Finance Bill

Schedule 35 has caused much concern to many people, including pension providers and the self-employed. They are concerned about the hasty way in which it was introduced, without consultation, the rough edges that it creates and its discrimination against people who do not make regular contributions—quarterly or more frequently. People have made many representations and sought ways of amending the schedule so that the rules apply more reasonably. The Financial Secretary, today and in Committee, emphasised a willingness to get the schedule right. However, he tempered that from time to time with a focus on the Revenue cost. He argued today and in Committee that some people are in a position to renegotiate their contracts to alter their package, thus taking advantage of amendment 29. However, some people who earn relatively low sums of money this year will have earned a large sum in the first year. I had an e-mail from a member of the public who earned little in the past two years but suddenly landed a contract this year and earned more than £150,000. [Interruption.] He may well have e-mailed other Members, too. That is the joy of e-mailing prolifically. Other examples have been given of other people who have received income in lumps. I want to ensure that the Government, in their pursuit of tax avoidance, do not create too many rough edges in the scheme so that people who are not in a position to manipulate their tax affairs lose out. That is why I tabled amendment 29. I am grateful to the Financial Secretary for recognising the strength of the arguments behind amendment 30. Several people have mentioned not only a change in the provider of the scheme—obviously people do not want to lose the benefit of protection under the scheme if the business for which they work decides to change pension provider—but what happens when the scheme itself changes. I wonder whether the Financial Secretary could reassure me by saying that he will deal with that through regulation or that it is already covered in the schedule. It would be helpful if he listened to me rather than his neighbour. We know that several large employers are closing down their defined benefit schemes and moving to defined contribution schemes. I had an e-mail from someone who was in a defined benefit scheme and was concerned that they would lose the benefit of the protected pension input amount provisions in schedule 35. Could the Financial Secretary say a little about how people in that situation would be protected? If someone remains in the same employment, with the same broad employment package, but the employer closes down the DB scheme and the employee is therefore forced to move to a DC scheme, will the protection remain? Given the changes that are likely to happen in the next couple of years and the number of DB schemes that are closing, that will be of interest to many people. Let me turn now to amendments 25 to 28. I welcome the fact that the Government's thinking has moved. In Committee we looked at either increasing the special allowance from £20,000 to £50,000 across the board or averaging the previous year's contributions. We decided that we wanted to take a hybrid approach, and clearly the Treasury has been thinking along the same lines. We welcome the fact that the Government have moved some of the way, by introducing a £30,000 limit, which is not where I thought they were heading in Committee, when I thought that they were considering simply keeping the £20,000 limit. However, I am still not convinced that they have moved far enough in recognising the difficulties for those who are self-employed who make irregular contributions to their pension funds. I would have preferred a more generous limit, although I take on board the Minister's comments about the cost of the £50,000 limit compared with the cost of the £30,000 limit. In conclusion, I will not press amendments 29 or 30 to a vote. I am pleased that the Government have taken on board the thrust of amendment 30 and come up with a more elegant and cheaper version of amendments 25 to 28. If the Minister had tabled those amendments rather sooner than the Friday before debating them, I might have tabled a more elegant amendment of my own to change £30,000 to £50,000. However, the Government have moved somewhat, thanks to the pressure from both inside and outside this House. I do not think that the proposed measure is perfect by any stretch of the imagination. Some people will still suffer from the sharp edges that the proposed anti-forestalling measure will introduce, but schedule 35 is certainly in better shape than it was when the Finance Bill was published a few months ago. Amendment 48 agreed to. Amendments made: 49, page 302, line 41, at end insert—