CBI did not back Brown’s pension raid

The Confederation of British Industry (CBI) has said that it did not support Gordon Brown’s 1997 decision to abolish tax relief on dividends.

Richard Lambert, director-general of the CBI, told the Financial Times that Brown’s decision to remove tax relief in the 1997 Budget had made, “a significant contribution to the weakening of the country’s occupational pensions platform,” and called it a “misjudgment”. Cutting tax relief on company dividends has been partly behind the fall in the number of people in final salary pension schemes.

A CBI spokesman said it has issued its Budget submissions from 1996/7 which “state totally unequivocally that we opposed demolition of the dividend tax credit.” He added that the CBI has consistently been opposed to any abolition and certainly did not lobby for it.

Over the weekend, Ed Balls, economic secretary to the Treasury and a former chief economic adviser to the chancellor, said that the CBI had backed the move to take away this tax relief.