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Self-invested Personal Pensions

4. Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): What assessment his Department has made of the likely impact of the new self-invested personal pension regulations on the demand for second homes in rural areas. [26725]

The Economic Secretary to the Treasury (Mr. Ivan Lewis): There has been widespread speculation about the impact of the new rules that will allow self-invested personal pensions to invest in residential properties. Government guidance sets out the implications of putting a residential property into a SIPP. It is unlikely to be an appropriate investment for most people, but the Government are committed to keeping this area under review and will not hesitate to act if there is evidence of any abuse.

Danny Alexander: I am grateful to the Minister for that reply. Has he seen this morning's Financial Times, suggesting that Standard Life alone has so far sold £1.1 billion-worth of investment in those products? Is he aware that Scotland's second homes are concentrated in rural communities in the highlands and islands, for
 
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example, and that there is a real fear in those communities that even a small rise in demand for second homes, stimulated by the new rules, will push house prices even further beyond the means of local people? Why is the Minister—

Mr. Speaker: Order. That is fine. I believe that the Minister will be able to answer the question.

Mr. Lewis: Thank you, Mr. Speaker, as ever, for your assistance.

We need to consider the issue in the context of pension tax simplification, which has been welcomed by almost everyone—the industry, financial services and all Opposition parties. It is also true to say that the rules do not put the investments into any tax privileged category over and above any other investments in a pension. There are already around 15 million pension savers who can invest in residential properties. At the moment, there are only around 200,000 savers in SIPPs. Having said that, if we find that the hon. Gentleman's concerns prove to be justified, we remain willing to act and to act appropriately. At this stage, however, we believe that pension tax simplification is the right thing to do and, in that context, SIPPs are relevant. However, if there are unintended consequences, we are willing to consider those and to act appropriately.

Mr. Andrew Love (Edmonton) (Lab/Co-op): Concern has been expressed, especially in the media, about the possibilities of mis-selling, and the Minister commented on that. There has also been concern about whether there will be an adequate regulatory regime. Is he aware of those concerns? What action is he likely to take to ensure the protection of the public?

Mr. Lewis: My hon. Friend raises a legitimate issue. At the moment, there is a 12-month gap between the regulatory regime that the Financial Services Authority will be able to introduce and the changes from 1 April next year in terms of pension tax simplifications and, specifically, the impact on SIPPs. Clearly, the Treasury and the FSA are concerned about that gap, and we are considering whether we can do anything practical about it. Having said that, it is important that the FSA follows its usual consultation processes before rushing in inappropriate rules. We are conscious of the 12-month gap.

Mr. Patrick McLoughlin (West Derbyshire) (Con): May I congratulate the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for South Dorset (Jim Knight), on coming into the Chamber for this question? It is obvious that DEFRA takes the matter seriously. Is the Minister telling us that the Government have done no work on the possible implications of the measure for the countryside? Is he saying that he does not believe that it will have an impact on the price of rural housing?

Mr. Lewis: I am saying that there have been a lot of accusations in the press and elsewhere about the potential of SIPPs that are not supported by the evidence. Having said that, we have been working on the potential consequences of the changes, including the potential impact on rural communities and on housing,
 
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which is why if we feel, having considered the evidence, that there are undesirable consequences, we will take the necessary steps.

Paddy Tipping (Sherwood) (Lab): What discussion has the Minister and his officials had with the Affordable Rural Housing Commission? It, too, has raised concerns.

Mr. Lewis: I personally have not had discussions with that organisation, but I am willing, as part of the deliberations that we are having, to ensure that that organisation and similar organisations are consulted properly and that we take account of their views.

Adam Price (Carmarthen, East and Dinefwr) (PC): In drawing up the proposals originally, it is unlikely that the Government intended to help fund second homes at the expense of other taxpayers or the Exchequer. As part of the Minister's willingness to act, does he reserve the right to exclude second homes from the proposals?

Mr. Lewis: As I have said, we are aware of the concerns expressed. We are also aware of the benefits of pension tax simplification, which has been welcomed continually by anyone who has considered the issues. It is not generally known that around 15 million pension savers can already invest in residential property. That has nothing to do with the changes to SIPPs. However, I once again reassure the hon. Gentleman that if we feel that they will have a seriously detrimental impact on our housing policy or on rural communities, we shall certainly consider that and, if appropriate, take the necessary action.

Millennium Development Goals

5. Jim Dobbin (Heywood and Middleton) (Lab/Co-op): If he will extend the Government's debt relief programme to all countries that need debt relief to meet the millennium development goals. [26726]

The Economic Secretary to the Treasury (Mr. Ivan Lewis): At the annual meetings in September we secured agreement from the International Monetary Fund and the World Bank for 100 per cent. multilateral debt relief for up to 38 of the world's most indebted countries. Britain goes further than this, and we will unilaterally service our share of the debts of other poor countries where the resources freed up will be definitely used for poverty reduction.

Jim Dobbin: Short-term volatility can be damaging for developing countries. On current trends, sub-Saharan Africa will not reach its development millennium goals by 2015. What progress is the international finance facility making that would aid and support developing countries?

Mr. Lewis: First, I pay tribute to the work that my hon. Friend has done on these issues over many years within his constituency and in the wider community. My hon. Friend is right to raise the issue of the IFF. For example, on current rates of progress it is unlikely that some donors would be able to meet their aid commitments without the IFF, and based on donors'
 
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legally binding long-term commitments, the IFF would leverage money from international capital markets by issuing bonds. Bond holders would be repaid from future donor payment streams. More than 80 donor, emerging market and developing countries, including France, Italy, Sweden, China, Brazil and South Africa, support the IFF.

I can assure my hon. Friend that this was very much an initiative of my right hon. Friend the Chancellor, who wanted to see far more rapid progress in this area than would have been the case. I can assure my hon. Friend also that the IFF is gaining continuing and growing support from the international community. We see it as a crucial part of achieving our objectives on an accelerated basis, which I am sure every Member of this place would want to see.

Mr. Mark Field (Cities of London and Westminster) (Con): At the risk of playing into the hands of the Chancellor, even in his absence today, this question time, like so many others, seems to sound more like International Development questions than Treasury questions.

Might I suggest that an extension of the debt relief programme should depend on two conditions? Does the Economic Secretary agree that the best way to meet millennium development goals is to insist on pathways towards good internal governance and recognition of the role of government in the developing world, in both promoting and protecting private property rights?

Mr. Lewis: First, we make no apologies for dealing with these matters in Treasury questions. The Government have embarked on a moral mission in terms of the international community. It is one of the most tangible examples of a Government making a difference in respect of things that really matter in this world. We make no apologies for saying that "Make Poverty History" is a campaign that the Treasury has played a massive part in supporting. We pay tribute to the church groups and other organisations that have ensured that the issue is at the top of the political and public agenda throughout the international community.

On the hon. Gentleman's specific point, of course good governance matters. There is little point, as we have seen through history, in pouring aid into situations where the countries concerned are not being managed in an appropriate way, where there is not transparency and where there is corruption. As part of these new international agreements, the Chancellor has made it absolutely clear that good governance, openness and accountability are crucial if we are to be able to achieve the objectives that we are setting out. In that respect, I agree with the hon. Gentleman about the importance of good governance.

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