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Occupational Pensions

My hon. Friend makes another extremely good point. Other colleagues have also referred to it. On the Labour Government’s watch, 1 million manufacturing jobs have gone and a large amount of industry has transhipped to more clement locations abroad, with better tax and regulatory structures and a more favourable environment for business. The hon. Member for Amber Valley (Judy Mallaber) lives in a dream world when she says, ““But we all know it’s so wonderful?. Tell that to the 5 million people on benefits who cannot get a job. Tell that to the million people who lost manufacturing jobs in recent years. Tell that to the hundreds of thousands of people who no longer have access to final salary schemes or whose promises from such schemes will not be honoured in full, or who are nervous because they fear that those promises may not be honoured. Labour Members—although not normally the Chancellor, I am pleased to say—seem to think that the origins of the problem lie in the so-called pension holidays. It is true that in the 1990s a number of companies either cut their contributions or ceased to make them, which was sometimes beneficial for employees, because some of the schemes had employee and employer contributions. However, Labour Members really must understand how pension funds operate in this country. Each fund has to have not only an independent trustee board, but a consulting actuary who has to produce a calculation to tell the trustee board and the employing company how much money has to go into the scheme to ensure that pensions can be paid in the future. All the companies that cut, or removed, their contributions had signed actuarial certificates stating that they need not put in more money; indeed, they were often told that they could not put in more money. The rules are still the same. There are limits on how much anybody can put into a pension scheme, because it is a tax shelter. The rules are clear: a pension scheme cannot be overfunded beyond a certain amount, because it would be an unreasonable use of the tax relief, and that is right. The Conservative Government were right to impose a limit on the tax relief for funds and the Labour Government were right to continue with it. However, it is quite wrong to say that companies are to blame for a shortfall that emerged 10 years later; they had super-solvent funds at the time and the rules and regulations and tax requirements meant that they could not put more money into the schemes. Indeed, it would have been foolish of them to have done so.