Rt Hon Lord Lilley

    Pensions Funds & Savings

    Q2. [62499] Mr. Peter Lilley (Hitchin and Harpenden): Returning to the subject of the ?5 billion a year stealth tax on pension funds, can the right hon. Gentleman name anyone who believes that siphoning off millions of pounds from pension funds does not undermine their ability to pay pensions? Can he name anyone, that is, apart from the Prime Minister and, of course, the late Robert Maxwell?

    Mr. Cook: If I remember correctly, the right hon. Gentleman had some responsibility for pensions during the previous Conservative Government. The electorate have already given their verdict on how he managed his stewardship of their pensions during his time in office and I am happy to put our records side by side. On the question of the withdrawal of advance corporation tax, the right hon. Gentleman is intelligent and well informed enough to know that that was done in order to ensure that we did not distort the tax system to encourage dividends rather than investment. He is a fair-minded man, so I am sure that he will be delighted to hear that that decision has succeeded and that investment in British industry is now ?20 billion a year higher than it was under the Government of whom he was a member.

    Oral Questions 26 Jun 2002 : Column 872-3

    Mr. Peter Lilley (Hitchin and Harpenden): Does the Minister agree that the policies that do most to boost long-term savings encourage people to opt out of the unfunded state pension system into genuine savings in occupational and personal pensions, for which they receive national insurance rebates, which now amount to ?6 billion per year? Will she contrast the Conservative policy of putting ?6 billion into genuine savings for pensions with the ?5 billion of tax taken out of pensions by the Robert Maxwell memorial tax?the abolition of advance corporation tax on pension funds, which is Labour‘s response to our measures?

    Ruth Kelly: The right hon. Gentleman must surely realise that when he was Secretary of State for Social Security in the previous Government, hundreds of thousands of pensioners were forced into poverty. To ensure that pensioners share in the country‘s rising prosperity, we are spending an extra ?6 billion every year on them from this April, which is over ?3.5 billion more than, for example, if we had merely restored the link between pensions and earnings which, of course, the Opposition broke when they were in power. We are determined to ensure that pensioners do not fall into poverty in their old age and have the right incentives to save in future.

    20 Jun 2002 : Column 402-3