of his proposals that Labour would touch them."
I have subsequently spoken to another person who was present at that meeting and who took notes. He confirms that his notes show, more or less word for word, that that Labour spokesman, before the election, solemnly gave an assurance that Labour had no plans or proposals to tax pension funds or their surpluses.
"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.]
Conservative Members have sought, pressed and asked for any coherent explanation of how it is possible that extracting £5 billion a year from long-term investments made for and on behalf of pensioners can benefit pensioners, but we have received only the most incredible explanations. Nevertheless, an attempt at explanation was made.
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