What assessment his Department has made of the likely impact of the new self-invested personal pension regulations on the demand for second homes in rural areas.
There has been widespread speculation about the impact of the new rules that will allow self-invested personal pensions to invest in residential properties. Government guidance sets out the implications of putting a residential property into a SIPP. It is unlikely to be an appropriate investment for most people, but the Government are committed to keeping this area under review and will not hesitate to act if there is evidence of any abuse.
I am grateful to the Minister for that reply. Has he seen this morning's Financial Times, suggesting that Standard Life alone has so far sold £1.1 billion-worth of investment in those products? Is he aware that Scotland's second homes are concentrated in rural communities in the highlands and islands, for example, and that there is a real fear in those communities that even a small rise in demand for second homes, stimulated by the new rules, will push house prices even further beyond the means of local people? Why is the Minister—
Thank you, Mr. Speaker, as ever, for your assistance.
We need to consider the issue in the context of pension tax simplification, which has been welcomed by almost everyone—the industry, financial services and all Opposition parties. It is also true to say that the rules do not put the investments into any tax privileged category over and above any other investments in a pension. There are already around 15 million pension savers who can invest in residential properties. At the moment, there are only around 200,000 savers in SIPPs. Having said that, if we find that the hon. Gentleman's concerns prove to be justified, we remain willing to act and to act appropriately. At this stage, however, we believe that pension tax simplification is the right thing to do and, in that context, SIPPs are relevant. However, if there are unintended consequences, we are willing to consider those and to act appropriately.
Concern has been expressed, especially in the media, about the possibilities of mis-selling, and the Minister commented on that. There has also been concern about whether there will be an adequate regulatory regime. Is he aware of those concerns? What action is he likely to take to ensure the protection of the public?
My hon. Friend raises a legitimate issue. At the moment, there is a 12-month gap between the regulatory regime that the Financial Services Authority will be able to introduce and the changes from
May I congratulate the Under-Secretary of State for Environment, Food and Rural Affairs, Jim Knight, on coming into the Chamber for this question? It is obvious that DEFRA takes the matter seriously. Is the Minister telling us that the Government have done no work on the possible implications of the measure for the countryside? Is he saying that he does not believe that it will have an impact on the price of rural housing?
I am saying that there have been a lot of accusations in the press and elsewhere about the potential of SIPPs that are not supported by the evidence. Having said that, we have been working on the potential consequences of the changes, including the potential impact on rural communities and on housing, which is why if we feel, having considered the evidence, that there are undesirable consequences, we will take the necessary steps.
What discussion has the Minister and his officials had with the Affordable Rural Housing Commission? It, too, has raised concerns.
I personally have not had discussions with that organisation, but I am willing, as part of the deliberations that we are having, to ensure that that organisation and similar organisations are consulted properly and that we take account of their views.
In drawing up the proposals originally, it is unlikely that the Government intended to help fund second homes at the expense of other taxpayers or the Exchequer. As part of the Minister's willingness to act, does he reserve the right to exclude second homes from the proposals?
As I have said, we are aware of the concerns expressed. We are also aware of the benefits of pension tax simplification, which has been welcomed continually by anyone who has considered the issues. It is not generally known that around 15 million pension savers can already invest in residential property. That has nothing to do with the changes to SIPPs. However, I once again reassure the hon. Gentleman that if we feel that they will have a seriously detrimental impact on our housing policy or on rural communities, we shall certainly consider that and, if appropriate, take the necessary action.