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Another policy is based on our view that the burden of regulation on pension funds is too high and needs to be radically cut back. We strongly support the Pickering review, which I am sure that the Secretary of State will talk about in his speech. However, since the announcement of the Pickering review, which was supposed to reduce the burden of regulation on pension funds, we have had, in the past nine months, another 251 pages of regulations, including 67 pages of statutory instruments and 81 pages from the Inland Revenue. Those have been churned out while the Government have boasted of their review to cut the burden of red tape on pension funds. That is the reality of what they do, despite their claims.
Over the past five years, the Government have, in a display of hyperactivity, comprehensively messed up the provision of funded pensions in our country. The Government have taxed them more heavily, cut the value of the contracted-out rebates to which they are entitled and abolished SERPS. The Government have brought in more means-testing and introduced a stakeholder pension whose take up by the eligible target group has been pitiful.
We now face a Labour environment for pension provision, which means less saving, low funded pensions and a poorer retirement for millions of British people. Labour Members should be ashamed of themselves.
Mr. Smith: As the hon. Gentleman ought to know well from looking at trends in the savings ratio, it tends to vary inversely with economic conditions. Characteristically, the savings ratio goes up in recessions and down in periods of prosperity. Actually, he is pointing to the fact that we have had a period of stability, thanks to the stewardship of the economy by my right hon. Friend the Chancellor and the tough fiscal and monetary disciplines that we have stuck to. That is responsible for the savings ratio.
Like the hon. Member for Havant (Mr. Willetts), I very much welcome the Accounting Standards Board announcement this morning that it is delaying the introduction of FRS17, pending a decision on the international standard. I hope that there is agreement on both Front Benches that although it is vital that there be openness and transparency in accounting, FRS17 has been blamed for some of the closures of final salary schemes. Providers have put the case that the standard forces pension liabilities to be disclosed as a snapshot, when those liabilities may be spread over a longer period.
Ministers in the Department have been conscious of the impact that some providers believe FRS17 has had on schemes. My predecessor had a meeting with the ASB, drawing its attention to the advantages of aligning FRS17 with the international standard, which allows a smoothing of pension liabilities over time. I am pleased that the ASB will look at the international standard and I welcome the decision that our companies do not have to change their accounting practices twice, in 2003 and again, possibly, in 2005.
Of course, FRS17 is not the whole issue; of course more needs to be done to raise levels of saving for retirement. As the hon. Member for Havant said, people are living longer. That is something to celebrate, but it means that pension funds have to go further than ever before.
Mr. Smith: The reforms to which I have already referred, and especially the pension credit, reward people for saving. The Financial Services Authority has made that clear. Stakeholder pensions make an invaluable contribution in adding to the convenient vehicles that people can use. [Interruption.] Conservative Members ask how people are better off. With the introduction of the pension credit, where the Conservatives penalised people with modest savings and occupational pensions, we will reward them.
We accept that more needs to be done. That is why we set up the reviews, which the Opposition say that they welcome, and why we need to consider bold and radical action to sustain pension schemes and raise the level of
Mr. John Redwood (Wokingham): When the Chancellor imposes a tax on dividends and further substantial taxes on the cash flow of companies, would the Minister expect the value of shares in people's pension funds to go up or down?
Mr. Smith: As ever, the right hon. Gentleman misunderstands the purpose of that corporate tax reform, which was to correct the perverse incentive in the previous tax arrangements for distribution in the form of dividends rather than for reinvestment. The impact of such reform can be judged only over a period, but the level of investment in industry is now higher, having reached the highest level for many years, at 14 per cent., whereas it averaged about 11 per cent. in the years of Conservative government. The reform was designed to strengthen British industry and our wealth-generating capacity, which is what enables us not only to enjoy higher living standards but to boost the strength of the foundations of our economy so that we can pay decent pensions in retirement.
I listened very carefully to the speech by the hon. Member for Havant to try and catch one glimmer of what the Opposition's policy is. He mentioned annuities and said that he agreed with us on regulation, but that was about it. Under the Conservatives' stewardship, we had pensions mis-selling on a massive scale and the introduction of much of the burden of regulation on pensions that they now complain about. Their leader said that the minimum income guarantee, which is taking pensioners out of poverty, had "nothing to recommend it"; and the hon. Member for Havant said that the pension credit, which rewards modest savings and occupational income, should be "reconsidered".
On the basic state pension, which should be the foundation of security in retirement, the Conservatives tried to say nothing in publicand we heard nothing about it today. According to the reports of the Opposition's so-called summit last Thursday, their spokesman refused to say anything about what their policy would be, but we have, and can share with the House, not just a memo or a note but the formal letter that the shadow Secretary of State sent to the hon. Member for Sutton Coldfield (Mr. Mitchell) on 7 March. Let us remind ourselves of what it says: