Gordon Clown .Com

Gordon’s “hand-in-the-till” tactic of abolishing tax credits on dividends in his 1997 budget seems to be coming back to haunt him 10 years down the line.  The CBI have complained that Brown was warned at the time that such a stunt would cause a £100 billion black hole in pensions, and that this prediction appears to be coming true.

Gordon Brown’s decision to abolish tax credits on dividends was a “misjudgment”, according to Richard Lambert, director-general of the CBI employers’ body, who said on Sunday that the move had weakened occupational pension provision.

Mr Lambert, a former member of the Bank of England’s monetary policy committee, said the scrapping of tax relief in Mr Brown’s July 1997 Budget had made “a significant contribution to the weakening of the country’s occupational pensions platform”.

“There was a misjudgment by the chancellor,” he told the Financial Times. The CBI had privately warned the Treasury at the time the move was “not a good idea”.

The Tories have claimed that Brown deliberately attempted to bury the bad news of the release of the documents under the Freedom Of Information Act by releasing them just after the start of the commons easter recess:

There were suggestions, denied by Treasury officials, that the chancellor might have been seeking to prevent a more damaging disclosure later - possibly in the middle of the contest for the Labour leadership that is expected to see him succeed Tony Blair.

Another sly piece of trickery from the tricky sly chancellor we have come to know.  But the real bad news for Gordon came today when it was revealed that he could face a Treasury Committee enquiry into why he chose to ignore the warnings and push ahead with the tax rises anyway:

A possible investigation by the influential Commons Treasury committee into one of the most controversial actions of his decade as Chancellor threatens embarrassing publicity during his leadership campaign this summer.

The Tory MP Michael Fallon, deputy chairman of the Treasury Select Committee, said yesterday that he will propose an investigation into Mr Brown’s 1997 decision, which ultimately cost pensions an estimated £100 billion and contributed to the collapse of hundreds of schemes.

Mr Brown could be summoned to testify to the Committee on why he went ahead with the tax change, despite explicit warnings from Treasury economists that it would result in a huge chunk being taken out of retirement savings.

Labour sources acknowledged last night that any suggestion Mr Brown was personally responsible could further dent his appeal at a time when polls already suggest he is less popular than David Cameron, the Tory leader.

John McFall, the Labour MP who chairs the committee, said he would decide on the matter in the coming weeks, but pressure is mounting at Westminster for Mr Brown to answer for his abolition of the dividend tax credit.

Things are slowly falling into place ahead of the Labour leadership election, which seems likely to prove a fairly rough ride for Gordon.