Pensions Bill

It would be very helpful to have a report such as the noble Lord has proposed, because it might help to focus our attention on two issues. He has already sketched the first issue; namely, the extraordinary disproportion in how tax relief favours the wealthiest in society. I do not know exactly what the figures are, although I suggested at Second Reading, based on briefing that I had read, that 5 per cent to 10 per cent of the wealthiest individuals in the country enjoyed a benefit of 50 per cent of available tax relief. If the totality of that tax relief is creeping up towards £18 billion, this Labour Government are pumping £9 billion a year of tax relief towards the best-off people, which seems a very odd policy for a Labour Government to pursue. I know that the noble Lord, Lord Turner of Ecchinswell, in the Pension Commission’s report explained that so long as defined-benefit schemes loom large in the pensions firmament, there are significant technical problems about doing anything very much about this. Since we see that defined-benefit schemes are looming smaller and smaller, day by day, I hope that the day will not be long distant when the Government will feel able to address themselves to this. If we were to replace tax relief with a system of grants, it would be possible for the Government to exercise flexibility and to target incentives to save at people on much more modest incomes, which would surely be desirable, less wasteful and more just. The other issue that such a report might highlight would be that which my noble friend was talking about in a debate at the beginning of these Committee proceedings when he replied to an amendment proposed by my noble friend Lady Hollis. The amendment proposed that people should be enabled to buy up to nine extra years on their basic state pension at a late stage in their working life. As far as I could understand what my noble friend was saying, he explained that the Government had difficulties about this because of cash flow. They did not find it unacceptable to forego those pension contributions much earlier in the individual’s working history and said that it would not be right for people to be able to bunch their contributions towards the end of their working lives. This treatment of pension opportunity for people on very modest earnings seems strikingly at odds with the Government’s treatment of people on high earnings. The Government seem to be entirely happy that people wishing to make very large contributions in the late stages of their working lives to private pension schemes should be able to do so to secure tax relief at 40 per cent. Their commitment is fiscally quite open-ended. While there are very generous outside limits on what an individual can contribute—the amounts are massive—there is no limit on the number of people who may be eligible to do that. It depends on who comes along and wants to do so. I would be grateful if my noble friend could offer any reflections on that in his concluding remarks. It is one more illustration of how independent reports from time to time can help to get us all focused and anchored to formulate the issues with which we ought to be concerned, and precipitate us into doing something about them.