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Occupational Pensions

No money was taken out of the pension funds. A previous Government’s cash subsidy, which was being given to pension funds but was not advancing their interests, was removed for the long-term benefit of the economy. That was immediately perceived to be successful. That is what happened. The notion that any current problems or changes in the pension industry are attributable to the removal of the subsidy in 1997 is not simply wrong but ridiculous. That is why I am so impressed, as a partisan politician, that the Conservative party has got the subject on the Order Paper an unbelievable decade later. Let us consider Kaletsky’s column in The Times last week. I do not know whether hon. Members have read it—none, strangely, has mentioned it. I commend it to everyone. One of the many comments that he made was that"““the claim that the 1997 ‘tax raid’ was the main cause of pension fund closures, or even an important contributory factor, is simply false.?" As he goes on to explain:"““The fact is that the pre-1997 pensions industry was not remotely as healthy as its lobbyists have claimed. The closure of traditional private sector pension funds was already becoming inevitable because of regulatory changes imposed by successive governments over the previous 20 years.?" We know what kind of Governments they were in the 20 years leading up to 1997, do we not? I do not recall that they were Labour Governments. Let us be clear: even it were not for the dotcom crash that wiped £250 billion off the value of the stock market; even if contribution holidays—encouraged by Tory Governments through their capping of surpluses—had not been recklessly overused, and even if life expectancy had not risen so dramatically, there would still be major challenges for the pensions industry because of the serious regulatory changes, which fundamentally altered the landscape of the industry, the implications of which were not properly foreseen or understood when the Tories introduced them. Having to pay spouses’ pensions, protect pensions against inflation and offer equitable treatment to early leavers had, along with life expectancy, already doubled the cost of providing private pensions. To quote again the esteemed and disinterested Kaletsky in The Times:"““The last straw… was the Major Government’s panic reaction to the Maxwell pensions scandal.?" He finally quotes Stephen Yeo, as several others have done, who advised the Tories on pensions. It is a shame that he did not tell them at the time that the business of getting rid of the subsidy being responsible for a pensions catastrophe was nonsense. The Tories know it is nonsense, so what on earth is the motion doing on the Order Paper? To any student of economics or public policy, it would be baffling. To the student of politics—of the cynical, deceitful, disreputable way in which it is possible to practise politics—it is instructive. Hon. Members too often have recourse to Josef Goebbels’s line in 1933, which they often misquote and misattribute, that"““any lie constantly repeated eventually becomes the truth?." It is not a line that fits our purpose here because it is far too strong. Conservative Members have not been lying about the matter, obviously. However, the variation on Goebbels’s theme that dear old Willie Whitelaw played to the Conservative party conference in 1985, when he said that"““we must never forget the value of constant repetition to get our message across?" is not strong enough because it does not include the implication that it does not matter how misleading or lacking in truthful content the message that the party in question is conveying is—all that matters is how often one says it. Any young proto-politicians who seek instruction in the worst excesses of the dark arts should note the sheer, dogged, determination, during a period of utter barrenness, despondency and failure, to keep the non-story alive. Looking back through the records, there is quite a roll of honour from the Conservative point of view, though a complete rogues’ gallery from the point of view of serious debate about the pensions on which people are obliged to rely often at the most vulnerable time in their lives. The right hon. Member for Hitchin and Harpenden (Mr. Lilley), whom I greatly esteem in many other contexts, opened the Budget debate about which we have heard so much in 1997, and claimed that the change in the dividend subsidy, combined with the windfall tax—perhaps another potential Opposition day debate, ““the windfall tax on the private utilities? might be a good topic for next week or the week after—was"““a double whammy for pension funds; it is the Robert Maxwell memorial Budget.?—[Official Report; 3 July 1997; Vol. 297, c. 430.]" In the same year, the right hon. Member for Richmond, Yorks (Mr. Hague) stated that the Budget was"““a double whammy against pensions… It is a smash and grab raid on pension funds in this country?.—[Official Report; 2 July 1997; Vol. 297, c. 321.]" There is double whammy theme. In 1998, the right hon. Member for Horsham (Mr. Maude) wittily reminded us:"““Last year we had the Robert Maxwell memorial Budget, with its vicious raid on pension funds.?—[Official Report, 14 July 1998; Vol. 316, c. 198.]" Vicious? The Chancellor removed a subsidy to stimulate investment—and a year later it is ““vicious?. In 1999, the right hon. Member for Wells (Mr. Heathcoat-Amory) told us:"““In the Government’s first Budget, there was a £5 billion a year raid on pension funds as a result of the withdrawal of dividend tax credits.?—[Official Report, 28 April 1999, Vol. 330, c. 351.]" In 2000, Mr. Michael Portillo, typically lyrical, stated that"““the Chancellor is still taking £5 billion a year from the pension funds of people who are now saving for their retirement. He is attacking the people who are trying to do the right thing and want to be independent. He is impoverishing future generations of pensioners, driving more and more of them to be dependent on the state.?—[Official Report, 13 December 2000; Vol. 359, c. 662.]" The student should pause at this point and remember that that is not only not true, but ridiculous. Everybody knows that it is ridiculous. The Conservatives know that it is ridiculous. When they were in office, they did exactly the opposite from what they say. However, now they simply keep saying it—year after year and over and over again. In 2001, Lord Strathclyde warmed to the theme:"““I cannot think of any tax rise?—" it is now a ““tax rise?—"““more retrograde than his massive tax raid on pensions savings… How can this assault and battery of prudence be defended?... ‘it is like Gordon Brown leading a £25 million Brinks Matt robbery every day of the working year.’?—[Official Report, House of Lords, 14 March 2001; Vol. 623, c. 853.]" That goes on and on, right up to three weeks ago, when the hon. Member for Chipping Barnet (Mrs. Villiers) told us about the famous time when the Chancellor ““dealt a body blow? to savings with what has now become ““his £100 billion raid? on pension funds. The Chancellor removes a £3.5 billion to £4 billion subsidy to stimulate investment and it becomes a vicious, £100 billion raid on pension funds. For cynical, self-serving, misleading party politics, I take my hat off to the Conservatives. It is remarkable that they managed to get the motion on the Order Paper without the Clerks rolling about laughing and the printers becoming so hysterical that they could not get the document out. However, for serious debate about people’s economic security, it is not funny. To call the ending of a damaging £4 billion subsidy, which the Tories were in the process of phasing out five or six times, a £100 billion smash-and-grab tax is not only ridiculous but disreputable. To be so baldly at odds with the facts is not clever, but to scare people about something that can make them feel so vulnerable is not kind. It is for that serious reason that Labour Members will be glad to vote against the silly motion tonight.