Pensions tax 'means millions will have to work longer'

Iain Duncan Smith warned Tony Blair yesterday he faced another four years at work because of the Government's tax on pension funds.

The Conservative leader raised laughter when he challenged the wisdom of the £5bn a year tax in the light of recent turbulence in the City. Mr Duncan Smith asked Mr Blair whether he stood by his comment in 1997, when Gordon Brown introduced the levy, that it was justified by "the buoyancy of the stock market".

The Tory leader said the stock market had fallen by £300bn in the past year. "A man of your age will have to work four years longer than planned. That's because the pensions industry is in crisis," he told Mr Blair, 49. "As a direct result of your imposed pensions tax, millions of people's retirement plans are in ruins."

The Prime Minister conceded the stock market had dropped, but said it was still in net balance up of £250bn. "It really is absurd to say that the Chancellor is responsible for a fall in the stock market. Yes, the stock market has fallen but it is still massively up on where it was five years ago." Mr Blair added: "I may be working for four years but I think you will be working for about 40 before you have got any chance of crossing the floor."

Later in Prime Minister's Question Time, Mr Blair conceded new figures would show a rise in recorded crime for the last year. But he insisted crime was lower than in 1997.