Clause 60 - Index-linked gilt-edged securities

Part of Finance (No. 3) Bill – in a Public Bill Committee at 4:45 pm on 7th June 2011.

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Photo of David Hanson David Hanson Shadow Minister (Treasury) 4:45 pm, 7th June 2011

I look forward to working with you in the Chair, Mr Hood.

I have a couple of quick questions for the Minister. The explanatory notes helpfully supplied by Her Majesty’s Treasury to all members of the Committee state in paragraph 7 of the section on clause 60:

“At present, there is not a reliable government estimate of the number, or size of pension schemes that are affected.”

The clause amends the corporation tax definition of an index-linked gilt-edged security. The Committee will know that the current definition provides that an index-linked gilt-edged security is one in which payments are wholly or partly determined by reference to the retail prices index. This is to be changed, and such securities will be ones where the payments are determined wholly or partly by reference to the index of prices published by the Statistics Board.

Paragraph 5 of the explanatory note states:

“In July 2010 the Minister for Pensions announced that, from 2011, the ‘general level of prices’ for determining the statutory minimum percentage increase for revaluation and indexation of private sector occupational pensions, Pension Protection Fund compensation and Financial Assistance Scheme payments is the consumer prices index (CPI).”

Paragraph 6 states:

“As a result, for those pension funds whose trust deeds refer to the ‘general level of prices’ for the revaluation of deferred pensions and the indexation of pensions in payment, the CPI applies as the statutory minimum increase rather than the retail prices index”.

However, as paragraph 7 states, no reliable estimate has been made of the number or size of pension pots to be affected.

My question is simple. It is becoming rather a habit, but how can the Minister bring a proposal to the Committee—clause 60 is yet another example—when, as he admits in the explanatory notes, he does not know the number or size of pensions schemes that will be affected? As a starter, I ask the Minister for his assessment of the impact of the changes. How many pension schemes will be affected? What is the size of those pension schemes? How many individuals are there? Is there a costing in the Treasury for an up or a down in the overall value of the schemes? Putting, “We’re very sorry, guv. We don’t know,” in an explanatory note is not satisfactory, so will he give some indication of that?