Budget Statement

Lord Freeman Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Freeman (Con)]

My Lords, I shall concentrate my remarks on the problems faced by private sector pension schemes in this country, something that the Chancellor is very well aware of. I am greatly indebted to him and his staff for monitoring the situation, which is growing to alarming proportions. The financial position of private sector pension schemes—10 million people in this country are covered by such schemes—is in difficulty at present. I declare my past interest as a chairman of one of the large pension schemes in this country. The problems are that the liabilities of the pension schemes are growing, and the promised increase in the final payment made in the private sector to those who retire looking forward to a decent pension is coming under great pressure for the simple reason that interest rates have been extremely low for a number of years now. That means that gilt rates, in particular, are so small that provision for pensions is not growing as fast as demand.

The Department for Work and Pensions reported in February 2017, identifying this as a major problem for the private sector in industry and commerce—and, indeed, in the Civil Service—but did not provide any solutions. I have every confidence that the Chancellor will be addressing this. He has referred indirectly to an understanding of the growing problem, and I very much look forward to his and the department’s comments in due course.

The aggregate deficit of private sector pension schemes in January 2017, the beginning of this year, was £20 billion, and it has grown. It has been caused by very low gilt rates, which I am sure are a tremendous advantage and much appreciated by large sections of industry and commerce, but these low rates have been coupled with the growing obligations of industry in this country to provide a decent pension depending on length of service, and to augment that pension when unions and companies agree to increases. I know that the Chancellor is well aware of these problems. I keep a close connection with the Treasury, and know that he will continue to monitor the situation.

I touch briefly on two other problems. First, I very much welcome the Chancellor’s decision that foreign buyers of commercial properties in the United Kingdom must pay capital gains tax. This has been a problem for many years, and the decision is warmly welcomed not only by the property industry but, more importantly, by the community and electorate as a whole. Also, overseas purchasers of house properties in the United Kingdom—I am now talking about individuals—should have their ownership fully revealed. That is not the case at present. In London, in particular, unknown owners of recently acquired properties are escaping the full vigour of examination not only by the tax authorities but in terms of their proper maintenance. This matter has been debated in your Lordships’ House, and I believe that transparent ownership records will ensure that tax is fully paid. I know that the Chancellor is interested in this issue, and I ask the Treasury to continue to follow it up.

I welcome the tone and content of the Budget very much, and have confidence that the Chancellor will continue to monitor not only the pension fund problems to which I just referred but the well-being of our economy.