| Previous Section | Index | Home Page |
9.45 pm
My right hon. Friend the Member for Birkenhead said that pensioners should be able to pass on their remaining funds, at death, to their dependants. Generous tax reliefs were provided to support that. Annuities are not supposed to be tax-advantaged inheritance vehicles, however--they
are insurance products. One way in which they work--a point that sometimes gets lost in this debate--is as a pooling of pension funds, enabling those who live longer than the average life expectancy to go on receiving the guaranteed income because, sadly, some people do not live that long. That is an important point about the way in which annuities are structured.Increased longevity means that annuities are paid out for longer. A number of right hon. and hon. Members have remarked on the need to purchase more gilts to maintain the same income stream to back an annuity and on the availability of long-dated gilts. The MFR review has not yet reported; we will want to consider it when it reports, which I believe is not a long way off. As the hon. Member for Arundel and South Downs (Mr. Flight) said, the outcome of the Myners review will provide another aspect to all the matters being considered.
The hon. Gentleman and others have commented on the new products that are being produced. We are very interested in those new products and in new ideas for tackling the issues that the topic raises. We are looking at the Oonagh McDonald report and also at the more recent report of the Social Market Foundation. There are a number of issues surrounding the purchase of annuities and the supply of gilts, so there are many matters to be considered. When we have got all the information together and given it due consideration, if we think that there is a new way forward, we will consult people about those arrangements. I can give no undertakings to do so, but I hope that right hon. and hon. Members will have gathered from the tone of my responses that we believe the issue to be worthy of full consideration.
We have been asked why we made the changes to waiver insurance. I believe that I have already covered this point, but let me say again that our approach is better because it is better focused by boosting income going into the pension. Rather than tax subsidising insurance arrangements, it provides better cover against eventualities, and is better value and cheaper overall.
The hon. Gentleman expressed the view that annuities lock people into bonds and that equity-linked annuities cause problems. A number of innovative non-bond-based annuities are coming on to the market. These will benefit the majority with small to medium pension pots. Removing the requirement to purchase an annuity could stifle that development. As I said, Oonagh McDonald's report recognises that an annuity will remain the best option for many people. The Inland Revenue is working with financial institutions to aid the development of equity-based annuities. We are giving all these matters our full consideration.
Mr. Webb: Perhaps I have pre-empted the Minister regarding the open market option. Can she reassure us that she will push those who send out the letters to make sure that people are more aware of their choices than they are at present?
Miss Johnson: I am happy to give the hon. Gentleman the assurance that I will look at that issue. I cannot go further than that at this point, but I will in due course study in Hansard the points that have been made in the debate by right hon. and hon. Members.
I hope that none of the Opposition amendments is pressed to a vote, and that the House will support the Government amendments.
Mr. Edward Davey: The debate has been interesting and useful. The Minister has put on record the Government's thinking on some of these matters. I am sure that hon. Members and people outside the House will want to consider her words with care. She has helped explain the direction of Government policy in this area, and I am grateful for that.
The Minister made some welcome comments about new clause 8. I hope that she will urge her officials to produce genuine solutions to the problem of how the income from retirement annuities is administered for tax, and to the related problem that pensioners face extra complexity in their tax arrangements. However, I do not want to detain the House so I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
Schedule 2
Amusement Machine Licence Duty
Amendments made: No. 7, in page 122, line 45, leave out from "any" to end of line 48 and insert--
'gaming machine which is a small-prize machine or five-penny machine.'.
No. 8, in page 123, line 4, at end insert--
'(aa) a five-penny machine,'.
No. 9, in page 124, line 44, leave out from beginning to end of line 5 on page 125 and insert--
'3.--(1) In any case where--
(a) the Commissioners give a default notice,
(b) the due date specified in the notice passes, and
(c) it appears to the Commissioners that at some time during the alleged default period specified in the notice one or more amusement machines were provided for play on the relevant premises so specified without an amusement machine licence being in force in relation to the machines,
the Commissioners may grant, in accordance with this paragraph, one or more licences in relation to each of the machines.
(2) In this Schedule--
"default licence" means a licence granted by the Commissioners under sub-paragraph (1) above;
"unlicensed machine" means a machine in relation to which a default licence is granted by the Commissioners.'.--[Mr. Timms.]
Clause 20
Amendments made: No. 94, in page 16, line 2, leave out from second "of" to end of line 24 and insert "licences--
(a) issued in the period beginning with 1st March 2000 and ending with 28th February 2001, and
(b) not surrendered before the end of that period,
where the amount of vehicle excise duty chargeable on the licence would have been less if the amendment in subsection (1) had applied.
(3) The amount of the refund is--
(a) £55 for a 12 month licence, and
(b) £27.50 for a 6 month licence.
(4) The person entitled to the refund is--
(a) in the case of a licence in force on 28th February 2001, the keeper of the vehicle on that date;
(b) in the case of a licence that has ceased to be in force before that date, the keeper of the vehicle when the licence expired.
(5) For the purposes of subsection (4) the keeper of the vehicle shall be taken to be--
(a) the person registered as keeper of the vehicle on the date in question, or
(b) if the Secretary of State has received notification of a change of ownership of the vehicle as a result of which another person is on that date entitled to be registered as the new keeper of the vehicle, that person.'.
No. 95, in page 16, line 33, leave out from "section" to end of line 39 and insert--
'in respect of a licence does not affect the validity of the licence.
(8A) For the purposes of section 19 of the Vehicle Excise and Registration Act 1994 (surrender of licences) as it applies to the surrender on or after 1st March 2001 of a licence in respect of which a refund under this section has been made, or applied for, the annual rate of duty chargeable on the licence shall be taken to be that which would have been chargeable if the amendment in subsection (1) above had applied.'.
No. 96, in page 16, line 43, at end insert--
'(10) In the application of this section to Northern Ireland, references to registration as the keeper of a vehicle shall be read as references to registration as the owner of the vehicle.'.--[Mr. Timms.]
Clause 30
Mr. Letwin: I beg to move amendment No. 98, in page 20, line 4, leave out from "until" to end of line 6 and insert--
'one year after the expiry of a twelve month period during which UK emissions of CO 2 show an increase on the previous year'.
I do not want to detain the House, not least because my voice is failing. The arguments on the climate change levy are well rehearsed, but we could not let pass this opportunity to explain to the House why the Opposition consider that the implementation of this dreadful new tax should be delayed. A much better solution would be its withdrawal. Given the mood of co-operation in the House, perhaps the Financial Secretary will have a Damascene conversion and withdraw this dreadful tax before the evening is out.
Page 108 of the Red Book contains chart 6.2, which shows the root of the conceptual problem with the climate change levy. The number of millions of tonnes of carbon released through greenhouse gas emissions has been falling steadily since 1990 and remains on a declining trend. The new levy is being introduced at a time when there is no need for it.
What is worse, it will be entirely ineffective, not least because all the industries most able to respond to it, through the elasticity of price in relation to production, will be exempt, for one reason or another. The levy is a classic example of a new tax that is misnamed and misdesigned. With the exception of the companies whose behaviour it might affect, it applies to all companies of all sizes. It will be widely regarded as a supreme example of a stealth tax. I doubt whether the Financial Secretary
will, even now, be able to mention any small business in Britain that is yet aware of what is about to hit it--but hit it this tax will.The tax is not neutral, particularly because the offsetting national insurance contributions reduction, even if that were real, would not be coincident with the effect of the tax. Firms will be either gainers or losers. As the Financial Secretary is well aware, we are by no means persuaded that the offsetting NIC reduction will remain as an effect of the introduction of this levy. In any event, the offsetting NIC changes could have been introduced without the levy.
The levy is a tax. It is not a neutral tax. It is not neutral either in its particular or in its general effects. Its effect will be to raise the Government's tax income.
The levy is complicated. We became aware, as we went through it in Committee, that it is probably the most complicated tax that the Government have ever introduced--and that is saying something. If I remember correctly, its provisions extended to 55 pages. The situation has been made worse rather than better by Government amendments, which have made the tax significantly more complicated.
This tax hits our competitiveness. As we explained repeatedly in Committee, it is not levied outside the European Union, and many EU states have exemptions from comparable taxes. It is unnecessary, and it is the more unnecessary because other more effective means, such as voluntary agreements and emissions trading, could have been used to achieve our Kyoto targets of further reductions in greenhouse gas emissions.
Most important, and most directly germane to the amendment, is the fact that the policy represents work in progress--actually, I am doing the Government undue justice in saying that, because it is actually a mess in progress. It may be making gradual progress towards coherence, but it certainly has not got there yet. No one knows how combined heat and power schemes will be affected, and no one understands how the rebate mechanisms will work. No one knows whether the EU clearances on state aid will work. In that connection, I draw the Financial Secretary's attention to a letter, which he may also have received, from the Chemical Industries Association. It states
- the real "showstopper" for industries such as chemicals
- unable to get its existing package of Levy concessions . . . past the European Commission.
I hope that the Financial Secretary will have seen as much light as his colleagues have seen on double tax relief. By changing their minds, they have mercifully spared British industry from one of the worst disasters
that could have befallen it. I hope that he will tell us that he will accept this amendment--this life-saving device that we have thrown him--with the open arms with which it would behove him to accept it.
| Next Section
| Index | Home Page |