A future Labour government would introduce a new tax- efficient long-term savings scheme to encourage people to plan for their needs in old age, Gordon Brown, the shadow Chancellor, pledged yesterday.
The outline proposal, on which Labour will consult, will raise expectations of the party's willingness to tackle welfare reform in a way that contemplates people making more provision for themselves in retirement and old age.
Mr Brown said in a document prepared for a breakfast with business leaders: "I am prepared to consider extending the principle of Tessas and PEPs by introducing a new Individual Savings Account to promote long-term saving, particularly for old age as well as for other needs in the long-term.
"Tax relief would be geared to encouraging savers to invest in the long- term, with relief becoming available after a period of years."
Mr Brown said Britain would never raise levels of investment if savings were not encouraged.
After underlining his commitment to Tessas and PEPs, Mr Brown said: "We wish to find new ways of making saving more long-term, and linking the need for savings for investment to the need for people to save for their retirement."
In the first of a three-stage pre-Budget campaign, Mr Brown said Britain had been 13th in the world prosperity league in 1979, but after 16 years of Conservative government had slumped to 18th place, and was bottom of the league among G7 countries for investment. "The real issue for this Budget is not the Tory 1p or 2p down, or the Liberal 1p or 2p up but by how much we can end the chronic under-investment in our economy."
He called on the Chancellor, Kenneth Clarke, to double for 12 months the first-year tax allowance for new investment from 25 to 50 per cent. Mr Brown refused to be drawn on whether he believed, like members of the Cabinet, that public spending should not account for more than 40 per cent of gross domestic product.
Yesterday's document dismisses the Government's private finance initiative as a failure and pledges a "new partnership for renewal ... we will set up a new taskforce headed by the Chancellor which would prioritise projects. We are prepared to cash-limit our projects and then invite private tenders. We will work with the private sector to deal with the problems of risk allocation".
Setting out Labour's other industry policy priorities, Mr Brown said the party favoured the CBI's proposal for two-tier capital gains tax to encourage shareholders to hold assets over the longer term. Labour would also pledge measures to "help bridge the long-term funding gap for small business by empowering new regional development agencies to work with venture capital funds".
He said that expanding small businesses should benefit from a higher VAT threshold if they take on extra employees - paid for by the windfall levy on the utilities.Reuse content