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7 Mar 2003 : Column 1100—continued
Lawrie Quinn: My hon. Friend seems to be recommending preparation that the hon. and learned Member for Harborough may want to make before the Bill goes into Committee. Will my hon. Friend join me in commending to the hon. and learned Gentleman the important document, "Annuities—The Consumer Experience", produced by the Association of British Insurers? For me, that underpins the debate on the future of annuities, but obviously the Member promoting the Bill has failed to recognise that.
Mr. Dismore: I am sure that my hon. Friend makes his point exceedingly well, and if he catches your eye, Mr. Deputy Speaker, he will be able to develop those thoughts at length.
It would be regrettable if the Bill were to reach Committee stage because it requires so much heavy engineering that it would make the railways pale into insignificance. [Interruption.] I thought that that would
wake up the hon. and learned Member for Harborough. The Bill is so flawed that if it reaches Committee, it will never come out again. The Inland Revenue proposals and the Department for Work and Pensions document "Modernising Annuities" will make it necessary to table so many amendments that it will take for ever to deal with them all.For the purposes of the debate, I made an assumption earlier about multiple policies, but the Bill is entirely silent on the subject. At the last count, I had four private pension plans. The last time that we debated this matter, the hon. Member for Ryedale (Mr. Greenway) said that he had 11 pension plans. We do not know whether we would have to put all our policies into the system proposed by the Bill or whether we could pick and choose. I can see that there would be many cunning tax-avoidance schemes—I could put one policy in the system but withhold the others to maintain my annuities. There could be all sorts of juggling as people bought different policies, which would not be sensible. If the Bill reaches Committee, I urge the hon. and learned Member for Harborough to consider how multiple policies ought to be dealt with.
I urge the hon. and learned Gentleman to consider transitional arrangements because, as far as I can see, there are none in the Bill. It will straddle the introduction of pension credit and the continuing growth of stakeholder pensioners, so there is inevitably potential for loopholes to be created. There is also the problem of people's existing policies. It is incumbent on the hon. and learned. Gentleman to tell everyone with a pension policy where they stand and whether their policy will have to be changed. On the other hand, he may wish to introduce transitional arrangements, in which case the Bill would apply only to pension funds to which people sign up from next year or the year after, giving them time to adjust. Perhaps the hon. and learned Gentleman intends to introduce retrospective legislation, of which the House has almost always fought shy. I think that there have only been two pieces of retrospective legislation—I can remember the name of one but not the other.
Regrettably, the hon. and learned Gentleman has failed to examine the security of investments. The Bill refers to schedule 10 of the Insurance Companies Regulations 1994, which specifies permitted investments. However, those investments could be risky. We have already discussed certain aspects of investment, and annuities are generally secured against gilts. Schedule 10, which could be used to liberalise the investment regime, may go too far the other way, so I urge the hon. and learned Gentleman to consider restricting his implementation of that provision. That matter is very serious. We have seen, for example in Equitable Life, what happens when projected returns from investment are too high. We have seen the problems that arise when pension funds rely too much on equities, and we have read in the financial pages of the Sunday papers about scandals. However, the hon. and learned Gentleman's proposal, instead of providing more security of investment, provides less. He is in favour of a wild west form of annuity, not the security that people want for their retirement.
As I draw my remarks, regrettably, to a close, I shall return to the hon. and learned Gentleman's press release, in which he sets out what he hopes to achieve in his Bill:
- "I have tried to design a Bill whose principles are simple to understand and which is free of unnecessary technicalities or detail . . . Whilst it does not cure all the problems faced by pensioners it goes some way to offering practical assistance."
Lawrie Quinn: I am listening carefully to my hon. Friend, and regret that he is coming to the end of his speech. Obviously, longevity is an important part of our debate. Does he agree that that press release can only be characterised to use the language of my own industry, as a shoddy piece of cowboy workmanship?
Mr. Deputy Speaker: Order. Again, that is entirely and unnecessarily repetitive.
Mr. Dismore: I would not go down my hon. Friend's line, except to say that perhaps it is negligent with a small "n", or misleading with a small "m", or perhaps with a capital "M", to suggest that the Bill is simple to understand and free of unnecessary technicalities. The hon. and learned Gentleman has skated over all the technicalities and details that inevitably have to be addressed. I hoped that when he introduced the Bill he would fill in some of the gaps, but he lamentably failed to do so.
The hon. and learned Gentleman says that the Bill does not cure all the problems faced by pensioners, but that it goes some way to offering practical assistance. What utter poppycock! It does not provide practical assistance to 99 per cent. of pensioners. It may provide practical assistance to a tiny minority of extremely wealthy pensioners, but that practical assistance can be delivered much more effectively through taxation changes on which the Government are consulting. Such changes will not remove the flexibility and the existing practical assistance that it is available to everybody, and will not impose great restrictions on the majority for the benefit of the wealthy few. How can it be right to remove compulsion at the age of 75 from a few millionaires, and to introduce compulsion at the age of 65 for everyone else? That is not meeting the hon. and learned Gentleman's objectives.
We have no real way of knowing whether the Bill would provide practical assistance because there is no detail. The hon. and learned Gentleman has not defined his minimum retirement income. Perhaps he might have provided some benefit to the Plymouth Brethren, but the hon. and learned Gentleman has not defined his fail-safe retirement fund. We have no way of knowing about that. The fact remains that the Bill is a shoddy piece of work. It should never have seen the light of day in the previous Session. I should have thought that the hon and learned Gentleman would do a bit of learning and realise that the Bill cannot be allowed to proceed.
I know that I have spoken at great length. I had to, because the hon. and learned Gentleman wasted time in his relatively short introduction. That time would have been far better spent in setting out some of the detail, instead of engaging in party political point scoring, which he said he would not do but which he inevitably did. I think I have been extremely restrained in avoiding such point scoring. I have tried to present a logical and basic analysis of the Bill. Apart from one or two occasions when I wanted to make sure that the hon. and learned Gentleman was awake, I have not engaged in the party political wind-ups in which he engaged at the beginning of his remarks, when he advanced silly arguments. Had he wasted less time on that and spent more time on the substance of the Bill, he might have made much more progress and I might not have had to speak at great length in posing so many questions to him. The fact remains that he has done a shoddy piece of work.
There are one or two other aspects of the Bill to which I should refer before I resume my place. The starting point is the commencement date. It is not a major point, but it is an important one. The commencement date for the Act will not be set by the Minister by statutory instrument or by other forms of delegated legislation, as normally happens. Clause 3(2) provides for the Act to come into force on 6 April 2005. That being so, why are we wasting time on the Bill? The Government have already said that they intend to make their own proposals in the Finance Bill in 2004. Assuming that that will happen and that the tax regime for annuities will be greatly simplified in April 2004, clause 1 of the relevant section of that Finance Bill will provide, should this shoddy Bill ever reach the statute book, for the repeal of this shoddy piece of work. That has to be. If enacted, the Bill would be entirely inconsistent with the tax reforms that the Government are already consulting on. The hon. and learned Gentleman cannot have read the proposals. Had he done so, he would have seen that what I have said is the case.
The Bill cannot be allowed to proceed. I am sorry that I have had to speak for so long, but I hope that hon. Members will understand the reasons for my doing so.
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