Date: 2023-04-19
Anthony Browne: I preface my comments with an absolutely fundamental underlying principle of all economic policy. Whatever we are talking about, I think this should be our first, axiomatic ground rule: whatever is right for the Leader of the Opposition should be right for everyone. There is a fundamental principle here, which is fairness, and I will come on to that. First, though, I want to mention some of the underlying principles of the annual allowance versus the lifetime allowance, because during almost all of the previous Labour Government's time in office, there was not a lifetime allowance. It was brought in at the tail end of the Labour Government. One of the Government's concerns about tax relief for pensioners is the need to limit it so that we do not end up creating huge amounts of dead-weight costs for pension relief, particularly for the well paid. That is why we have an annual allowance that limits tax relief. The lifetime allowance is not an allowance of tax relief on the amount that people pay in; it is the amount that is accrued within the pension pot. As my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) said, a person could be very lucky: they could have worked for Google, for example, at the beginning of their career and got some Google shares in their pension, and then done virtually nothing else for the rest of their career, but their pension would suddenly be worth PS1 million because those shares have done so well. They would  then suddenly be hit by this punitive regime; they would have got virtually no tax relief at any point, but they would suddenly face this massive tax penalty. The only reason for the lifetime limit is a tax grab by the Government to try to penalise those who have ended up with big savings pots, and as we have heard, most of those affected by it work in the public sector, because public sector pensions are so generous. I am chair of the Conservative Back-Bench Treasury committee, and my hon. Friend was previously the deputy chair. We had various hearings on this issue, and we recommended to the Government that they get rid of the lifetime savings allowance altogether. I was delighted when the Government did it, because I did not think they were going to be that brave, but there is a logical series of steps that we have to follow in order to get there. I was delighted that the spokesman for the SNP, the hon. Member for Aberdeen North (Kirsty Blackman), accepted that there is such a thing as a Laffer curve that a person can be beyond the peak of--that if we tax people so highly, at some point, they just stop working. We can argue about where that peak is, but that was absolutely the point that the hon. Lady was making. Labour Members have to accept that point as well, because they are making the same point regarding NHS doctors, but it applies to everyone in every other sector as well. If we end up hitting people with taxes so high that it is not worth their while working, they stop working, whether they are in the public sector or the private sector. That principle--that there is no benefit to the country in hitting people with taxes so high that whatever sector they are in, they stop working, paying taxes and contributing to the broader economy--should be a foundation of the Government's overall thinking on pension taxation. The point I was making about the logical chain that leads to abolishing the whole lifetime allowance is that we already have the stand-alone personal regime for the former Director of Public Prosecutions, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer)--and not just him but his predecessors as well. We already have a separate regime for judges, which has been invoked; we now have a regime for NHS doctors that is being argued for; and as was mentioned earlier, there are various other regimes for senior police chiefs, headteachers, Government scientists, local authority senior officials, air traffic controllers--the list goes on. It is a fundamental principle of taxation policy that if we have so many exemptions in all those different categories, there is clearly something wrong with the system, and we end up with an absolutely hideous mess of tax policy. My hon. Friend the Member for Amber Valley (Nigel Mills) pointed out the complexities of having a regime just for NHS doctors, but that same complexity would apply to every other sector if we had a separate regime for police chiefs, Government scientists, and so on and so forth--what a hideous mess. We just have to accept that the whole thing is wrong. One might say, as the hon. Member for Aberdeen North did, that we should have a separate regime just for the public sector. I think that is absolutely, fundamentally wrong, which is a point that my hon. Friend the Member for Amber Valley also made. First, I just do not abide by the general principle that all those who work in the private sector are bad and all those who work in the public sector are good. By the way, 80% of employees--80%  of our voters--work in the private sector. I do not accept that those people are sufficiently bad and not moral enough that they deserve to have a specially punitive tax regime. I think it is really divisive to argue for a tax system that benefits public sector workers at the expense of private sector workers. Private sector workers do a lot of valuable work as well. We may not like all of the different things they do, but in my constituency, they work in life sciences, developing all the drugs, the vaccines, the cures for cancer and so on. People who work in supermarkets were heroes during the pandemic, as well--they kept on working throughout the whole thing. I agree that frontline workers are unlikely to benefit from this regime, but the senior managers certainly would. It would be really divisive and corrosive in society to say, "Right, we are having one tax regime for the public sector--you are in a privileged position--and everyone else, the 80% in the private sector, has to be punished." That is certainly not a world I would want to live in. I challenge Members to argue for that in public, because I think they would be shot down by all their voters. It would also be hideously complex, because a lot of people, including me, end up working part of their career in the public sector and part of their career in the private sector. How do we get a lifetime allowance out of that? Fundamentally, when we follow the logic and add up all the different private sectors affected by the allowance and the private sector overall, we end up seeing that we just have to get rid of the whole thing. It would be incredibly complex and incredibly unfair if we had single sectors that benefited from the abolition of the lifetime allowance. There is also the cost. The Treasury produces all these estimates, and we can have a big debate about its methodology and how it calculates things, but I fundamentally do not believe that a tax that is so punitive that it simply stops people from working at the peak of their skills and experience is somehow good for the overall economy. Clearly it means people work less and pay less tax. The overall cost of this measure will be far less than expected. I do not speak for the Treasury, but my understanding is that that was part of its rationale. When it looked at the costs for doing it for doctors and then at the costs for doing it for the economy overall, it realised there was not that big a difference, so it might as well go for the whole thing. The arguments against abolishing the lifetime allowance simply do not stack up. They are fundamentally unfair and economically illiterate, and the Government should push ahead with getting rid of the lifetime allowance.