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| Version 2 | Version 3 |
|---|---|
| Tories call for pensions inquiry | Tories call for pensions inquiry |
| (1 day later) | |
| The chancellor is facing calls from the Tories for an inquiry into the pensions gap after claims that he ignored warnings of a funding shortfall. | The chancellor is facing calls from the Tories for an inquiry into the pensions gap after claims that he ignored warnings of a funding shortfall. |
| Confidential Treasury papers have shown he was told in advance that scrapping dividend tax credits in July 1997 could wipe £75bn from pension fund values. | |
| The Conservatives said Gordon Brown had shown contempt for pensioners. | The Conservatives said Gordon Brown had shown contempt for pensioners. |
| But Treasury minister Ed Balls said Mr Brown had scrapped the credits on the "best advice" of civil servants. | But Treasury minister Ed Balls said Mr Brown had scrapped the credits on the "best advice" of civil servants. |
| Tories have called for an independent inquiry by the Government Actuary and want a statement to MPs from the chancellor. | Tories have called for an independent inquiry by the Government Actuary and want a statement to MPs from the chancellor. |
| The extent of disregard he has shown towards pensioners, past and present, is unbelievable Shadow work and pensions secretary Philip Hammond | The extent of disregard he has shown towards pensioners, past and present, is unbelievable Shadow work and pensions secretary Philip Hammond |
| "The chancellor has effectively concealed information surrounding these plans from Parliament for the last ten years," shadow work and pensions secretary Philip Hammond said. | "The chancellor has effectively concealed information surrounding these plans from Parliament for the last ten years," shadow work and pensions secretary Philip Hammond said. |
| "The extent of disregard he has shown towards pensioners, past and present, is unbelievable. | "The extent of disregard he has shown towards pensioners, past and present, is unbelievable. |
| "The chancellor's been telling us for the last ten years these tax changes didn't have a negative effect on pensions funds. The documents now prove this is not true." | "The chancellor's been telling us for the last ten years these tax changes didn't have a negative effect on pensions funds. The documents now prove this is not true." |
| Liberal Democrat Treasury spokesman Vince Cable accused the chancellor of doing "lasting harm" to pensions. | Liberal Democrat Treasury spokesman Vince Cable accused the chancellor of doing "lasting harm" to pensions. |
| "It is absolutely clear that not only did these tax changes cause a great deal of damage to private and occupational pension funds, but that the damage was premeditated," he said. | "It is absolutely clear that not only did these tax changes cause a great deal of damage to private and occupational pension funds, but that the damage was premeditated," he said. |
| Official advice | Official advice |
| The documents were released after the Treasury withdrew an appeal against a freedom of information ruling from the Times newspaper, who had asked for the figures. | The documents were released after the Treasury withdrew an appeal against a freedom of information ruling from the Times newspaper, who had asked for the figures. |
| The papers include advice from officials prior to the chancellor's decision to scrap tax relief on pension funds in 1997. | The papers include advice from officials prior to the chancellor's decision to scrap tax relief on pension funds in 1997. |
| One document, from the Inland Revenue to the chancellor, concludes: "So, the general message is that the big employer pension schemes will be able to cope at some cost to employers. | One document, from the Inland Revenue to the chancellor, concludes: "So, the general message is that the big employer pension schemes will be able to cope at some cost to employers. |
| What these papers show is that from the early 1990s, the Treasury recognised that dividend tax credits were an anomaly in the tax system Treasury spokesperson Read the Treasury documents | What these papers show is that from the early 1990s, the Treasury recognised that dividend tax credits were an anomaly in the tax system Treasury spokesperson Read the Treasury documents |
| "But members of money purchase schemes would all be potential losers. | "But members of money purchase schemes would all be potential losers. |
| "Outside the pension field there will be small but vocal losers among the holders of tax exempt life insurance policies sold by friendly societies." | "Outside the pension field there will be small but vocal losers among the holders of tax exempt life insurance policies sold by friendly societies." |
| Later, it adds: "We agree that abolishing tax credits would make a big hole in pensions scheme finances." | Later, it adds: "We agree that abolishing tax credits would make a big hole in pensions scheme finances." |
| A separate Financial Institutions Division paper suggests that the pension schemes "should be able to cope" after the reform but warns that there are "risks". | A separate Financial Institutions Division paper suggests that the pension schemes "should be able to cope" after the reform but warns that there are "risks". |
| 'Extremely damning' | 'Extremely damning' |
| It adds that future pension benefits would be reduced, share prices could fall by up to 20% and those on low incomes would be worst affected. | It adds that future pension benefits would be reduced, share prices could fall by up to 20% and those on low incomes would be worst affected. |
| BBC personal finance reporter Richard Scott said the documents made "pretty nasty reading for Gordon Brown", adding: "They are going to be extremely damning for him." | BBC personal finance reporter Richard Scott said the documents made "pretty nasty reading for Gordon Brown", adding: "They are going to be extremely damning for him." |
| But Mr Balls, the Economic Secretary to the Treasury, told BBC Radio 4's Today programme: "We decided on the basis of civil service advice to go ahead because this was the best thing for the long-term investment of the UK economy." | But Mr Balls, the Economic Secretary to the Treasury, told BBC Radio 4's Today programme: "We decided on the basis of civil service advice to go ahead because this was the best thing for the long-term investment of the UK economy." |
| "The suggestion that the decisions were made not on the basis of the best civil service advice... is not true," Mr Balls, a long-time ally of the chancellor, added. | "The suggestion that the decisions were made not on the basis of the best civil service advice... is not true," Mr Balls, a long-time ally of the chancellor, added. |
| A Treasury spokesman blamed pension schemes' recent funding problems on the dotcom crash, pension holidays in the 1980s and 1990s and a rise in life expectancy. | A Treasury spokesman blamed pension schemes' recent funding problems on the dotcom crash, pension holidays in the 1980s and 1990s and a rise in life expectancy. |