§ Mr. Tim Smith (Beaconsfield)I beg to move amendment No. 75, in page 51, line 32, leave out 'if' and insert
'to the extent (but only to the extent) that'
Mr: SpeakerWith this we shall take the following amendments: No. 76, in page 51, line 33, leave out 'benefits secured' and insert 'premiums payable'.
§
No. 77, in page 51, line 35, at beginning insert
'Except as provided by subsection (4A) below.'.
§
No. 78, in page 51, line 41, at end insert—
'(4A) If an option otherwise falling within the terms of subsection (4) above, provides only for an increase in the benefits secured by reference to a corresponding increase in an index mentioned in Schedule [Indexes to which section 70 refers],then subsection (4) shall not apply.'.
§ No. 93, new schedule—Indexes to which Section 70 refers—
§ "Retail Price Index Average Earnings Index"
§ Mr. SmithI tabled similar amendments in Committee but did not move them. The amendments have a limited effect in the context of the abolition of life insurance premium relief. Their sole object is to change the emphasis in subsection (2) from benefits to premiums. They would not increase the scope of life assurance premium relief available to policy holders who took out policies before 14 March 1984.
Mr:. HirstI shall not detain the House for long, but I wish to refer to amendment No. 77 which stands in my name. The purpose of the amendment is straightforward. A number of insurance policies contain an option that allows the policy holders to increase the benefit under a policy in accordance either with the retail price index or the index of average earnings.
I accept that policy holders who, from the start, have uprated the benefits under their policies by either the RPI or the average earnings index are not affected by the abolition of life insurance premium relief. The small category of policies covered by my amendment are thosewhere the policy holder has an option within the policy to index the benefits.
Unlike amendments Nos. 75 and 76, the cost of my amendment to the Treasury would be small because of the comparatively small number of policy holders who have that option. Nevertheless, the point must be made that those policy holders who have qualifying policies took out policies that contained an option, and the ability to exercise that option is merely a fulfilment of the conditions 1325 of the policy. I hope that my hon. Friend the Economic Secretary to the Treasury can give me some encouragement this morning.
§ The Economic Secretary to the Treasury (Mr. Ian Stewart)My hon. Friends the Members for Beaconsfield (Mr. Smith) and for Strathkelvin and Bearsden (Mr. Hirst) have raised interesting points about options. My hon. Friend the Member for Beaconsfield asks that premium relief should be disallowed only on the excess premium if a policy is enhanced. That would impose an impossible administrative burden not only on the Inland Revenue but on the life offices. It would be difficult, if not absolutely unworkable, to monitor and deal with that proposal.
I understand that the matter will be dealt with in future by top-up policies. As the market is so competitive, there should be no difficulty in policy holders obtaining that sort of cover.
My hon. Friend the Member for Strathkelvin and Bearsden questioned the position on the uprating of policies where there is an option for indexing to the RPI. Such a policy would not qualify anyway, and the amendment would require the conditions for qualifying policies themselves to be amended for a potentially unlimited commitment.
An option is not a commitment. If there is a clear commitment on premiums, premium relief will continue. If there is not, it will not be available. The options are often available not for cash purposes but for health or other reasons. Therefore, I must tell my hon. Friend that I do not find his proposal acceptable
Mr:. Tim Smith Amendment, by leave, withdrawn.In the light of my hon. Friend's remarks, I beg to ask leave to withdraw the amendment.