§ 7. Mr. Roy Hughesasked the Chancellor of the Exchequer how much money per annum would be lost to the revenue by allowing tax relief on graduated pension contributions.
§ Mr. Patrick JenkinAbout £250 million.
§ Mr. HughesThe hon. Gentleman will recall our correspondence on the matter. Does he not feel it is time the Government took steps to iron out this anomaly? In particular, why should people in private pension schemes have preferential treatment over those who are not covered in that way?
§ Mr. JenkinIt was the right hon. Member for Cardiff, South-East (Mr. Callaghan) who decided in 1965 to withdraw the allowance for the national insurance and graduated pension contribution, making a corresponding increase in the personal allowance. The reason was very largely the need to avoid the many millions of small tax adjustments that would otherwise have been necessary. In the reserve scheme to be introduced under the reform of national insurance, the share of the contribution of employer and employee is weighted in favour of the employee, who will pay a lower share, which largely offsets the absence of tax relief on the contributions.