The answer to the Secretary of State's second question is that investors are capable of reading newspapers. In answer to his first question, I repeat this quite extraordinary proposition: the Chancellor thinks that £5 billion can be spirited out of those companies and it will make no difference to prices, investment, service to customers or employment. Where does the Chancellor think that the money will come from? It is wholly implausible, and the Chancellor discredits his office by allowing such sentences to be written into his Budget speech.
That is not the only attack on investment in the Budget. The Chancellor found his other major source of revenue by attacking pension funds. It is easy to remember the Budget's revenue raising: £5 billion from the utilities and another £5 billion from the pension funds. When the Chancellor referred to the pension funds and to the effect of his changes on dividend policy, he was once again hopelessly muddled. He said:
Many pension funds are in substantial surplus and at present many companies are enjoying pension holidays, so this is the right time to undertake a long-needed reform."—[Official Report, 2 July 1997; Vol. 297, c. 306–14.]
Reform, my foot: the Chancellor simply saw a ready target. He saw an easy way of raising £5 billion from what he thought were pension funds in surplus. I shall return to that point. The truth is that this is not a tax strategy. We heard lots of rhetoric about the effect of dividends on investment flow, but that has nothing to do with it. Ferdinand Mount, writing in The Sunday Times, got it right when he said:
This is the opportunism of the mediaeval monarch who tours his domain looking for the fattest peasants to pillage.
The peasants that the Chancellor found to pillage were Britain's pensioners. The Government should be ashamed of that decision.
The Chancellor not only pillaged pensioners, but argued that the employer-provided pension funds are in surplus. In so doing, he betrays his lack of understanding of the pensions sector. What will the Chancellor say to the 6 million pension fund investors who are in not defined benefit schemes but defined contribution schemes? Those people paid the contributions—not their employers—and the Chancellor's measure will directly reduce their pensions in retirement. What does the Chancellor have to say to those people? Where is the surplus for them? They did not merit a mention in the Budget speech.
The Chancellor takes an extraordinarily partial view of the way in which the pensions market operates. He seems to be completely oblivious to the effect of his £5 billion raid on the pensions sector. Just as he believes that he can spirit £5 billion from the utilities, he believes that he can spirit £5 billion from the pension funds and it will not matter because they are all in surplus. What kind of analysis is that?