An opposition amendment to the Taxation of Pensions Bill was voted down in its final House of Commons committee hearing this morning (20 November), with legislation now moving to the upper house for further consideration.
Shadow financial secretary Cathy Jamieson once again sparred with her opposite number, financial secretary David Gauke, this time on a previously tabled request for regular reviews of analysis the Treasury was undertaking on the impact of the pension reforms.
Mr Gauke stated that the new clause was unnecessary, as amongst other things measures contained in the bill do not have a direct effect on household incomes.
He added that Treasury work on tax implications were sensitive and their regular publication would aid those looking for loopholes.
“Detailed behavioural analysis would be counterproductive... information will be made available in future in the normal way, minimising unnecessary duplication,” Mr Gauke said.
These latter comments refer to ongoing arguments over a potential loophole in the rules which could see individuals paying no tax on up to £10,000 a year in salary sacrifice pension contributions which are then immediately drawn under the new freedoms tax free.
Some have suggested as much as £2bn a year could be lost to the public purse, but the Treasury has consistently disputed those figures.
Ms Jamieson argued for a systematic review on the workings of the act, preferably on an annual basis, dismissing claims that this was impossible due to long-standing Treasury traditions and rejecting Mr Gauke’s promises that the reforms would be under constant review.
“This means that unless there is a focus or trigger for information to be put into the public domain then no-one will ever know what they’re working on.
“We want this clause included to make sure the government doesn’t just monitor in the background waiting for something to go wrong, but proactively brings things forward in order to remedy any unintended consequences and loopholes.”
The clause was put to a vote, with the no’s taking it 10 to 6, meaning the bill will now progress to the House of Lords.
Mr Gauke mentioned his attendance of an industry conference earlier in the week, where he told of giving reassurances that the opposition was merely giving diligent scrutiny of the bill, rather than “backsliding” in its support of the measures.
Concerns over a future unwinding of radical pension reforms have been abating after opposition to the bill in House of Commons readings focused only on details rather than the main thrust of the reforms, and shadow pension minister Gregg McClymont pledged to “go with the grain” of the changes.
Ms Jamieson said: “We have said on numerous occasions that this scrutiny is not about the principle of freedom and choice in pensions, but that the bill needs to be fit for purpose and all issues have been considered.”
peter.walker@ft.com
