SIPPS U-Turn Has Left City to Carry The Cost and The Can - Huhne

1.24.00pm GMT Thu 8th Dec 2005

Liberal Democrat Shadow Chief Secretary to the Treasury, Chris Huhne MP, has today asked the Treasury to provide details of the regulatory impact assessment of their ill-fated and ill-thought plans for Self-Invested Personal Pensions (SIPPS).

In response to the Chancellor's massive u-turn in his Pre-Budget Report on Monday, Mr Huhne has also tabled a Parliamentary Question to the Treasury asking who the Government consulted before drawing up its SIPPS plans.

The Liberal Democrats tabled an amendment pointing out deficiencies in the SIPPS plans during the debates on the Finance Bill in June 2005, but these warnings were ignored by the Treasury.

Commenting, Mr Huhne said:

"This week's u-turn heeding Liberal Democrat concerns is a welcome shift in policy, but it will be cold comfort to city institutions and taxpayers who have seen vast amounts of their money wasted by the Treasury.

"Anybody with even the smallest understanding of how a market economy works should have been able to predict that the proposed rules would have skewed pensions portfolios artificially towards rental property, boosted the prices of homes in rural areas pricing out local people, raised the cost of starter homes in urban areas at the expense of first-time buyers, and provided wholly unjustified tax relief to the wealthy.

"The Government has got this badly wrong and left the City to carry the cost and the can."

ENDS

Notes to editors:

The Liberal Democrat Treasury team has raised the issue in the House of Commons on four separate occasions this year alone, and also tabled an amendment to the Finance Bill 2005 which government ministers refused to accept.

On 13 October 2005, Chris Huhne MP raised the SIPPs issue in Treasury questions. Chief Secretary, Des Browne, replied that the changes had been welcomed but would be kept under review.

On the third reading of the Finance Bill 2005 on 6th July 2005, Chris Huhne MP raised the issue but ministers dismissed concerns. Chris Huhne MP also raised the issue in standing committee on 30th June 2005 when he warned that the Treasury could lose more than £500 million a year in revenue, and pointed to the amendment tabled by himself and Liberal Democrat colleagues that would exclude residential property and exotic assets such as vintage cars and wine from Self Invested Pension Plans. Treasury junior minister Ivan Lewis merely stated that the amendment could not be discussed (as it had to be supported by a minister, as a revenue raising measure).

On the 7th June in the second reading debate, Treasury junior minister John Healey dismissed concerns about SIPPs merely saying that they had been legislated in the Finance Bill 2004, implying they should not be reopened.

On 6th June, Lord Oakeshott of Seagrove Bay wrote to the Chancellor highlighting Liberal Democrat concerns about the abuse of the new rules.

The Conservatives' Treasury team did not support the Liberal Democrats in raising the possible abuse of the SIPPs rules.

Economics, Personal Finance, General, Newsdesks, Internal