Britain's finance minister Gordon Brown defended on Tuesday changes he made to the pension system in 1997 in an effort to defuse a row that has cast a shadow over his bid to replace Prime Minister Tony Blair.
Brown is widely expected to take over from Blair in June or July. But documents from 1997 released last week showing Brown was warned of risks to the pension system have been damaging and raised the chances of him facing a serious challenger.
Brown and Blair, the architects of the modern Labour Party that has ruled Britain for the past decade, were in Scotland on Tuesday to rally support ahead of local polls on May 3 in which Labour looks set for a humiliating defeat. Critics blame the removal of tax breaks for pension funds shortly after Labour came to power as the cause of a crisis that has forced the closure of many of the more generous retirement schemes. The change was expected to cost funds up to four billion pounds ($7.90 billion) per year.
They say Treasury documents published last Friday show Brown ignored sound advice before abolishing tax credits on share dividends in his first budget. Independent experts say the policy change was only one of several factors that have hit pension schemes since.
Brown said he stood by his budget. "It was a decision in favour of long-term investment in our future." Blair, who has had a strained relationship with Brown, gave his full support. "Gordon was able to stabilise the economy, and - in part as a result of those decisions, difficult though they were - gave us 10 years in which this has been the strongest economy in the western world."
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