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Occupational Pensions

No, as my time is running out. The suggestion is that the abolition of dividend tax relief was the reason for the present serious problems with pension funds. However, no reference has yet been made in the debate to the TUC, which represents many of those who have suffered as a result of what has happened to pension schemes. If the proposition behind the debate was correct, I do not believe that the TUC would say the following:"““Neither employers nor opposition politicians should be allowed to get away with blaming Gordon Brown for cuts in occupational pension schemes. When the tax rules were changed, pension funds were generally in surplus. Many companies had got used to long contributions holidays, and with typical UK short-termism had no plans for restarting contributions. Many companies used pension surpluses to make people redundant through early retirement.""But when reality returned and employers started facing bills for their pension schemes once again, the retreat from quality schemes began. Stock market pressures and longer life expectancies have caused far more difficulties than the tax change?." Most serious commentators have highlighted three factors behind the development of the problems with pensions. First, employers took pension holidays when the going was good in the 1980s and 1990s, and they did not begin to contribute again when things started to go pear-shaped. Secondly, firms rushed to get involved in the dotcom bubble, which ended with the stock market fall of 2000. According to the Pensions Commission, in the 1980s and 1990s companies should have been investing, not cutting their contributions. As was said in earlier exchanges, they should have been looking at factors such as the increase in life expectancy and realised that more money, not less, needed to be put into pension schemes. I hope that such issues will be discussed in a more serious debate on pensions tomorrow when we consider the Pensions Bill. It would appear that actuaries suddenly woke up and realised the cost to pension funds of increasing life expectancy. They started getting worried and demanding that each year any potential liabilities should be brought forward. I am not an accountant or an actuary, but other contributors will probably come in and make more points about the impact of that in terms of decreasing confidence in pensions. It is hypocritical of the Conservatives to accuse my right hon. Friend the Chancellor when they themselves were responsible in considerable part for creating the conditions in which contribution holidays were taken by companies. My right hon. Friend the Member for West Dunbartonshire (John McFall), the Chair of the Treasury Committee, quoted Adair Turner’s report, which cited the changes introduced by Tory Chancellor Nigel Lawson in the Finance Act 1986, which forced companies to take contribution holidays. It said:"““indeed not only did contributions fall but they were required to fall by deliberate government policy … the Finance Act of 1986 … required pension funds to identify whether … they had a surplus of 5 per cent. or more, and to take action to remove the surplus within five years, or else lose some part of their tax exempt status.?" So the Conservative party cannot deny its responsibility for what was clearly an important factor. I am proud of a number of things that we have done to assist with pensions. I am proud of the number of pensioners in my constituency who have been taken out of poverty. I am proud that pensioner households will be £1,500 better off in 2007-08 as a result of the way in which the tax and benefits system has developed. I am proud that the average household will be £2,200 better off and that the 2007 Budget will lift a further 60,000 pensioners out of paying tax. I am pleased that we have introduced the Pension Protection Fund and that extra money has been announced for it in the Budget. A lot of things have been put forward by the Conservative Opposition that have not been based on a serious analysis. My concern is that we should return to having a serious debate. I agree absolutely with the hon. Member for Putney (Justine Greening) that these are serious issues. None of us would undermine that assertion. I do not think that the to and fro of political polemics, in which I now find myself engaging as well, necessarily helps us take those arguments forward. These are serious issues.