Why is it a disgraceful u-turn? It was mooted as a possibility and put out for consultation, it aroused considerable opposition and the Government decided not too proceed with the proposal in its original form and will not be amending the regulations to allow holiday homes to be regarded as pension 'savings'. Seems fair enough to me and anybody who took the gamble on buying a property in the expectation that they would receive a government subsidy to help them acquire a personal property asset before the legislation had actually been enacted surely realised that it was a gamble? They after all still have that personal asset, it will now just not be as good an investment as they perhaps hoped for but they haven't lost anything.

SM

The reason I say its a disgrace is twofold. Firstly I run an IFA practice and a lot of companies including my own have spent a lot of time and money gearing up for the new pension regime, including the ability to invest residential property/Holiday homes in to a SIPP. We were assured this would go ahead. Even the Inland Revenue I believe had sorted the tax implications, albeit recently. Millions of pounds have been wasted.
Secondly the public have had their hopes and expectations dashed. Only a few weeks ago someone was asking for help regarding a SIPP to purchase a holiday home. To be honest it looks like the government can't make their mind up. Hardly creates confidence does it?
Sorry if it sounds political, its not meant to be. If any other party had done this I would still feel the same.
The reason I see it has a U Turn is that it is unusual or maybe unheard of for changes of this kind due to come into force in barely 3 months time to be scrapped. Companies need a long time to plan for such substantial changes. Of course legislation will still come into force at the beginning of April regarding pensions simplification, but one of the key areas trumpeted by the government will have been withdrawn. You only have to surf the internet to see that the press and the financial services industry, not to mention the public were given the impression this was a done deal.

I think that this has possibly happened because a lot of people don't understand the legislative process. People in the finance industry might think it unusual for proposed changes to be scrapped within 3 months of their proposed implementation but this is actually very common across the broad spectrum of Government policy. Changes can happen right up until the final vote in the Commons and I suspect the reason for scrapping this proposed change now is that the Government knew there would be an even bigger outcry if it did get to the final stage and they lost the vote at that point.

There was an extremely strong risk that this would happen - they have not managed to sell this change to their own backbenchers, many of whom have been angered by the proposed changes to the pension schemes for public service workers that would result in them being very much worse off in retirement as a result whilst at the same time the Government was proposing to provide a public subsidy for those who had enough money to invest in property unlike most workers in the public sector. This was a measure that was perceived by many to be only of benefit to those who were better off in the first place and the Government was having a hard time selling it to their own backbenchers who have given them a couple of very embarassing black eyes in the recent past re NHS and education reforms. they would want to avoid the same happening with this.

It's worth bearing in mind that the report that set this particular hare running only had the status of a 'green' paper put out for consultation and as such it was always open to a great deal of revision between now and eventual enactment. This consultation would also have included consultation with not just the public etc but also other Government Departments and agencies and I suspect that now that the Inland Revenue has had a chance to work out the implications of the proposed changes - and the amount of revenue that would potentially be lost - that this has also been a factor in the Government's change of heart. What is unusual is that the Government realised they had got it so completely wrong that they haven't even bothered to wait until the end of the consultation period (Dec 23rd 2005) before announcing that they've changed their minds.

The next stage will be the publication of a 'white' paper which will contain the exact legislation and consequent regulations that will put before Parliament in the form of a 'Bill'. This is what will be debated in both the Commons and the Lords and will be examined in fine detail by the relevant parliamentary committee/s. MPs can table amendments right up until the final vote in the House of Commons and have been known to force through amendments right up until that final vote. Only once there has been a clear majority 'yes' vote for all the components of a Bill and the associated vote in the Commons does the process move on the publication of the final 'blue' paper or Act of Parliament. So these proposed changes have fallen at the very first hurdle - they have never even made it into the 'Bill', much less an Act of Parliament and in the end nothing is ever certain until the Bill is passed in Parliament and the Act published by HMSO.

Whilst this particular proposal was about amending the regulations and revising a previous Act, it still had to go through due parliamentary processes. I accept that some people might have got their fingers burnt as a result of what's happened but anybody who confuses a 'green' paper (the least authorative, most 'draft-like' version of a piece of legislation) with an Act of Parliament and makes decisions on the assumption that it will be eventually implemented in its entirety without change is a bit 'green' themselves in the sense being inexperienced in Parliamentary procedures :-)

If IFAs acted on advice from their professional and regulatory bodies as if this would definitely become law in April then they have an understandable beef with them but I think that that is where the beef is, not with a Government that changed it's mind after consulting with the relevant Whitehall Departments and other interested parties. If only Governments of all political persuasions, past and present, were willing to change their minds at the consultation stage then perhaps we'd be on the way to being a better democracy.

SM

PS The jargon about 'green', 'white' and 'blue' papers stems from the days when these were the standardized colours of the covers of the successive versions of proposed legislation! All Acts of Parliament did once have nice mid-blue covers! A bit of useless information that might win you a pub quiz one day :-)

Oh ******.

I'll try and keep my reply fairly short.
Generally I agree its not over till its over. But millions have been wasted, I dread to think what its cost other government departments. ie: The Inland Revenue. Its our money that's been wasted, and it sticks in my throat.
I decided to look at a few sites at random. One was the Guardian the other a C4 site. they go back a few months, but go into some detail about purchasing residential property in a SIPP. So so far we have the industry, the IR, The media, and the public felt it was a done deal. Perhaps even the chancellor did at one time lol
Regarding public sector pensions. As you know these are final salary schemes. The private sector is a different matter. However I could go on for quite a long time about both, however my post is regarding SIPPS.

I'll try and keep my further comments short too :-) The people who made the public think it was a done deal were the finance industry and the media and not the Government - the original Government publication and associated literature makes it very clear that it was a consultation report, put out for comment and nothing more. Nor would the Inland Revenue think it was a done deal - all they were doing was publishing details about how the new regs would work if they were implemented. This was information that the various stakeholders needed for them to decide whether they wanted to respond positively or not to the consultation exercise.

As for the wasted millions that's the price we pay for democracy. If the Thatcher Government had put the Poll Tax proposals out to consultation in the same way and listened to their critics, yes, that would have cost money but it would also have saved the millions which were later wasted on implementing an unworkable scheme that aroused massive public opposition and had to be completely replaced with another scheme in pretty short order.

Yes, I do realise the difference between the way most public sector pension schemes operate and that they are final salary schemes, as some (a very few, true) still are in the public sector. But the point that I was making was that the Governemnt misjudged the mood of their own back benchers on this issue and realised late in the day that they were never going to convince them that it was going to be OK to take away from low paid public sector workers with one hand and give money away to those who were perceived to be wealthier on the other.

I think we are probably both agreed that the Government should never ever have floated this idea in the first place though probably for different reasons. For me, rather than giving away tax breaks and bribes (which will always favour the haves over the have-nots) to try and make people save for their own old age I would rather see them keeping hold of the money and instead having a decent state pension system for everybody. The private sector has just as bad a record in ensuring that ordinary people will have a decent income in old age as evidenced by the Mirror group and Equitable Life scandals. But that probably edges us into a more political discussion than is appropriate here. Where we differ is on whether so many people should have behaved as if it would be enacted as exactly as described in the consultation report and perhaps we should just agree to differ over that.

SM

And thats short.
I think we will have to agree to disagree on this one. I feel, along with many others that this is a you turn and a disgrace. I stand by those comments.