Autumn Budget 2024

Lord Davies of Brixton Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I thank the noble Lord, Lord Booth-Smith, for his maiden speech; I welcome him to the House, and I am sure he will be an asset. I also thank my noble friend Lord Livermore for his comprehensive report to this House on the contents of the Budget, as is entirely appropriate.

There is much that is good in the Budget. My noble friend Lady Crawley identified and summarised the good things in it, so I hope I will be forgiven for mentioning my major point of concern, which is the promise, made by the Chancellor in introducing the Budget, to make welfare spending more affordable. That causes me considerable concern. Of course, we will not know the details until we get the “Get Britain Working” White Paper, and I wonder whether my noble friend is able to provide us with a date. Perhaps the White Paper has been delayed because the Government are trying to learn lessons from the winter fuel payment problems. There are lessons there that I hope they have drawn.

There were two specific references in the Chancellor’s speech that caused me particular concern. When we talk about a crackdown on fraud, as she did, we have to ensure that it is done in a way that does not create collateral damage for people who are fully entitled to the benefits. The problem with crackdowns is that they can affect innocent bystanders unless massive efforts are made to ensure that does not happen. I hope my noble friend will be able to assure us that everything will be done to avoid the downside of crackdowns.

I have a particular concern, and we debated this in the last Parliament, about direct access to bank accounts. The Government seem to be stressing the influence of criminal gangs. My guess is that you cannot access the bank accounts of criminal gangs. Accessing bank accounts without probable cause seems a growth of the power of the Government. Again, if that is introduced in legislation, it needs to be done with considerable care.

I am very pleased with what the Budget said about pensions, which was very little. Pensions are an area where stability is essential because people are making long-term plans, so I am glad that the number of changes in the area of pensions was limited.

The changes to the Mineworkers’ Pension Scheme were very welcome. I need to say here that I was the actuarial advisor to the National Union of Mineworkers at one stage so I am familiar with the issues here. The mineworkers fully deserve what they are now being given.

The major change affecting pensions was charging inheritance tax on unused pension. Unused pension is a new concept. If you accumulate a pension fund and it has not been used in order to provide you or your dependants with an income, from 2027 that will form part of your estate and be subject to inheritance tax. I think that is entirely reasonable. I welcome the change. The money was put in the pension fund tax free and it seems eminently reasonable that, when the money is taken out, it should be subject to tax. Pension funds are for the purpose of providing pensions; they are not for the purpose of inheritance tax planning or tax avoidance.

We have a technical consultation going on that raises particular issues. I have some concerns that the proposals in the document go beyond technical issues and raise issues of principle. Of course, anyone who has dealt with a will knows that the problems of probate are profound and, when you put pensions into that mix, it is going to create considerable difficulties. I hope these issues will come out in the consultation.

Employment: Tax Policy

Lord Davies of Brixton Excerpts

Thursday 31st October 2024 Grand Committee

[Lord Davies of Brixton (Lab)]

I thank the noble Lord, Lord Leigh of Hurley, for raising this issue. As he says, the debate is extremely timely. I have set up and run a small business—not at all on the sort of scale that he has achieved but it has given me a perspective that he perhaps suggested in his speech did not exist on this side of the discussion. Many noble Lords who take the Labour whip have been successful in business, so I think the suggestion that we on this side of the Committee do not know what is required to achieve success in business is wrong.

I will not pursue the issue of the £22 billion, which has been well trodden, but will pick up on the noble Lord’s comment that Labour created a reason to increase tax. It was not Labour that created the reason; it was 14 years of Conservative mismanagement of our economy that created the situation that has led to increases in tax.

I spoke briefly to the noble Lord, Lord Leigh, yesterday, and we agreed that it is a general issue and not just about the Budget. Looking at the issue in general, it is quite clear that if firms have to pay higher tax then there will be impacts on employment, on the pay that can be given to employees, and presumably on profits. Of course, profits does not just mean entrepreneurs; it means pension funds and other investors who hold those investments. Clearly, those effects exist—I do not think anyone would argue about that.

However, in truth, it is a lot more complicated, because the Government receive the money and then spend the money—they do not bury it in a hole in the ground. The Government increase their revenue and use it to create employment, through providing their own services, and to create the society infrastructure that is required for business to operate. Higher quality infrastructure means more successful businesses. The Government also purchase, using that money significantly to buy from the private sector—and much of the private sector depends on government revenues for its economic success. There are two sides to that equation and we cannot assume, a priori, that one side is more significant than the other. We have to look at the evidence.

I thank the Library for its relatively short briefing. It identifies that this whole area is contested, at the least. It is very difficult to identify cause and effect in this area because the whole system is moving on. It is not an isolated, scientific experiment, with a control for all the variables involved; to reach a definitive conclusion is not straightforward. For example, there is the vexed issue of incentives and disincentives. The situation as it works in practice is not quite as clear-cut as the anecdotes that are often advanced to try to argue on one side or the other. The general issue, as I say, is a lot more complicated than perhaps was suggested by the noble Lord in asking his Question.

The noble Lord quite rightly identifies that we have an interesting case study in yesterday’s Budget of what the effect of the increase in national insurance contributions will be on employment. The Office for Budget Responsibility’s report makes for interesting reading. Of the net effect of the measures in yesterday’s Budget, principally the increase in national insurance contributions, it says that:

“The unemployment rate is forecast to average 4.3% in 2024, a small increase on 2023, before remaining close to 4.0%. The employment rate (for those aged 16 and over) is expected to remain close to 60% over the forecast”.


Whatever the impact of the increase in national insurance contributions by itself, the overall effect of the Budget is to maintain employment and, ultimately, provide the basis on which our Government will move forward and achieve the sort of growth we need to repair our public services.

Fiscal Rules

Lord Davies of Brixton Excerpts

Tuesday 29th October 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I thank my noble friend for this Statement; the real meat will come tomorrow. I also thank noble Lords opposite for reminding us of their gross irresponsibility and refusal to accept any responsibility for this situation. When you have fiscal rules that distinguish general expenditure and investment in one way or another, you need a clear definition of investment. The problem is that pinning down such a definition is difficult in practice. When we on the Economic Affairs Committee took evidence from Joseph Stiglitz, he drew attention to this, instancing the possibility that spending more money on nurses would count as investment towards the sort of growth we need in the economy.

[Lord Livermore (Lab)]

My noble friend makes an extremely interesting point. I am grateful for his support for what I have set out and will take away his point to give it further consideration.

Budget Responsibility Bill

Lord Davies of Brixton Excerpts

2nd reading & Committee negatived & 3rd reading
Monday 9th September 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I support the Bill—after all, it is in the manifesto—but it has faced some criticism. The comments of Ben Zaranko have already been mentioned. It ill becomes a Member of the Opposition to criticise legislation as performative, since that is practically all they did over the last five years.

The legislation is not performative but declaratory—it is setting out a declaration of intent, and it is to be welcomed for that. But—and there is always a but—I see in the Bill potential weaknesses, which arise from the exceptions in new subsection (4), and this issue of what counts as “temporary”. After all, the freeze in fuel duty each year is temporary, but it is now apparently part of our constitution. But I am more concerned about the term “emergency”. Is it a term of art? Who is going to determine what counts as an emergency? It is not defined in the Bill, and it has not been used in the charter. Ultimately, there is no track record of how it is interpreted in this context or who is going to decide.

We have an interesting case study here. Of course, we had a fiscal event on 29 July. I shall steer away from talking about winter fuel payments again. My assumption is that it was not large enough to trigger the size test, but did it trigger the emergency or the temporary test? I shall be interested in hearing my noble friend’s comments on how that undoubtedly fiscal event fitted in with the requirements of this legislation.

I was going to speak at more length on that but, inevitably, I was diverted by the comments made by the noble Baroness, Lady Wheatcroft, who came up with the perennial saw that there was some sense in including liabilities for future unfunded public service pensions in the national accounts. The whole point about unfunded pensions is that they are unfunded, and it makes no sense at all to treat them as though they were funded. However, if you are going to do the sums—or I could do them for you—and say what the current value of the future liabilities of these schemes will be, logically you should also have a figure for the future revenues that are going to meet those liabilities. It is not funded, so the future payments are exactly matched by the future taxation revenue that will pay those liabilities. You have to include both figures if you are going to account for them, and they are equal and opposite by definition. Including them in the national accounts makes no sense.

European Investment Bank

Lord Davies of Brixton Excerpts

Wednesday 24th July 2024 Lords Chamber

[Lord Livermore (Lab)]

The national wealth fund will work on the same basis as the UK Infrastructure Bank in terms of allocating investment. I think that is the answer to the noble Lord’s question.

[Lord Davies of Brixton (Lab)]

In a similar vein to the question from the noble Lord, Lord Fox, I had a question in the debate on Monday about the first phase of the pensions review, looking at the investment of pension scheme monies in productive economy. I am sure my noble friend will agree that in such discussions the voice of the trade unions that represent scheme members and pensioners through their organisation should be an important part of the debate.

[Lord Livermore (Lab)]

I thank my noble friend for his question. I did not address his question in the debate, because I hoped he knew that I would agree with him, which I do. As part of the pensions review, we will consult all interested bodies.

Finance (No. 2) Bill

Lord Davies of Brixton Excerpts

2nd reading & Committee negatived & 3rd reading
Friday 24th May 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, it is such a pleasure to follow the maiden speech of my noble friend Lady Hazarika, of Coatbridge—Ayesha Hazarika. We must all congratulate her on a tremendous speech; hers is a particularly tough act to follow. It is clear from her speech and biography that she has a sound political background, but she also has, to use Denis Healey’s memorable word, a hinterland—more experience.

I am particularly pleased to welcome my noble friend as a fellow resident of Brixton and a fellow graduate of the University of Hull, where she studied law. My recollection—it is a long time ago—is that the law students were particularly serious and I am glad to say that she breaks that convention. Clearly, they are important influences, but I suspect that most noble Lords will be keen to talk to my noble friend about her appearances on “Have I Got News For You”.

She has demonstrated that she will be a popular speaker. People may well come for the jokes, but they will stay for the serious political points being made. To conclude this part of my speech, it is important that she is here, particularly on this side of the Chamber, representing an underrepresented group: people under 50.

I turn now to the content of the Bill. I have found that speaking on finance Bills, even though there is nothing we can actually do, is the ideal opportunity to seize the attention of the Minister and, through her, the officials, on points which perhaps do not get sufficient coverage. I want to talk about Clause 24 on collective money purchase arrangements. I can read the Explanatory Notes, but when I try to understand what the amendment does, my mind glazes over. I do not know whether the Minister has a better understanding of what it does, but I think it illustrates two points.

First, the Government have still to get their act together on the introduction of this new type of pension scheme. Many of us with considerable experience on pensions believe that this is important for the future development of pension coverage across the economy, yet we are still getting these regulation-making powers. It is important to understand that this does not make any actual changes but, principally, creates further regulation powers, and we will have to wait for the regulations to understand what will happen. Will the Minister accept that it is a matter of priority to get this law straight, so that people can get on with introducing these important new types of schemes?

The second point, which is narrower, is contained in the heading “Collective money purchase arrangements”. Nobody in the pensions arena talks about collective money purchase arrangements; they always talk about collective defined contributions schemes. That is what they are, yet for some bizarre reason, lost in the policy-making process, we have ended up with them legally being described as collective money purchase arrangements—which in fact is a misleading title. The whole point of collective defined contribution schemes is contained in the objective of providing a pension. Calling them collective money purchase schemes gives the appearance that they are simply savings arrangements, with the infamous freedom of choice when people get to retirement. What people want is pensions. Adopting this terminology is grossly misleading about where this area of policy has to go.

The ship has sailed; it is in the legislation—I think there were 300 references to collective money purchase arrangements in the pensions Bill—but I say to the Minister that the Treasury and the Pensions Regulator together need to get a clear understanding of the terminology here. This initiative is about providing pensions; it is not about money purchase.

Spring Budget 2024

Lord Davies of Brixton Excerpts

Monday 18th March 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I congratulate the noble Lord, Lord Kempsell, on his excellent, informative and measured maiden speech. I am sure he will be an asset to the House. I mainly want to question the Government about their proposals on national insurance, which are clearly a major part of the Budget and have given rise to the Bill before us today. I would like to make a couple of other points first.

First, I point out that no serious independent commentator thinks that the Government’s fiscal rule makes any sense whatever. The Government claim that it demonstrates that they are behaving responsibly, but it is clearly nonsense. Any parameter that depends on the difference between two enormous and uncertain figures is not going to work in any practical way but, even on its own terms, we have fantasy income—the treatment of the fuel levy is only one example—and fantasy expenditure. Rather than demonstrating the Government’s responsibility, their fiscal rule actually illustrates their irresponsibility.

Secondly, the Government claim they want a tax system that rewards and incentivises work. If that were anywhere near true, how does it explain the continued favourable treatment of what, to the older ones among us, used to be called unearned income? Income from rent and property is taxed significantly lower than income from work. If the Government were interested in incentivising work, the burden of taxation could be shifted from work on to these other areas, which are currently taxed at lower rates.

I am a strong supporter of the national insurance scheme. It has lasted for 113 years since it was first introduced as a term by Lloyd George. It was brought into full effect by the post-war Labour Government under the leadership of Jim Griffiths, who I suggest needs to be honoured as much as another leader in that Government, Aneurin Bevan. I am a strong supporter of national insurance because it provides a system of paying contributions while you are at work. You then receive benefits when you cannot work, whether because of illness, unemployment or retirement. That was the system that was established; the fact that we still use the term national insurance demonstrates the support that that approach to providing social benefits continues to enjoy.

As a strong supporter of national insurance, I would like the Minister to tell us what on earth the Government are up to. The proposals floated since the Budget bear all the hallmarks of a bright idea from a Tufton Street Astroturf think tank. They are ill thought out, ill considered and ill formed. Someone has a plan; we do not know what it is, but we are entitled to know. It is absolutely wrong for the Prime Minister or the Chancellor to float ideas without explaining the full implications of what they are saying. Unless they provide us with those full implications, their ideas are worthless.

There are two key questions that arise from removing one leg of the national insurance arrangement—the contributions. First, they must tell us where the money will come from. Will it be from massive economic growth, which would suggest that the entire focus of economic growth will be devoted to removing national insurance contributions? There are more important priorities than that, so the Government need to tell us where the money will come from. Secondly, they also need to tell us what the implications are for contributory benefits, as my noble friend Lady Lister of Burtersett said. We have a contributory system: if you remove the contributions, you have to tell us what you will do with the contributory benefits. My main focus is pensions, but this applies equally to pre-retirement benefits. I hope the Minister can explain a bit more about what the Government have in mind because unless they provide further information and clarity about the idea, they are seriously misleading people about their intentions.

International Women’s Day

Lord Davies of Brixton Excerpts

Friday 8th March 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

One or two Members of the House drew attention to the terminology used when opening speeches. I will follow my noble friend Lady Gale and open with “my Peers”.

It is a privilege and a pleasure to participate in this debate, and it is certainly not something I take for granted. I will direct my remarks to the scandal of the gender pensions gap, as an important element in the economic exclusion of women.

Broadly speaking, women receive lower state pensions than men, and, when it comes to private pensions, the gap is stunning. Women have private pensions that are, on average, only about one-third of men’s. I have spoken about this before, and no doubt I will speak about it again, but I will just summarise.

There are solutions and there are causes. There is the pay gap, obviously; so much of our pension depends on people’s earnings while they are at work, and women have lower earnings so they have lower pensions. To the extent that we can move on and remove the pay gap, that element of the pensions gap will be eliminated. But there is more to it than that. It is compounded by a number of factors, but the key one is the gender care gap. Care in our society is gendered. Childcare and eldercare are predominately undertaken by women and, because they are providing care, they lose out in their profession and work, and end up with smaller pensions. They work part-time, so their pay is lower, and they take career breaks to provide care for children and parents, and so they lose pension. They lose out even when they return to work, because of the impact on their career progression. Care, as well as pay, is the crucial element that means that women end up with poorer pensions.

What are the solutions? Clearly, we hope we are making progress, but much more needs to be done to eliminate the gap in people’s pay. We also have to address the impact on their pensions of the fact that women are the predominant care providers. To a large extent, we have to move away from that model, but I think progress will be slow. First, pay should be equalised, but there has to be access to comprehensive and affordable childcare and eldercare. We have to look at our workplace practices and the extent to which women are losing out in their career progression and so on, and provide them with information so that they know the impact. We have to look at the structure of our pension provision, and automatic enrolment is one element of that.

The key is that unpaid caregivers have to be provided with additional pension—pension credits of one form or another. My preferred option is that they accrue additional elements of their state pension and, when they come to retirement, their state pension is enhanced in recognition of the unpaid periods of care that they have undertaken during their working lifetime. We all benefit from the care provided by women, not just the family and the children, and that should be recognised in the pensions we provide.

I am looking forward to the Minister’s response. I have raised these issues on a number of occasions and I must say that I have not totally been impressed by the response so far. It is true that they are now producing the figures—as we will be told, no doubt—but the fact is that the gap exists. In the longer term, I want to see a shift in the way care is provided and in pension credits, but in the short term I have a relatively modest aim, which I hope the Minister will assure us that we can meet: whenever we enter into this sort of debate, the gender pensions gap must be automatically included in the issues that need to be addressed. When a Minister stands up, and in the progress of their speech, they must say that we are not just moving towards recognising the gender pensions gap but are looking constructively at solutions that will eliminate it.

Alternative Investment Fund Designation Bill [HL]

Lord Davies of Brixton Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I very much thank the noble Baroness, Lady Altmann, for her detailed and comprehensive explanation of why this Bill is needed. The matter before us is straightforward, and the question that has to be answered is why we would not correct this total inconsistency in the way information is provided to potential investors.

With most investments, the charges are added after you invest the money. With investment trusts, the expenses are included within the price you pay. That is the essential difference. To require these two completely different approaches to expressing expenses is clearly inconsistent and properly addressed by this Bill. This is a valuable way in which to present the issue before us, but it is unfortunate, as the noble Baroness explained, that we have to go through the process of doing it through primary legislation when other avenues might be swifter or more straightforward. Unfortunately, they are not available, for whatever reason, so we have to resort to this legislation.

The key reason why this is important is that expenses are important. There may be a slight difference in tone on this issue between me and other commentators on investment matters, but expenses are important; we know what they are and they can be declared. Issues such as value for money and expected future return are important, but they are to a greater or lesser extent assumptions based on assumptions—they are hypotheticals—whereas the expenses are there as part of the contract that is being entered into. There is a tendency within the investment industry to try to downplay the importance of expenses, but they are crucial and it is right and proper that they are the subject of this Bill.

As someone who has been following the financial press for far too long, 60 years or so, I know that the question of investment trusts makes regular appearances in the financial press. It is a staple of the financial journalist to come up with these articles, and they do it on a regular basis. Nevertheless, they are still a bit of a niche approach to investment; there are certain aspects, and to an extent you are presented with a basket of investments—and, very often, they are being sold to you at a discount. You think, “Well, I’ve got a bargain here”, but you have to ask why they are at a discount and whether there is an additional element of risk that you should have in mind when making your decision.

Nevertheless, those investments should be available, and should be presented with the information in a way that provides what the potential investor needs to know. There is a pension point involved here, because they are suitable investments. In some ways, I think they are more suitable for pension funds, which have the resources and expertise to undertake a proper evaluation of the potential investment. Nevertheless, having the expenses declared in a clear and consistent way is an important principle.

That brings us finally to the question of the FCA. What is illustrated here is the extent to which the Financial Conduct Authority is answerable to Parliament; it is an illustration that it is not answerable to Parliament. I hope that our new financial regulation committee will look at this and arrive at a more consistent pattern, whereby these issues receive proper parliamentary consideration.

Finance Bill

Lord Davies of Brixton Excerpts

2nd reading & Committee negatived & 3rd reading
Wednesday 21st February 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, the Finance Bill gives us a chance to raise issues which others may regard as hobby horses but which I think are important topical, technical matters that are worth drawing to the Minister’s attention. I have two issues on my agenda. The first is the implications for recipients of the state pension of the Government’s policy of freezing income tax personal allowances and the second is the taxation of pension benefits following the abolition of the lifetime allowance.

Those with a very long memory will be aware that there is something called the Rooker-Wise amendment, “Rooker” being my noble friend Lord Rooker. Back in 1977, it was laid down for the first time in legislation that the personal allowance should be increased each year in line with inflation. I think that, technically, that is still in force, but successive Governments, including this Government, have opted out, through Finance Bills, of that requirement to index-link. My understanding —and I ask the Minister for confirmation—is that the freeze, which is now proposed to go up to 2027-28, was provided for in last year’s Finance Act and so there is no need for it to appear again in this Bill. Does that imply that the Government have given up on rolling forward the period for which the personal allowance will be frozen? It is shorter this year than last year. Is that a clear statement of policy or has it just been left out? We cannot forecast the Budget. Will we be told? Perhaps we will if it is not in the Budget and not in purdah. Does the freezing last only until the year that we were told it would be or is it going to be rolled forward another year?

That is very pertinent to the main point that I want to raise, which is the impact of freezing the personal allowance on pensioners, particularly those dependent mainly on the state pension. As we know, the state pension is being increased in line with the triple lock, to which all parties are currently committed, so it goes up by inflation, earnings or 2.5%, whereas the personal allowance is frozen. The new state pension is rapidly catching up with the personal allowance. My figures, based on estimates by the Office for Budget Responsibility, are that the new state pension will catch up with the personal allowance by 2027-28 and that in the following year, 2028-29, it will exceed the personal allowance.

The practical problem is that pensions are not part of the PAYE system. Where people receive a state pension—many pensioners receive a state pension that is greater than the new state pension because they have retained rights from the previous scheme—they will owe tax but are not part of the tax system. Instead, at the beginning of the following year they get a brown envelope in the post saying, “You owe us some money”. That is going to become more and more frequent as the state pension increases but the personal allowance is frozen.

I want the Government to say they are fully aware of this problem and are on the case. The obvious answer is that the state pension ought to be brought within the remit of the PAYE system so that people pay the taxes due over the year, as people do out of their earnings. However, I have not yet heard the Government say either that they understand the issue that is coming down the road or that they are going to do anything about it.

I emphasise that the hardest hit will be those earning income entirely from the state pension—maybe they do not have any other income or it is very small—that is slightly larger than the new state pension. We are talking £15,000 a year, which is not exactly riches. That is over £2,000 more than the personal allowance so they will be liable for 20% tax on that £2,000, which is £400. Someone on £15,000 a year is going to get a request for £400, to be paid as a lump sum. That is untenable. It will be a crisis when it arrives, and I just hope the Government can get ahead of the issue.

I turn to pensions taxation. Clause 14 and Schedule 9 deal with the abolition of the lifetime allowance charge. The Financial Secretary said in the Commons, when introducing the Bill, that this was intended as part of a policy to

“remove both barriers to work and incentives not to work”.—[Official Report, Commons, 13/12/23; col. 925.]

Those remarks were echoed by the Minister in this House. Indeed, the OBR estimated that the abolition of the lifetime allowance would mean there would be 15,000 more people in work, not least in the medical profession. That is an estimate based on behavioural change so we have to be a bit sceptical, but still it will have had an impact.

However, the Government have been too quick to congratulate themselves on solving the problem of pension taxation on highly skilled professionals, given the extent to which they will still be leaving their jobs because of the impact of the pension tax system. In my view, the annual allowance has always been the bigger problem. Particularly when someone is at work, the annual allowance means that early the following year they get another brown envelope relating to a significantly larger sum of money, saying, in some cases, “You owe a sum in excess of £100,000”. That is not unknown, so this is a serious issue. The Government may think they have addressed that because they have increased the annual allowance from £40,000 to £60,000, but still on £60,000 there will be highly paid, sorely needed professionals who will get a tax charge the following year.

That is not even the biggest problem. There are two further immediate problems. First, there is the taper. This is not the venue to start explaining the technical details of pension taxation, but the taper withdraws the relief available on the annual allowance as incomes increase. It is a classic case of something that those familiar with how taxation works will know: when you remove a taper, you get very high marginal rates. There is a taper on the tax payable after allowing for the annual allowance. The taper is still there, and some professionals argue that that is actually what is driving them out of employment.

There is a second issue that needs to be addressed. The rules have changed. You are taxed on the growth of your pension in a pension scheme. If you have two schemes, under the previous rules each pension scheme was taken separately. If you happened to be in an old pension scheme, which many doctors were, as well as in a new pension scheme because of all the changes that were made to pensions in 2015, you could have a declining value of a pension in one scheme but an increase in the value of the pension in the other. Overall, you would not really have gained much at all, but you were still taxed on the increase in the one scheme even though you were not getting any extra pension.

The Government addressed that, so you were allowed to combine your schemes from the same employer, but there is an issue they have not addressed: if your pension went down last year, you get no credit for that if your pension goes up the following year. So over a two-year period there might be no change in your pension, but you still have to pay tax on the value of the increase of that pension the following year.

Those are the two issues that I have taken the opportunity to draw to the attention of the Minister: the taper and the taxation of negative pensions growth.