A lot of hot air has been generated in the course of the row over exactly “who said what” in the run up to Gordon Brown’s raid on pension funds in 1997.

The now famous removal of the tax credit on dividends was part of a tidying up of the advanced corporation tax (ACT) regime – a process which had been started by a previous Conservative Chancellor of Exchequer, Norman Lamont.

The reform of ACT benefited companies with large overseas earnings, such as BAT, which openly welcomed the change at the time.

The only other comment at the time came from the National Association of Pension Funds which remonstrated to the Treasury in its usual behind-the-scenes way, but otherwise the issue went largely unremarked by the mainstream media.

Fast forward 10 years, and with thousands of final salary pension funds in deficit, Gordon Brown has become the bogeyman of UK plc.

The CBI denies all knowledge of having called for the reform, even though a number of its member companies benefited from the reforms.

So what is the truth of the matter? While the move has certainly caused damage to pension schemes, it is by no means the principal cause of their current plight.

The bear market of 2000-03 which wiped around £250bn off pension scheme assets is principally to blame.

With rising stock markets in the 1990s, pension schemes were lulled into a false sense of security. In 1997, many schemes were in surplus and benefiting from contribution holidays, whereby employer contributions were suspended while buoyant stock market returns kept their pension schemes afloat.

Secondly, changes to accounting rules as to how pension funds are measured and disclosed in company reports turned nominal surpluses into massive deficits over night.

A third factor has been rapidly increasing longevity, which actuaries were aware of, but skated over in the advice given to scheme sponsors about the level of contributions needed to counteract the effect of longer living pensioners, no doubt in a bid to keep employers happy by limiting pension costs.

A fourth factor relates to the law of unintended consequences. Added protection imposed on final salary schemes in the wake of the Maxwell scandal, in the form of inflation-linked increases to deferred pensions and those in payment, have added 50 per cent to scheme costs, according to Lord Turner, the author of the 2005 Pensions Report for the government.

So the £50bn loss to pension schemes over the last 10 years through the axing of the tax credit on dividends is small beer compared to the £250bn hit through the stockmarket collapse, the £50bn cost of inflation proofing and the unquantifiable impact of rising longevity.

That said, Mike Warburton, a senior tax partner at Grant Thornton, who acted as an expert witness for the Times in its appeal against the Treasury’s refusal to release the documents concerning the advice given to Gordon Brown in 1997, is adamant that the measure was nothing less than a cynical tax raising exercise.

“It was a disgraceful attack on pension funds and the linking of the ACT reforms to the axing of tax credits to pension funds was completely unnecessary. The two could have been dealt with separately so that pension funds did not suffer,” says Warburton.