New Clause 2 - Pension flexibility: Treasury analysis

Taxation of Pensions Bill – in a Public Bill Committee at 2:45 pm on 18th November 2014.

Alert me about debates like this

‘(1) The Chancellor of the Exchequer shall, within six months of this Act receiving Royal Assent, publish and lay before the House of Commons any analysis prepared by the Treasury prior to the publication of the Taxation of Pensions Bill introduced into the House of Commons on 14 October 2014, relating to the impact of changes made by this Act to the Finance Act 2004 and the Income Tax (Earnings and Pensions) Act 2003.

(2) The information published under subsection (1) must include—

(a) the distributional impact, by income decile of the population, of changes made by this Act to the Finance Act 2004 and Income Tax (Earnings and Pensions) Act 2003;

(b) a behavioural analysis; and

(c) the financial risk assessment.’—(Cathy Jamieson.)

Brought up, and read the First time.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I beg to move, That the clause be read a Second time.

Subsection (1) of the new clause would require the Chancellor to publish the information set out in subsection (2). Given the number of times that we have talked about to the need to have analysis, figures and more information, I do not want to go over that ground again, but I will briefly revisit it with some examples of why I think that this is necessary.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

Welcome to the Chair, Mr Weir.

I seek information from the Government. For the financial risk assessment, does my hon. Friend have in mind some of the points we discussed in the previous sitting, which will be specifically covered in new clause 3, notably the impact on the Treasury revenues and the assessment the Government, by definition, have already made? It seems inconceivable that the Government had not assessed the impact on Treasury revenues before introducing the Bill, yet we were assured at the last but one sitting that the Government have made no such assessment. Is she trying to capture that information?

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

My hon. Friend makes an important point. Our aim in new clauses 2 and 3 is to capture the information the Government already have. What work has already been done? I heard and understand what the Minister said about it not being possible to lay out some of that information in advance, for various reasons of market sensitivity and because figures have to be dealt with by the OBR. I understand that, but it seems to me that that work must have been done, so at what point can that work come into the public domain? New clause 2 would simply write it into the Bill that the information will be published, so that it is there for the future. That links to new clause 3, which looks to the future—how the legislation and schemes will be implemented in practice and what can be learned from that. It is always good to have a baseline of information to start from.

I am sure that the Minister will understand why we tabled the new clause. He has heard me talk on numerous occasions—perhaps more than he would like to recall—about drafting legislation on the basis of an evidential process. It should be based on consultation, engagement and, crucially, analysis. I do not think it is unfair to say that we want as much information as possible to be put into the public domain. These reforms were introduced with a pretty big fanfare at the time of the Budget announcement. As the Government have made a big deal of this, it seems reasonable to say that we would like to understand fully the underlying assumptions.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

My hon. Friend said in the previous sitting that the legislation was introduced with some haste and highlighted the rather peremptory nature of its introduction. Perhaps the Government did not carry out any proper assessment beforehand. I think that this is what the new clause is seeking to get behind, is it not?

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I hear what my hon. Friend says. I think I said earlier that I was giving the Government and the Minister in particular the benefit of the doubt in assuming that this work had been undertaken, but perhaps I am being too generous. My hon. Friend, who has a great deal of experience in these matters, seems to be suggesting that I am. Perhaps the information that I am seeking to bring into the public domain has not been put together, or is being put together to be finally sent off by the OBR. Who knows? Only the Minister can answer. We have discussed the principles of the Bill and what it tries to achieve; we now need to drill down into the financial underpinnings, both to understand what is likely to happen and to give us a baseline for the future. I want to highlight a couple of issues. The Minister will be relieved to hear that I do not intend to read out all the pages I have here. I simply have a few points marked to raise with him.

Paragraph 215 of the explanatory notes, under the broad heading of the financial impacts of the Bill, states:

“In view of the subject-matter of the Bill, a full Impact Assessment is not necessary. A summary of the impacts is provided below. Further detail is contained in the summary of impacts in the Tax Information and Impact Note.”

Paragraph 216 gives some fairly specific figures for the period between 2015-16 and 2019-20, both the revenue that is expected to be raised and the costs for implementing the changes that HMRC would need to make in terms of staff resources and IT systems. On the one hand there is no requirement for a full impact assessment, but then there is reference to some figures and we do not have the full information to be able to scrutinise them.

Some of the written evidence that has been provided to us deals with the broad context of financial analysis and the impact on the economy. The written evidence from the Association of British Insurers has a whole section on product innovation. It states:

“Providers will respond positively to the 2014 Budget reforms as the new rules should allow for better product solutions to be offered to cope with historically low levels of interest rates and high levels of longevity in retirement.”

The ABI assesses the current economic circumstances, then goes on to talk about some of the changes the Bill makes where it believes people could make use of the flexibilities. I was drawn to one paragraph, which states:

“However, the regulatory regime and the tax framework will be critical to the degree of innovation possible in the post-April 2015 market. Both conduct and prudential regulators will need to take sensible and proportionate approaches to the sale of new products and the capital required behind them, if the Government’s ambitions for an innovative market are to be fully met.”

We have not taken a huge amount of time to probe into what the impact on the industry will be in terms of the capital requirements.

There are other areas where the ABI has raised concerns. These people are experts in their field. They are not saying, “We are not doing it,” or, “We can’t do it,” but “There are problems and challenges along the way and we have to get it right.” I shall mention two areas in particular. The first relates to social care which I referred to this morning. The ABI’s written evidence states:

“The ABI signed a Statement of Intent with the Department of Health in January 2014 demonstrating the willingness of providers to be part of society’s response to the challenge. Of equal importance is the need to develop the demand for care products through a government led public awareness campaign and we are pleased that the Department of Health is taking this forward.”

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West 3:00 pm, 18th November 2014

My hon. Friend touches an important point, directly relevant to the new clause. The Bill has been introduced in haste and was something of a surprise. It has been described in certain parts as a headline-seeking announcement, and although that is not a phrase that I would necessarily use myself, there is a danger of it being rushed through. What would be the dangers, other than inconvenience, if the measure were postponed for a year? Is there not a danger of it being rushed through, ill prepared? A Bill such as this one is always the better for preparation.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

Once again, I thank my hon. Friend for his intervention. The Minister will obviously respond on this, but we have two significant pensions Bills running, not quite alongside each other but almost in tandem. Without wishing to go back to the earlier debate about the guidance, it is critical to get both bits correct. The danger is that if we do not probe all the implications thoroughly, we could find that the guidance guarantee does not quite cover all the bases, or indeed that all the financial implications have not been thought through and that there is perhaps a difference of opinion or of intent between what one Bill aims to do and what the other Bill actually will do in practice. It is right and proper that we probe these things here and that is why we have tabled new clause 2.

The ABI talks about investment in infrastructure, highlighting the part that the insurance industry plays in our economic strength,

“managing investments of £1.8 trillion—equivalent to 25% of the UK’s net worth.”

This was drawn out in the evidence session. Crucially, the ABI says in its evidence that:

“If the momentum towards early access continues, the prospect of the pension sector providing long term investment fuel for economic growth is reduced. Pension providers, whether trust based occupational schemes, contract based schemes, or retirement income providers, will face greater requirements to be ‘liquid’”,

to deal with that issue around the age of 55. I do not want to open up the whole debate again, but this morning I picked up on a phrase used by one of my hon. Friends and said that, essentially, the Bill devolves the responsibility for making decisions from the state and the pension providers to the individual. The Bill and the Pension Schemes Bill both have a knock-on impact in terms of economic consequence. It comes back to the broader economy and the ability of pension funds to be part of that growth process.

The ABI goes on to say:

“The long-term nature of annuity books helps the insurers who run them to invest in the UK economy, especially in long-term projects like infrastructure. If pensioners take more of these assets at the point of retirement and keep them in a bank account or invest in other assets (such as buy-to let)”— this is another area where a number of concerns have been raised.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

My hon. Friend’s point is well taken, certainly by Labour Members, that this is a huge industry. It controls, or at least holds in one way or another, up to a quarter of the nation’s entire net worth. The United Kingdom’s net worth is roughly a quarter resident in these pension schemes. When we mention the financial risk assessment in new clause 2, surely that is what my hon. Friend has in mind. What assessment have the Government made? The financial risk could be that funds for infrastructure could die off, for example. Is that all covered, in her view?

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

My hon. Friend has highlighted some of the reasons why it is important to have that analysis and risk assessment done. I am sure that with all the resources available to the Treasury, it will have considered this—again, I am being generous to the Minister and the Government. I am sure that they have done all the work and considered all these issues and that they have answers to the questions about the potential impact if pension funds are not able to invest in infrastructure, but I would like to understand the thinking and find out whether they uncovered any concerns or any changes that might need to be made in the future.

I mentioned buy-to-let. One concern that was raised at the outset is that if people decide, for example, to take their pension pots and invest in property, how might that skew the housing market? What are the wider implications? How does that skew the whole way of procuring and investing in infrastructure for the long term? These are all things that matter to the broader UK economy and although they may not appear to be directly within the wording of the Bill, none the less, there is a potential impact arising from the Bill which has not yet been explored.

I will briefly mention some of the other written evidence contributions. I have spoken about the impact on the broader economy, the insurance industry and so on, but some of the issues relate more to individuals. A number of submissions were made about the need for the new rules to be preceded by education and promotion campaigns. For example, the Association of Taxation Technicians, which is in the business of making these schemes work and providing information on them, talks about the need to provide information, in particular real-time information on the reporting requirements. That is to do not so much with the broader economy, but with the financial impact on individuals. In its submission, the ATT said that it remains

“deeply concerned about the impact on the income tax position of pensioners considering taking benefits under the new regime. A system based on many end-of-year reconciliations being carried out with no legislative framework or structure—such as there is, for example with the self-assessment system where assessments are appealable”— it makes the point that P800s are currently not appealable—

“will only lead to chaos and misery for very many frustrated pensioners.”

I am in generous mode, so let me say that I am sure that that is not what the Minister or the Government intend. None the less, if the people who will operate the system and provide guidance, information and advice are raising concerns, we must listen to them.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

As I read the written evidence, I see a favourable attitude to the general direction of the Bill; people are merely raising concerns that they hope have been properly considered. The publication of the analysis, as suggested by my hon. Friend, would give both reassurance and confidence. She is putting the case for that well.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I thank my hon. Friend for that. Indeed, all the points I am making have been raised time and again since the Bill’s publication. As I have already acknowledged, after the initial shock, with people being perplexed and not sure how they would take things forward—to be fair, this tends to happen in such circumstances—the industry rallied round, looked at what it had to do and began to put in place the required measures. Whatever the Government of the day decide, that is what it does. None the less, there is still a concern that, with the pressure to get this done for April 2015, certain matters still have to be addressed because no one can quite predict what the behaviours of people will be in the future.

As I outlined, the impact on the wider economy has not been looked at as thoroughly as it might. Our new clause, which would simply require the Government to put information into the public domain to allow us to see their thinking and the workings done behind the scenes so that we could understand the situation better, is a mild-mannered request. I do not think that that would be difficult for the Government, given that they have done all of that work, which will have been scrutinised and signed off. We want to see the workings behind the scenes as well, to give us the opportunity to look to the future.

I have had the pleasure on several occasions to move similar amendments to various Bills urging that analysis and information be brought into the public domain, and the Minister has always been pleasant and responsive in saying no and repeating why he cannot do that. I am not holding my breath, but it would be wonderful if, in this Bill, he could change the habit of a lifetime, break out into a different approach and make my day by agreeing to provide the information and accepting the new clause. I look forward to hearing what he has to say.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury 3:15 pm, 18th November 2014

Indeed it is a pleasure to respond to the hon. Lady. As she said, there have been many occasions on which she has tabled new clauses seeking a review and there have been many occasions where I have turned down her kind offer. Today is no exception.  I hope that in some ways I can sugar the pill by saying that I hope that we have many opportunities to have similar debates, in which she puts forward such proposals and I turn them down, over many years ahead. Nothing would please me more.

New clause 2 would require that the Government should, after six months, publish any analysis prepared prior to the introduction of the Bill, including assessment of distributional impact, behavioural analysis, and the financial risk assessment. I will try to explain why the proposed new clause is unnecessary. First, I will provide a short explanation of the distributional analysis that the Government publish.

Distributional analysis measures the impact of Government changes to tax and spending. Although the measures in the Bill are clearly taxation measures, they do not, in and of themselves, make individuals materially worse off or better off. They increase the choices available to individuals over how they access their savings and allow people to delay or bring forward their income, but do not alter the amount of savings that they have in aggregate. As the Government set out in paragraph 1.9 of the distributional analysis document accompanying this year’s Budget, the distributional analysis

“shows the impact of changes in government fiscal policy with a direct impact on households, but not of all government decisions.”

The tax information and impact notes published at the Budget set out the Government’s analysis of the impact of the measures contained in the Bill, including estimates of the costs to the Exchequer, certified by the independent Office for Budget Responsibility, and equalities impacts.

The new clause would require the Government to publish a full behavioural analysis and a financial risk assessment. As I am sure hon. Members will realise, the costing of tax measures can involve an assessment of the behavioural impact of the measure and, in some cases, the capacity for additional tax planning and avoidance behaviour. Those assumptions are certified by the OBR. However, the Treasury considers that the publication of detailed behavioural assumptions can have the potential to affect that behaviour and, as such, is potentially detrimental to policy-making.

The policy costing note published alongside the Budget explains how the costings have been calculated in line with the principles outlined in the Government document, “Tax policy making: a new approach”, which was published alongside the June Budget in 2010. The costings of the policy will, as I said in the evidence that I gave to the Committee, be updated at autumn statement, when they have been certified by the OBR. The policy costing note will be published, setting out how the costings have been reached.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

On that specific point, it seems rather implausible that the Government had done all that detailed work before the Bill was announced unexpectedly to the public and were all ready to go, but that no assessment was given. It depends a bit on assumptions about behavioural impact and of the impact on the Government’s revenues. Coming back to that point, is the Minister really sure that no estimate was made of that? I would have thought that was one of the central estimates that the Treasury would have made right from the beginning.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

I am glad that the hon. Gentleman intervened. I would not want him to be confused in any way by anything I said earlier, so let me be completely clear: the Treasury published at the time of the Budget an estimate of the impact on the public finances. Indeed, I have in my hands a piece of paper with the information set out at that time. It involved increased revenue in 2015-16 of £320 million, £600 million the following year, and then £910 million, £1,220 million and £810 million. That was all set out at the time of the Budget. When I say that further information will be published, I am talking about the further analysis undertaken in the light of further policy changes announced since the Budget. I do not want the Committee to be left with the impression that no numbers have been produced. Numbers were produced at the Budget and a further update will be provided at the autumn statement in the normal way. An assessment was made at the time of the Chancellor’s announcement at the Budget.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I hear what the Minister says about the figures that we already have and the other figures that will come in the usual way, as he describes it. Will he confirm that the analysis undertaken has also taken into account the concerns that we and others have raised about the wider economy? Will it simply be an update of the figures that are already in the public domain?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

It is an update of the figures that we have, taking into account the additional policy announcements that have been made. We discussed earlier the development of this policy and the announcement made at the March Budget. There were details that we wanted to consult upon; we had a 12-week consultation and responded to that. As I work through the points raised by the hon. Lady, I will say a little more about the thinking behind this. We will set out details in the autumn statement, which is not very far away, in the normal way that a policy and its costings are set out in the relatively new regime, with an independent Office for Budget Responsibility.

Analysis of the policy to reduce the withdrawal tax rate for income from pensions from 55% to the marginal rate of income tax is detailed in the policy costings document published at the Budget. I referred to those numbers a moment ago. A number of updates have been made to the policy since the announcement at Budget. The Exchequer impact of those will be presented in an updated tax information impact note at autumn statement, in line with the normal policy costings process. The question of why there is no impact assessment was raised. The Government publishes tax information impact notes—TIINs—for tax measures, which are similar to the impact assessments published for regulatory measures.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

The Minister is anxious that I should not be confused, but I have to confess to being somewhat confused by what he says. Of course, we understand fully that this is not a tax measure directly raising or lowering rates of income tax. However, it has a behavioural consequence that may have a considerable impact on the Government’s revenues. I want to come back to the specific assessment he made of what might happen to existing policies without these changes. That could have  a bearing on Government revenues, directly or indirectly—whichever way he wants to describe it. That is all clear. These are very big changes by any standard. We welcome the idea behind them, let us be clear about that; but how could such changes be introduced without the Treasury making an assessment of what might happen in certain circumstances given behavioural changes, or of the indirect effects on Government revenues? It is that assessment that we are really seeking, not the figures that he read out.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

I will continue to endeavour to reduce the confusion that the hon. Gentleman may feel. He can inform me at the end of our proceedings what progress I have made on that front. If he is talking about, for example, issues to do with social care, let me say a word or two about that.

By way of context, this Government are introducing historic reforms to social care funding, including a cap on people’s care costs from April 2016 and a universal offer of deferred payment agreements from April 2015. That means that people will not face unlimited care costs and should not be forced to sell their home in their lifetime to pay for care. The Dilnot commission found that, although the financial services industry already offers some support to people to pay for their social care costs through products such as care annuities, it has the potential to play a larger role and offer people more choice if the conditions are right. A review commissioned by the Department of Health identified that allowing people to have more flexibility over when and how they take income from their retirement products could help them to plan better for their care. The Government expect that the proposed changes to the tax rules from April 2015 will allow the industry much greater flexibility to develop new products that may meet people’s social care needs. The Government are working closely with the Association of British Insurers on how the insurance industry can help people to plan for social care. The new tax framework allows providers to innovate and create new products that meet consumers’ needs, including for social care.

The wider question, which the hon. Member for Coventry North West raised, is what is the impact on the Exchequer—are we going to see greater costs, and so on? We debated that this morning. The point I would make is that it is hard to make an assessment, because it depends on a whole number of factors and how many different people will respond to the new environment. We should not miss from this debate the fact that there is also the opportunity for greater innovation in developing products that may well help people. So there are many factors here. In the great scheme of things, what we have done as a Government in terms of dealing with the long-term sustainable risks that we face, whether that is increasing the state retirement age or reform of public sector pensions, is to put the UK in a much better fiscal position long term. We do not believe that the changes we have made in this area in terms of risk that people will find themselves relying on the state to help them through their last years are as significant as the hon. Gentleman fears. Given that overall context, not to mention of course the reforms to the state pension, which mean that people are less likely to rely on means-tested benefits, we believe that this is a fiscally sustainable and responsible approach.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I rise to probe the Government slightly on provision of social care. It has been a fundamental principle of the Government’s approach to pensions to provide freedom, choice and flexibility. What work has been done to ensure that freedom, choice and flexibility will be available for people planning for their long-term care, and to ensure that the rules do not inadvertently mean that people are incentivised to use only certain services? I asked previously about the buy-to-let property market; has any assessment been made of whether the market in care provision is similarly likely to be skewed?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury 3:30 pm, 18th November 2014

We are working closely on this matter with the ABI and the insurance industry more widely. We believe that the new framework will give greater flexibility to the industry to respond to the needs of consumers, which is helpful in the context of long-term social care. I am not sure that we expect the Bill to have a particularly distorting effect; if anything, the greater ability to innovate will be helpful.

The hon. Member for Kilmarnock and Loudoun also asked about the future of the UK life insurance industry. We recognise that there will be a significant change for the industry, but the new measures will provide a real opportunity for it to innovate and develop new products to meet consumer needs and preferences, and the Government are keen to work with industry on how best to implement them. We remain committed to the UK insurance industry. We recognise that there are challenges, but we are committed to working with the industry to serve the needs of UK customers and to help it to grow internationally.

I was asked about the wider issue of whether, as we debated this morning, the pensions industry will be ready for the April 2015 launch. We have consulted extensively with the industry and with individual pension providers, and they overwhelmingly support the proposals. They are keen to introduce products and innovations for their customers in time for next April. Following the Budget, there were 12 weeks of consultation and more than 300 responses, and an HMRC technical consultation on the legislation was published. I would say that the industry is supportive. Although I will not, I could run through a list of quotations from industry figures in support of the reforms that we have undertaken.

I note the suggestion by the hon. Member for Coventry North West that we should delay introduction for 12 months, but 320,000 or so people with a defined-contribution scheme are likely to retire over that period, and we do not want to deprive them of the opportunity to make use of the flexibility that the Bill will grant. I do not know whether he was merely floating that idea as a suggestion or strongly advocating it as an approach, but if it is the latter then we are probably not inclined to follow his advice.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

It was merely a suggestion and was not intended to be taken at all seriously, and I did not think that it would be taken up by the Government. On the other hand, I am not sure whether we are going to push new clause 2 to a vote if the Minister does not accept it—as is usually the case. I will of course be guided by my hon. Friend the Member for Kilmarnock and Loudoun on that.

To his immense relief, I am sure, I will not push the Minister on what estimate was made of the impact on Treasury revenues, although I am sure that that must be in there somewhere. Nevertheless, before we move on, I still want to try to get behind what assessment has been made of the financial risk, which is the purpose of the new clause. I have an infrastructure question: can the Minister confirm that the £1.8 trillion figure provided by the ABI is correct and that that represents 25% of the UK’s net worth? It seems to me that the Treasury should be concerned about that, because infrastructure is vital, as the Treasury has said. We have a national infrastructure plan that has not got going, and we all know about the very real difficulties with getting infrastructure going. The issue is not only money—it is also planning and all the rest of it—but it is in part money. What estimate has been made of the possible impact on the liquidity of those funds? There are real implications. What assessment did the Treasury make before the launch of the Bill? We will be asking for a report on it in new clause 3. What is the Treasury’s assessment of the Bill’s impact on the liquidity of the funds available for national infrastructure?

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

Before responding to the hon. Gentleman, I am tempted to ask whether in his time as a Treasury Minister he ever accepted an Opposition amendment to have a review of a piece of his legislation.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

I am sure he gave it full consideration.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

I am sure he did, and I am fairly confident that he then rejected it.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

In those days, we did not introduce in haste and repent at leisure. We clearly thought things out. The Minister will find an account of the immense detail that went into preparing legislation in books that have been quoted against me—my own book in particular. I do not expect that he will read it, but I do not see why he should not. We could avoid the need for this if he would tell us now the answer to the financial risks involved.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

I will resist the temptation to examine the hon. Gentleman’s claim that all measures during his time as a Minister were well considered and thought through. I have read his book and thoroughly enjoyed it. I shall re-read it to discover the answer to my question.

On the issue of investment in infrastructure, the hon. Gentleman quoted some numbers. Those are the ABI’s figures, not the Treasury’s. The point is that annuities will remain the right product for many people. The regular cash flow profile and potential long duration of infrastructure assets will continue to be attractive for backing long-term liabilities such as annuities. As such, infrastructure is likely to remain an attractive investment for institutional investors, including the insurers. He raises a perfectly reasonable point, but I do not think we should overstate the risks.

I also make the point—although I suspect, Mr Weir, that you would not want me to dwell on this—that the national infrastructure plan is already delivering a large  number of projects. I think there are 800. We are making great progress, and we hope that with our long-term economic plan we will be able to further deliver infrastructure projects in the years ahead. However, Mr Weir, do not let me be drawn down that route.

The hon. Member for Kilmarnock and Loudoun asked whether people would know what tax they would be charged before accessing their pension flexibly. When an individual accesses their pension flexibly, it will be taxed under PAYE in the same way as any other pension payment. If they have a tax code from their P45 or they provide the pension scheme with specific information to work out their tax code, they will be taxed as they would for any other pension income. If they do not have that information after the first payment, HMRC will issue a tax code that can be used against any further payments that they receive from that particular pension.

I have tried to address the questions raised by the hon. Member for Kilmarnock and Loudoun. I appreciate the spirit in which she tabled her new clause and I have given it a great deal of thought this afternoon. However, I fear that I will follow the precedent of many distinguished Treasury Ministers before me and tell the Committee that even after long reflection I cannot accept her new clause. Should it be pressed to a Division, I must advise voting against it.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I thank the Minister for the long deliberation that he has given us this afternoon. I think that the Minister and I have faced each other across the Chamber and Committee Room so often now that he has probably guessed that I wish to press the new clause to a vote, but it is important for people to understand why that is the case. Notwithstanding the reasonable and, to be fair, well-argued way that the Minister has put across his views and those of the Government—he has done so in a polite and respectful manner—it is disappointing that we have not been able to get behind that polite manner and the information he has given us to find out a bit more about the debate and discussion behind the scenes in the Treasury on those particular issues.

We have to focus on what the financial implications are for individuals and what work was done in relation to that, and enough concerns have been raised about that from people in the industry and people representing consumer organisations to make it a valid request to have the analysis published. I was disappointed that we did not seem to get more of a sense of the work that had been done in relation to the wider economic impact. My goodness, I thought that the Minister was even going to miss saying a “long-term economic plan” until he managed to slip it in at the last moment. I do not want to be quoted on it, it might be words that do not slip out ever again, but I just wanted to congratulate him on getting his line in, albeit late in the proceedings.

On a serious note, if we are looking to ensure that we have the growth and the economy that we all want, and to value and understand the important part that financial services and the insurance sector play in that process, then we have to listen to the concerns that they have raised. I do not think we got an answer to the question from my hon. Friend the Member for Coventry North West about the capital requirements and the liquidity. Those are exactly the sorts of area that the industry will perhaps be most concerned about. We want not only to  know that the Government have done that work but that they have taken account of it. I heard the Minister again saying that they worked closely with the ABI and with the industry, yet concerns are still being raised in the public domain.

On that basis, I feel disappointed that the Minister would not allow the new clause to be part of the Bill. It would have been an assurance that all the information and work can be put into the public domain, not just the revised or updated figures that will come via the OBR in the autumn statement. I know that the autumn statement is not far away, but it always seems odd when we are into December and still talking about autumn. I know that the Treasury has a sort of language of its own, which comprises terms such as “in due course”, “shortly” and “et cetera” without ever giving a time scale. At least we have a time scale for the autumn statement, but I would have liked to have seen one for all of this information coming into the public domain, so that we could probe it further and set the scene for a review in due course of the operation of the Bill.

With those remarks, I would like press new clause 2 to a vote.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 7, Noes 10.

Division number 1 Decision Time — New Clause 2 - Pension flexibility: Treasury analysis

Aye: 7 MPs

No: 10 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.