Field: government 'unaware' of Brown's pension plan
Updated on 02 April 2007
Former welfare minister tells Channel 4 News 1997 documents raise questions about chancellor's 'judgement'.
Chancellor Gordon Brown has come under further pressure today over claims that he ignored warnings that changes to tax credits in his first budget could be disastrous for pension funds.
Frank Field, welfare secretary at the time the decision was taken, has admitted that he - and most likely the rest of government - was in the dark about the changes and said the issue raises questions about Brown's style of management.
'Presumably like the rest of government, we were unaware that this extraordinary change was planned.'Frank Field, former welfare minister
Meanwhile, Lord Turner, head of the CBI at the time, has denied claims by the Treasury that he argued in favour of the changes. And the current CBI chief Richard Lambert said he had privately warned Brown it "wasn't a good idea".
The row follows the release of documents revealing concerns among Treasury officials before the 1997 budget.
Field told Channel 4 News at Noon: "Presumably like the rest of government, we were unaware that this extraordinary change was planned. It does now raise questions not just about the judgement of the chancellor but also his style of operating which I think is relevant to the Labour Party as we come to think about who are new leader should be."
"For example, had the chancellor been open minded and shared information with colleagues ... we might have warned [him] against the changes he was making fearing the very outcome which has occurred - which is in effect the poleaxing of people's retirement provision."
What happened in 1997?
Two months after Labour's May 1997 general election victory, the new chancellor, Gordon Brown, announced that he would abolish the dividend tax credit on pension funds.
Ed Balls, economic secretary to the Treasury, explained last week that the move was intended to remove an anomaly which had encouraged pension funds to pay out in dividends rather than investing for the long term.
At the time, it was intended that the measure would be offset by a simultaneous cut in corporation tax.
- Q&A: pension tax row
Field dismissed as "folly" suggestions that pension shortfalls was more to do with the downturn in the stock market than a decision taken 10 years ago.
He said: "Of course stock markets go up and down but pensions are planned over a 90 year period. And for that employers need two things - one is that tax changes are not made overnight and secondly when there are proposals for changes that these are made public and fully discussed."
Ex-CBI chief Lord Turner told the programme: "The truth is Gordon Brown made these decisions. He had the information in front of him, he knew the damage it would do to pension funds. He decided to go ahead anyway."
The chancellor has so far declined to comment.
