Finance Bill

Getting the derogation is certainly welcome, but it is deeply regrettable that it has come at the expense of our rebate. The Prime Minister’s original decision to give £7.2 billion more of our money to the EU is regrettable, and the Chancellor is only confirming that in the negotiations on MTIC. That is indeed of great concern to Conservative Members. Lastly I turn to pensions, and clauses 67 and 68. Clause 67 is not a particularly high-profile part of the Bill. It removes tax relief from something called pensions term assurance. On 6 April 2006, as probably every hon. Member knows, the Government introduced new rules on certain types of life cover as part of their A-day reforms, which included new rules on certain types of life cover. Their aim, they said, was to increase fairness, but their premise seemed to be to give people who did not have access to employer-based death-in-service schemes access to similar benefits if they set up their own personal cover. The result was that the tax treatment for such schemes was the same both for employees and for the self-employed. The Secretary of State for Communities and Local Government, when she was Financial Secretary to the Treasury, told the House that A-day reforms would"““create a transparent, consistent and flexible system that is readily understood. That will make it easier for people to concentrate on the things that matter, such as when and how much to save for their retirement, rather than on trying to understand anomalies between the different tax regimes.?—[Official Report, Standing Committee A, 8 June 2004; c. 427.]" When the A-day reforms were being negotiated, the insurance industry made it very plain to the Government what the impact of those changes would be—that certain types of life cover would be given the same tax treatment as a pension. The Government were clearly told by the industry about the sort of products that would be developed in response to the legislation. From A-day onwards, a competitive market developed in what became known as pension term assurance, or PTA. Then suddenly, in December last year, after only 9 months, the axe fell and the Chancellor announced that tax relief for PTA policies was to be scrapped. As the Association of British Insurers put it, the Government had managed"““in one blow—to put an end to a developing market that they had only just helped create?." Scottish Widows estimated that £35 million had been spent on developing PTA plans. We can see that the Government also found their reverse gear on clause 68, which introduces significant restrictions on the use of alternatively secured pensions—again, only nine months after their introduction on A-day. The Government have carried out U-turn after U-turn on pensions. These two latest examples come hard on the heels of their reverse on self-invested personal pensions—SIPPs—last year.