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Occupational Pensions

I welcome that point because it underlines the concerns that I have about how we get people to realise the full extent of their personal liabilities for their own futures. Anything that reduces their awareness of what they need to do is of considerable concern. When the Chancellor introduced his 1997 Budget, he was aware that some of us were already talking about the implications of what might happen. My right hon. Friend the Member for Charnwood (Mr. Dorrell) was involved in the previous decisions and I was aware that we had rejected a change of the sort that the Chancellor and the hon. Member for Coventry, North-West were considering. Therefore, the first time that the Prime Minister’s came to the Dispatch Box to answer questions, in May 1997, I asked him whether he would compensate pensioners for any loss that might arise from the rumoured changes in tax, including a windfall tax and advance corporation tax. Not surprisingly, I got the brush-off with an evasive reply. The Prime Minister merely commented that a windfall tax would not damage pensioners and did not comment on advance corporation tax. He also took some sideswipes at my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) and the pension proposals and reforms that we had put forward before the 1997 election. That attack was disingenuous, because at least we had put our proposals forward for public consultation. They were misrepresented by the incoming Labour Government, but I strongly suspect—as my right hon. Friend pointed out in his speech today—that they subsequently regretted having written off those proposals, which meant that they could not grasp the pension problem for some years. Lord Simon of Highbury, then a Minister, also apparently made it clear that the changes would be damaging. He also said that the proposed tax change was a particular concern, given its impact on investment in the UK and pension provision. The Chancellor claimed that he was given the opposite advice today—that the decision would help investment. Those issues have been addressed by colleagues in previous speeches, so I shall not go over them. The Chancellor was aware of the implications, but he did not make them clear in his Budget speech. I am not sure that he fully understood what the implications were. Local authorities have been mentioned, and I checked with my local authority, Surrey county council, today. It said that at the 1998 valuation the deficit on the pension fund was £243 million, but at the 2004 valuation—the latest official valuation—the deficit had grown to £517 million, despite the council making additional contributions of £200 million to reduce the deficit over the period. That prudently run county council has been hit, with the result that council tax payers are paying more. The impact of the measure in 1997 was not only felt by pensioners, but caused collateral damage. Did the Government admit that? Did the Chancellor come to the House and say ““Well, I think that this is a necessary measure because we need to raise more money. I have been advised by my Minister?—the hon. Member for Coventry, North-West—““that we have to raise £5 billion and this is how we’ll do it. It will of course affect pensioners, but in the long term we think that the pension industry will survive, and of course it will have a knock-on effect on council tax payers, but they must play their part.? He did not say any of that. The accusation against the Chancellor is not that he thought through some measures and happened to come up with some that were tax-raising. That is the job of the Chancellor. The accusation is that he did that in a clandestine, covert way and has never apologised to the people who have been affected. Apologies in the Chamber are always highly regarded and respected by colleagues. The House listens sympathetically if a Member comes to the Chamber and says, ““Well, I didn’t understand the full implications of what I have been doing. There were merits to my decision and I took good advice, but the effect has been worse than I expected.? But even today, when the Chancellor’s cover has been blown, we did not hear a word of apology. There was lots of talk about other measures that he had introduced to try to protect from flanking cover the problems that he had caused by that decision, some of which have been beneficial to pensioners, but that does not alleviate the damage to confidence in the pensions industry. We did not get an apology. Instead, we got bluster, fight-back and statistics that did not make comparable sense with the time scales involved. Interestingly, few of the figures came from after 2001. Heaven forfend that I should have to read the Chancellor’s speech in Hansard tomorrow, but I think that that is true. That is interesting, because one of the arguments that he has used is that the stock market went up. It is rare that Chancellors claim credit for stock market movements, and he certainly would not wish to claim credit for the fall in the stock market, which logically he should. If he is behind all movements, the fall must also have had something to do with him. Lord Turnbull said that the Chancellor was behaving like Macavity the cat, and my hon. Friend the shadow Chancellor referred to that. That excellent poem also says:"““But when a crime’s discovered, then Macavity’s not there!?" Well, the crime has been discovered. The Chancellor was there, but he did not come to the House and own up. That is the accusation that we are making.