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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 6:31 pm on 20th April 2004.

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Photo of Adam Price Adam Price Spokesperson (Economy and Taxation; Education & Skills; Miner's Compensation; Regeneration; Trade & Industry) 6:31 pm, 20th April 2004

I agree entirely with the hon. Gentleman, and when the Committee of the whole House sits next week, I hope that the opportunity will arise to strike down these proposals, which are very damaging to the Scotch whisky industry. The last Welsh distillery closed 120 years ago, and we have waited all that time to get our whisky industry back. Yet within 16 days of the launch of the first single malt Welsh whisky in 120 years, the Chancellor's iniquitous strip stamp proposal is introduced. [Interruption.] We should have kept it under wraps for a little longer. I am not sure whether there is an English whisky, but if so they can join our battalions in defeating these proposals.

I want to concentrate on two problems of what used to be called political economy—economic problems with a major policy component—that the Government face, the first of which concerns pensions. Some 120 clauses, more than a third of the Bill, are devoted to pensions. Unfortunately, the poor old members of the Pensions Bill Standing Committee are upstairs and have been unable to contribute to this debate. The other issue, which was mentioned by Mr. Laws in particular, is the looming fears about the state of the property market. We should consider the two problems together, because they are linked in the Bill. In pensions, we have the crash in the equity market that has already happened; in property, we have the crash that may yet happen. For one set of assets, value has collapsed; for the other set, value has risen exponentially.

It is interesting to make the contrast. Property is one of the few asset classes that has been successful. Mr. Jack spoke about problems in the financial services industry. We know about problems in Equitable Life, problems with the occupational pension funds of ASW and other companies and problems with split capital investment trusts and so forth. Wherever one looks in the financial services industry, there are problems, which contrasts markedly with the exponential rise in property values.

In the light of that contrast and the contra-cyclical effect of the two markets, it is not surprising that the Government are trying to achieve a more reasonable spread of investments. They are trying to create a more efficient and effective mechanism for making investment in property part of the pension funds through changing the regulations for self-invested personal pensions schemes or SIPPS and small self-administered schemes. The problem is with the timing and the means by which the Government propose to introduce those changes. There is a real fear that by trying to deal with the pensions crisis and particularly the collapse in the equity market, thereby creating a mechanism for property investment for pensions, the Government could be exacerbating the problem of speculative investment in the housing market, or even precipitating and bringing about the very crash in the property market that they tell us we have no need to worry about.