Senior Tory warns Osborne against Autumn Statement pension tax relief reform

Guto Bebb, Welsh Conservative Party politician and the Member of Parliament for Aberconwy photographed in his office in Portcullis House, Westminster, London. Photo by Michael Walter/Troika

A newly-appointed Government whip has warned Chancellor George Osborne against returning to controversial pension tax relief reforms in the Autumn Statement.

Conservative MP Guto Bebb was appointed a whip this weekend in changes following the resignation of Work and Pensions secretary Iain Duncan Smith.

Speaking to Money Marketing before the appointment, Bebb said he was one of the Conservative backbenchers who pressured Osborne to delay reforms to tax relief.

The Chancellor announced plans to investigate either a new flat rate of pension tax relief, or a more radical move to tax contributions in last year’s July Budget.

However, the ideas were abruptly dropped just days before last week’s Budget.

Bebb says: “It’s a good example of backbenchers making a difference. I know the parliamentary private secretaries to the Chancellor and the Prime Minister very well, and I can tell you that both of them have had representations, not just from myself, but from others as well.

“Perhaps the Treasury were aware that they might have a similar size concern on the Conservative benches, which might create a problem for them.

“But ultimately, it’s not about holding a gun to the Treasury’s head. There’s an argument for reform of the way tax relief works in pensions, but it’s not a short term issue, it’s something that should be subject to a rigorous debate for maybe even a good two years.”

Bebb adds any move to resurrect reforms later in the year, and in particular after the European referendum on 23 June, would be considered “cynical” by MPs.

He says: “There would be a degree of concern if something that was talked about for this Budget was abruptly cancelled, and then reappears after the European referendum.

“If it has been kicked into the long grass and we’re going to have a proper look at how to deal with the way in which we encourage pension saving, then I’m completely comfortable.

“If, on the other hand, all we’ve done is kick the can down the road and it will be resurrected in time for the Autumn Statement, then there will be a feeling that is a rather cynical move.

“I genuinely think the reforms we are doing on pensions are incredibly positive in many ways, so therefore trying to get the money spent on tax relief to support even higher levels of saving is a legitimate policy aim and aspiration.

“But that’s something that will take more than just a quick decision in the Autumn Statement to raise some cash.”