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Occupational Pensions

There are probably even more victims to be added to the list, but I believe that it is indeed internationally the same firm, but no doubt some very good people worked for that accountancy and consultancy firm. It was Enron rather than working for new Labour that brought it to grief, but the firm did indeed work for both and helped to produce this particular proposal. Why was the decision taken? They looked at the argument, familiar to anyone at the time, that if companies were stopped from paying dividends as demanded by pension funds and were encouraged to retain profits, it would boost investment. That was repeated and has been repeated again over the last few days. It was a convenient argument to use whenever people were looking in that direction to raise revenue. However, as the hon. Member for Twickenham said, subsequent events proved that that was quite untrue. In any event, I do not accept it because the idea that if a company has produced a surplus, the best form of investment for it is to plough it back into the same company—or that if it distributed that surplus to the markets, they could not find better ways of investing the money in other ventures and other businesses—is a somewhat preposterous one. If anyone returns to that argument, as new Labour Ministers do, I hope that we will not go back to the absurd idea that successful companies should hoard all their profits and not return any of the money to the owners as if that were the best way of making use of the surplus generated. In today’s modern markets, which work very well, I believe that quite the reverse is true. All the pressures under the present Government are for share buy-backs and distribution of dividends because most people accept that that former argument was wrong and that the best way to proceed is to encourage the distribution of dividends so that the market can make use of them in new ways.