Newspaper article The Evening Standard (London, England)

Brown Fought for Even Bigger Pensions Raid; Chancellor Wanted [Pounds Sterling]8bn Take& but Lost Battle to Blair

Newspaper article The Evening Standard (London, England)

Brown Fought for Even Bigger Pensions Raid; Chancellor Wanted [Pounds Sterling]8bn Take& but Lost Battle to Blair

Article excerpt

GORDON BROWN originally demanded that [pounds sterling]8 billion should annually be taken f rom

Britain's pension companies but was defeated by Tony Blair after a bitter row, we can reveal.

Documents released late on Friday under the Freedom of Information Act showed that civil servants had warned that the move which finally resulted in a [pounds sterling]5 billion pensions raid could lead to the closure of many occupational pension schemes.

But the Chancellor initially had a far higher sum in mind until it was watered down by No 10.

Today Michael Fallon, deputy chairman of the Treasury select committee said an inquiry may be launched into why the Chancellor ignored warnings that the tax changes could leave a "big hole" in pension funds.

Critics claim the move cost [pounds sterling]100 billion and was a key factor in the collapse of pension funds. The Con- federation of British Industry's federation of British Industry's director-general, Richard Lambert, accused the Treasury of a "convenient bit of spin" after it claimed that business had lobbied for the abolition of the dividend tax credit 10 years ago.

The [pounds sterling]8 billion was, in fact, suggested to Brown by Chris Wales, a partner at Arthur Andersen, the accountants Brown had retained as advisers, paid for by Geoffrey Robinson, the former Paymaster General.

Mr Brown's support for such a high figure was opposed by Derek Scott, economist and special advisor to Mr Blair in 10 Downing Street. Mr Scott, who has subsequently become a vocal critic of the Chancellor, insisted that a meeting be arranged in the Prime Minister's office. The confrontation between the Chancellor and Prime Minister was, according to eyewitnesses, "loud and noisy".

Across the table were Mr Brown's senior civil servants, Robert Culpin and John Gieve. Neither vigorously challenged the Chancellor. Beside Mr Brown was Ed Balls, the real influence.

The Prime Minister said that everyone agreed taxing pensions was "not a good idea". "It's a manifesto commitment," replied Mr Brown. "It's got to come down," said Mr Blair.

Mr Blair was, according to witnesses, alarmed by Mr Brown's attack on the middle classes. Now by abolishing the tax credits on dividends received by pension funds, Mr Brown wanted to boost the Exchequer every year. The middle classes, he believed, would not feel any instant pain.

The most important protest should have come from the CBI. Adair Turner, the then director-general, however, was switching his allegiance from the Tories to Labour. On pensions, he was not about to publicly attack the new Chancellor.

Mr Brown thought he was completing Harold Wilson's policy to reduce the political power of the financial institutions controlling [pounds sterling]650 billion by terminating their excessive tax advantages. …

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