HC Deb 14 February 1957 vol 564 cc1427-9
28. Mr. J. Paton

asked the Chancellor of the Exchequer what was the amount of the Treasury contribution to State retirement pensions for 1956; and what was the cost to the Treasury of the rebates allowed in taxation of private concerns for their superannuation schemes for the year 1956.

Mr. Powell

The cost of allowing employers' contributions to superannuation schemes for their employees to be deducted in arriving at taxable profits is estimated at present to be in the region of £80 million a year.

The estimated total cost to the Exchequer of Civil Service and Armed Forces pensions for the financial year 1956–57 is £82.6 million.

Retirement pensions payable under the National Insurance Scheme are the principal benefits payable from the National Insurance Fund, to which the Exchequer contribution in 1956–57 is expected to be £96.75 million: in addition, the estimated cost of non-contributory old-age pensions in 1956–57 is £15.3 million.

Mr. Paton

Is it not evident from these figures that the cost of these superannuation schemes of private firms is mainly borne by the Treasury? Is it not rather inequitable that the general taxpayer, and the State pensioner in particular, should be asked to contribute so lavishly to the specially favourable retirement pensions of the equivalent of one-third of the workers engaged in our industries?

Mr. Powell

If the hon. Member will look carefully at the reply, I do not think that he will find it bears out his contention. In any case, there is no analogy between the Exchequer contribution and the cost of paying State pensions on the one hand and the contributions of a private firm on the other, for if firms were to pay the same sums as additions to wages these would equally be a deduction for tax purposes.

Mr. Jay

Is not the hon. Gentleman's figure of £80 million for tax rebate on private superannuation schemes too small for the total tax rebate for all forms of private saving, since the Phillips Committee gave a figure of £100 million two years ago? Is it not rather extraordinary that more public money should be used for fairly high pensions for a third of the community than for much lower pensions for the remaining two-thirds?

Mr. Powell

The £80 million relates to the Question, but it does not follow that if these contributions did not rank to be allowed against taxable profits that amount of tax extra would be collected.

Mr. Osborne

Would my hon. Friend not agree that these contributions do not come from public funds but come from the profits created by the brains of these men and, therefore, the more he allows in this way the more he will encourage the managerial class on whom the welfare of the country so largely depends?

Mr. Powell

That is another ground on which there is no real analogy between the figures which the hon. Member for Norwich, North (Mr. Paton) sought to compare.