Downing Street Says

Put that Adair Turner, former Director-General of the CBI, had told the BBC that it was completely untrue to suggest that publicly or privately, he was responsible for any lobbying that took place in 1997, yet Ed Balls said the opposite on Saturday and the CBI had lobbied the Government, the Prime Minister’s Official Spokesman (PMOS) said that what was more important was to focus on the actual substance of this issue. This was a decision about getting the balance right between incentivising investment versus paying out dividends. It was a tough decision, but the Prime Minister fully backed the Chancellor’s decision at the time, and he still did because it believed that it was in the long-term health of the economy, as it was for long term interest of the economy, including pension funds, to increase investment. As the Treasury had pointed out, this decision was part of an overall package, which included cuts in corporation tax, which had 50% increase in investment over the last ten years. Corporation tax had been cut from 33% to 31%, the small business rate from 23% to 21%. Temporary capital allowances for SMEs had been doubled. The reduction of corporation tax had benefitted 450,000 companies. Therefore, there was an overall package within which this was one part.

Put that if those arguments were so strong, why didn’t Ed Balls repeat them, the PMOS replied that the broader argument had to be about whether it was right to continue with a system which distorted the investment market. The Chancellor took a tough decision at the time that that was correct. The Prime Minister fully backed him on that.

Put that the CBI clearly believed that they had been misrepresented, and were we going to apologise to them, the PMOS said that in terms of the CBI, it was better that the Treasury dealt with that side of things. With regards to the substance of the argument, which is where we should be, there had been a 50% increase in investment over the last 10 years. We believed that this decision had been right, because it had played a part in that increase in investment. That increase in investment did feed into pension funds. We recognised that because of the other world-wide problems there had been with pension funds, the market value overall of occupational pension schemes fell between 1999 and 2002 by £250 billion, but that was mainly due to the fall in the stock market. We had to take account of that, because this was a world-wide phenomenon, not just a UK one.

Put that the CBI was taking issue over this because of the way their views were being misrepresented, the PMOS said that in terms of the overall argument, which was what the public were interested in, it was much more important to understand the reasons for the decision, and why the Prime Minister believed the decision was right at the time.

Put that Derek Scott had revealed that the Chancellor in 1997 wanted to cut £8 billion a year, not £5 billion from pension funds, and that there was a row about it all, and the Chancellor had backed down, and did we recognise any of that account, the PMOS said that not giving a running commentary was retrospective, as well as current, and it was not right to give a retrospective running commentary.

1 Comment »

Lying, spinning rodents.
Comment by Pensioner — 3 Apr 2007 on 9:31 pm | Link

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» Monday, April 2, 2007

Pensions

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