Programme motion, Consideration of Lords amendments in the Commons
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- I beg to move, That this House agrees with Lords amendment 1.
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Sarah McCarthy-FryLabour- Quote
- Lords amendments 1 and 2 would make all recipients of carer’s allowance eligible for the saving gateway. The issue was discussed in detail during the Bill’s previous stages in this place, and I am particularly grateful to my hon. Friends the Members for South Thanet (Dr. Ladyman) and for Leeds, East (Mr. Mudie) and the hon. Member for Taunton (Mr. Browne) for raising it. In response, the then Economic Secretary said that the Government were minded to table amendments in the other place—[Interruption.]
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Mr. Iain Duncan Smith (Chingford and Woodford Green) (Con)Conservative- Quote
- On a point of order, Mr. Deputy Speaker. I understand that the statement is now due to follow the business that we are considering. I wonder whether the Speaker has taken it into consideration that, during earlier points of order about the Government’s not coming to the House to discuss the nationalisation of a particular rail franchise and our having to wait for the statement to be made in the other place first, the Leader of the House was signalling to him, for all to see, that the statement would not be made at 7 o’clock, as he proposed, but at 5 o’clock. We had no statement at 5 or at 7 and we still await it. Could you also tell me, Mr. Deputy Speaker, whether, now that the Speaker has had time to read the transcripts from the “Today” programme, which I know he has in his possession, he or anyone in the Chair plans to make a clear criticism of the Government for their failure to come here before announcing a programme of nationalisation on the radio?
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- Sarah McCarthy-FryLabour
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- As I was saying, the Government intended to table amendments in the other place, and my noble Friend Lord Myners did that at the first opportunity. I should like again to place on record our thanks to all those with caring responsibilities. We will continue to do all we can to help and support them, and I am glad that we have been able to find a mechanism to do that while staying within our original policy objectives. As hon. Members know, the saving gateway is targeted at working age people on lower incomes. As the then Economic Secretary explained, carer’s allowance can be claimed by anyone aged 16 or older, as long as they meet the various requirements, and there is no upper age limit. Indeed, 375,000 of the 880,000 claimants are of pension age. Making everyone who is entitled to carer’s allowance eligible for the saving gateway would extend eligibility to a large number of people from outside our target group. We have therefore looked for a more targeted option. The amendments would make those receiving carer’s allowance eligible for the saving gateway, rather than everyone who is entitled to receive it. Even without the amendments, around 225,000 claimants of carer’s allowance would be eligible for the saving gateway through qualifying benefits. The amendments will add a further 300,000 carers to that number, taking the total to more than 500,000. I commend the amendments to the House.
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Mr. Mark Hoban (Fareham) (Con)Conservative- Quote
- As the Minister said, the issue has been discussed at length in the Commons. The Government’s late conversion to the cause may come as a surprise to those who took part in the debates in Committee, as the then Minister did not greet the probing amendments that were moved with any great enthusiasm. Indeed, she used some of the statistics that the Minister has now used as a reason not to extend the scheme to carers. That said, we should not be too churlish when the Government listen to the views of hon. Members in all parts of the House, so we welcome the measure. The only omission from the Minister’s remarks was any indication of the cost of extending eligibility to people in receipt of carer’s allowance. It would be helpful for the House to know the additional financial commitment that has been entered into as a consequence of the Government’s accepting the Lords amendment.
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Mr. Jeremy Browne (Taunton) (LD)Liberal Democrat- Quote
- I rise briefly to thank the Minister for accepting the amendment, which was tabled in my name in Committee. We support the overall principle of the Bill, which is to give people of working age on very low incomes greater opportunities and incentives to save, and the benefits that will flow from that. Our feeling was that carers as a group were worthy of consideration. I am therefore grateful to the Minister for slightly belatedly accepting the merits of that argument, which, as the hon. Member for Fareham (Mr. Hoban) said, it would be churlish not to recognise as a positive development. Although I am minded to support the amendments, because their origin is those that I and others put forward in Committee, I, too, would be curious to know their estimated financial costs. However, unless the amendments are prohibitive—I assume that they are not, because the Minister does not appear to regard them as such—we would be enthusiastic in supporting them.
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Mr. John Redwood (Wokingham) (Con)Conservative- Quote
- When we last considered the Bill, I asked the Minister to tell us what interest rate would be made available and how much good news there would be for savers under the scheme. Absolutely no information was forthcoming, so I hope that she will be able to supply it now that we are extending the scheme, because given the people to whom we are extending it, we want to ensure that it would be valuable to them and worth their attention. It is absolutely typical that such a proposal should come forward with no costing, no regulatory impact assessment and no comment from the Minister about why the scheme might take off and why it might help the people whom we would all like to help. I am afraid that, yet again, we are seeing an appallingly bad standard of work.
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Mr. John Gummer (Suffolk, Coastal) (Con)Conservative- Quote
- Can my right hon. Friend imagine any company on earth that would make a proposition without properly costing it and without the shareholders and the board understanding what they were letting themselves in for? Why are the Government totally unable to understand the basic rules of economics?
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- Mr. RedwoodConservative
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- I quite agree with my right hon. Friend. We would like the scheme to work, because we agree with the broad aim and we would like to assist people who could qualify under it, but throughout the process Ministers have been completely wooden. They will not tell us who will introduce the scheme, how much the fees and costs will be, what the interest rate would be if it were launched today or how much the amendment will cost, because they clearly do not know whether the scheme will be popular and take off. Indeed, how can they know that if they have done none of the homework on whether the scheme makes sense for the people concerned? Indeed, if the Government are not careful, they will be guilty of mis-selling, because one cannot come to a conclusion about whether the proposed scheme is a suitable savings scheme for people on low incomes and benefits unless one knows the answers to some of the questions that I and others have been putting. Therefore, at this late stage, can the Treasury and the Minister redeem themselves by giving the House some information so that we can willingly approve the scheme and know that it might do some good?
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- Sarah McCarthy-FryLabour
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- I am grateful for the comments of the Opposition Front-Bench spokesmen, who said that they thought that the Bill was a good measure. By my reading of Hansard, the idea was that we would find a mechanism to bring carers of working age into the scheme—and we believe that we have done so. I was asked how much the amendments will cost. We estimate that they will make an additional 305,000 people eligible for the saving gateway, which will cost about £4 million in 2012-13, falling to about £1 million in a steady state. That will not affect our overall estimates of the numbers eligible for the scheme or its costs. We have always said that we expect about 8 million people to be eligible for the saving gateway; previously, our exact estimate was £7.7 million, which the amendments will increase to £8 million. The change will not impact on the cost estimates of the scheme, which have been rounded to the nearest £10 million. Those therefore remain at £130 million in 2012-13, £110 million in 2013-14, £100 million in 2014-15 and £60 million in steady state. I hope that we can all agree that we have found a mechanism to bring carers of working age into the scheme, and I also hope that all will welcome that. Lords amendment 1 agreed to, with Commons privileges waived. Lords amendment 2 agreed to, with Commons privileges waived. Clause 4 Requirements relating to accounts
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- Sarah McCarthy-FryLabour
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- I beg to move, That this House agrees with Lords amendment 3.
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- Sarah McCarthy-FryLabour
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- The amendments achieve three separate things, which I shall set out in turn. First, Lords amendments 3, 4 and 5 relate to the maturity period of the saving gateway accounts—in other words, how long each account will last. As hon. Members will know, we intend to set the maturity period at two years or 24 months. These amendments would prevent regulations from setting a maturity period of less than 12 months. It was suggested in the other place that a maturity period of less than a year would not encourage saving, as it would not be long enough for saving gateway account holders to develop a strong savings habit.
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- Mr. HobanConservative
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- Given that the regulations are intended to have a maturity period of two years, why are the Government tabling amendments in the Lords to restrict that maturity period to 12 months? Why not have the primary and secondary legislation instead?
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- Sarah McCarthy-FryLabour
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- We cannot foresee a period in which a maturity period of less than 12 months would be desirable, which is why we are setting the bar at 12 months. That does not prevent the period from being longer. As I said, we envisage setting the maturity period at two years, but the regulations put the minimum bar at 12 months because we believe a lesser period is not sufficient to encourage the saving habit. Lords amendment 6 is intended to correct a minor error in drafting. The Bill provides that the Northern Ireland social security commissioner will hear certain saving gateway appeals on non-tax matters in Northern Ireland. Clause 25(7)(b) originally provided that a tribunal of three or more commissioners would fall within the Bill’s definition of a Northern Ireland social security commissioner. That would be unnecessarily restrictive in comparison with the position for appeals on comparable matters such as the child trust fund, where only two such commissioners are sufficient. The amendment would mean that only two were required, which would make the provision consistent with the relevant Northern Ireland social security legislation. Finally, Lords amendment 8 would increase parliamentary scrutiny of the use of the regulation-making powers provided by the Bill. As hon. Members may know, most of the delegated powers will be subject to the affirmative procedure on their first use, and the negative procedure on subsequent uses. As the Bill stands, there are four exceptions in which every use of the power will be subject to the affirmative procedure: the three delegated powers relating to eligibility for the saving gateway, and the power for regulations to set the match rate. As those delegated powers relate to central features of the gateway, it is right for any changes to be subject to full parliamentary scrutiny.
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- Mr. HobanConservative
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- I still do not quite understand why the Government have decided to specify in the Bill that the maturity period should be no less than 12 months, given that their intention from the outset has been for it to be two years and the Minister has confirmed that the regulation will provide for it to be two years. It will just add to the confusion if one period is specified in primary legislation and a different period is specified in secondary legislation. As was pointed out in Committee, one reason the maturity period is important is that it establishes a time during which someone with a saving gateway account will develop a saving culture. It was argued then that a reasonable period of maturity would give people time to develop the practice of putting money aside regularly. During the public evidence sessions that preceded detailed scrutiny of the Bill, Teresa Perchard of Citizens Advice supported a two-year period, and the Economic Secretary agreed when he was leading on the issue. We tabled an amendment to that effect in Committee, but, while accepting the strength of our argument, the then Minister was not very keen for any particular period to be specified in the Bill. It is perplexing that the Government have decided to specify a period, and that it is not the period that they want to be specified in secondary legislation. They seem willing to move some way in recognising the Opposition’s view, but not willing enough to go further, have the courage of their convictions and specify in the Bill what they believe to be the right period in the context of secondary legislation. I hope that, when she winds up this relatively short debate, the Minister will explain why she considers it appropriate for two different periods to be specified. As for Lords amendment 8, we are pleased that the Government have accepted the proposals that we made in Committee. We wanted further use of the regulation-making power to be subject to the affirmative rather than the negative procedure in three areas because of the impact on costs. We felt that changes relating to entitlement and maturity payments needed proper parliamentary scrutiny rather than being rushed through without proper debate in the House. I feel that it is important to protect taxpayers in that regard. In the House of Lords, my noble Friend Lady Noakes tabled amendments to extend the affirmative resolution to powers to set the monthly deposit limit, to set the maturity period, and to set the number of accounts that people could hold. They affect the cost of the scheme, and we are pleased that the Government eventually succumbed to pressure in the other place to reflect those changes. The Government are very keen to talk about democratic renewal and the role of the House of Commons, yet it appears that the only amendments they are prepared to accept are those made in the other place. If the Government are genuine in wanting to embrace the views and reflect the opinions of this House, they should accept more amendments tabled in this place when they are tabled, rather than waiting for pressure from the other place to get them to change their mind.
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- Mr. Jeremy BrowneLiberal Democrat
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- At the risk of sounding somewhat graceless, I, too, wish the Government had gone a little bit further and had done this with a little less reluctance, but having said that, I am pleased that the amendments are in place and that this degree of progress has been made. The Bill itself says very little. Anybody who picks up a copy from the Vote Office will not necessarily be very well informed about the nature of the scheme. There are 29 delegated powers in a Bill that has only 32 clauses. I will not give an exhaustive list as I did that in Committee, but the Government are, for example, able to do the following: change the rules governing the issuance of a notice of eligibility; change the rules governing the approved institutional criteria used by HMRC; limit the size of monthly deposits; decide the level of the maturity payment; and impose requirements relating to statements. There is a whole list of criteria that the House is being asked to nod through and to allow the Government to make those changes as they see fit at a later date. The fact is that those changes are substantial to the scheme. We do not have the ability we might wish to influence the details, as they are left out of the Bill. Having said that, some progress is clearly better than no progress. Lords amendment 8 asserts the use of the affirmative procedure to decide the maturity period, the definition of an eligible person, and the requirements for opening an account. That is definitely going in the right direction, because without proper discussion of such details in the House we would be asked to approve a shell of a proposal with very little meat inside it. It is, however, a shame that we are not being asked to vote for a Bill that has specific measures such as the 50p rate, the two-year maturity period and the £25 a month deposit limit. That is not treating the House as it should be treated. I am enthusiastic about the amendments as they are preferable to what existed before, but the Government could have gone further still.
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- Sarah McCarthy-FryLabour
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- I welcome the fact that the Front-Bench spokesmen of both main Opposition parties appear to welcome the amendments, and I hope they will support them. I think that the only point I need to come back to is the reason the maturity period in the Bill is not less than 12 months and the rest is in regulations. As I have said, we believe that less than 12 months would not represent saving, and that is why we are stating that minimum in the Bill. We want to leave flexibility for regulations to set the minimum period. Leaving that in secondary legislation provides the flexibility to alter that feature of the accounts if, for example, the experience of operating the national scheme suggested a different account length would better achieve the aims of the saving gateway. That is why we want to put that in regulations. Under Lords amendment 8, the maturity period would be subject to the affirmative procedure and to parliamentary scrutiny in this House. Lords amendment 3 agreed to. Lords amendments 4, 5 and 6 agreed to. Before Clause 26 Review and report to parliament
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- Sarah McCarthy-FryLabour
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- I beg to move, That this House agrees with Lords amendment 7. At various stages during the passage of the Bill, hon. Members and noble Lords made a case for a review of the saving gateway to be carried out in due course after the launch of the accounts. I know that the hon. Member for Fareham (Mr. Hoban) and the hon. Member for Taunton (Mr. Browne) spoke on this matter on Report. In response, Ministers in both Houses made clear the importance that they attach to a future review as a way of assessing the success of the saving gateway against the objectives that we have set for it. This amendment would impose a statutory requirement on Her Majesty’s Revenue and Customs to commission an independent review of the effect of the saving gateway. It would also set the time scale for the review and its publication, and specify that certain matters will be considered within it. The results and conclusions of the review would be set out in a report that had to be laid before Parliament. As hon. Members may be aware, independent evaluations of two saving gateway pilots were carried out by the Personal Finance Research Centre at Bristol university, the Institute for Fiscal Studies and Ipsos MORI, and we envisage following a similar model for this review. It will consider the effect of the scheme against the objectives that we have set for it: to kick-start a saving habit among working age people on lower incomes; and to promote engagement with mainstream financial services. Therefore, the matters addressed in subsections 1(a) to (d) of the proposed new clause directly relate to the development of a saving habit among account holders, account holders’ engagement with mainstream financial services and barriers to the opening of saving gateway accounts. In addition, subsection 1(e) would allow for other relevant matters to be considered as part of the review. I commend this amendment to the House.
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- Mr. HobanConservative
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- As the Minister has said, we have been calling for a review of the scheme’s effectiveness both in this place and in the other place. Let us be clear why such a review is important. We have supported this measure because we believe it is vital to encourage savings and to develop a savings culture among people on lower incomes in this country, and this scheme is aimed at improving that culture. It is, in many respects, a relatively generous scheme—it has a 50p matching rate—and we want to ensure that the taxpayers’ money that is being used to support the scheme is being spent wisely and effectively, and that taxpayers get a return from this scheme through the encouragement of a high level of savings among people on low incomes. The Bill was deficient when it first came before us because it did not contain a statutory requirement to conduct a review, and attempts were made both in this place and in the other place to amend that. To an extent, we welcome this amendment, but it contains gaps, two of which, in particular, were demonstrated in the amendment tabled in the other place by my noble Friend Baroness Noakes—I shall return to those in a moment. I am concerned that the report will be laid before this House only within seven years of “the coming into force of section 6.” During the intervening period a significant amount of taxpayers’ money will be spent supporting this scheme. I hope that the Government see the seven-year period not as a time scale within which the report will be brought before this House; I hope that they do not wait until the seventh anniversary and then report. The sooner we know how effective the scheme is, the better it will be. We will then be able to consider whether it is a good use of taxpayers’ money or whether changes need to be made to the matching payment, the maturity period or the range of eligibility to make it more effective in encouraging the savings culture. The first of the two areas omitted from the Government’s amendment but addressed in that of my noble Friend relates to take-up. The Government amendment talks about the effect of saving gateway accounts on attitudes to saving, the behavioural impact of the accounts, the involvement of people who use them with the institutions offering the financial services and the barriers to opening the accounts, but it does not mention take-up, whether the take-up rate is adequate and whether that rate should be improved. I understand that an annual report will be made on the number of people who open these accounts, in line with similar statistics produced on the child trust fund, but it would be helpful to have an independent review of the level of take-up and of whether that rate is sufficient to justify the existence of the saving gateway account. The Minister will point out that subsection (e) of the new clause includes the opportunity to add other areas to the review and I hope that she will confirm that she will ensure—should she be in a position to do so in seven years’ time—that the take-up rate would be included. The second area omitted is financial education. A series of pilots took place as part of the long evaluation of this idea, and they suggested that account opening should happen in conjunction with financial education. We are talking about a group of people who do not necessarily have bank accounts, and they may be sceptical about, or uncomfortable with, dealing with financial institutions. Support may be needed for people opening these accounts. If we are to encourage a savings culture, we need to provide incentives to save and accounts that people are happy to save in, and we must provide financial education in parallel with that, to persuade people of the long-term benefits of saving. I am disappointed that the Government have not taken the opportunity to include explicit reference to monitoring the financial education that is provided alongside the opening of the accounts. Perhaps the Minister can say whether financial education will be covered in the independent review and should be taken up under subsection (e). We have called for independent reviews of the system, so we will not oppose the amendment, but the Government could have thought more broadly about what the independent review will cover and have been more timely about when it will be laid before Parliament.
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- Mr. Jeremy BrowneLiberal Democrat
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- My party, for the reasons that have just been outlined by the hon. Member for Fareham (Mr. Hoban), supports this Bill, partly because it encourages self-reliance in people on very low incomes. It will encourage them to save in a way that gives them a greater stake in society and to interact with financial constitutions in a way that, in many cases, they do not feel able to do. Both of those objectives are laudable, and that is why we support the legislation. Even though there have been pilot studies, we have had to made educated guesses about how the system will work in practice. We cannot be certain, for example, that the 50p matching rate will not be excessive and, therefore, place too great a burden on the taxpayer in achieving the scheme’s objective. On the other hand, it might not be a sufficient inducement for people who will be encouraged to take it up. We do not know whether the two-year period will be successful. We do not know whether the maximum contribution is set at an appropriate level—too high or too low. We cannot be certain about the cost or the penetration of the scheme—the two are linked. We may wish to increase the inducements, because the people whom the scheme is meant to attract are not sufficiently attracted on the existing terms. Or it may be that the costs prove to be prohibitive and the Government wish to scale back the scheme in the future. It is important that the Minister makes a commitment that when this review comes to this House, it will be debated, not just noted. More importantly, the seven-year period is excessive. We will have at least two general elections between now and then. I do not mean to be unkind, but the Minister’s predecessor was in office for nine days, so while it is possible that she will be in post in seven years’ time, it is not unreasonable to expect some ministerial changes in the Treasury in that time. More importantly, we will have had more than enough time to review the issues that I have raised and for a reasonable opinion to be formed about the workability or otherwise of the legislation. Like the hon. Member for Fareham (Mr. Hoban), I would encourage the Government to think about the lifetime of a Parliament as being a reasonable scale. Four years would be an appropriate amount of time to make a reasonable assessment, would fit into a natural political cycle and would also be sufficient to gauge the success or otherwise of the scheme. As I have made the case previously for such a measure, like the hon. Member for Fareham we will not oppose the measure before us although it is not precisely that which we would have introduced had it been left in our hands. On that basis, and with those caveats, we are happy to support Lords amendment 7.
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- Sarah McCarthy-FryLabour
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- I welcome the support from both hon. Gentlemen for the amendment. Let me pick up on a couple of the points that were made. Both hon. Gentlemen made a point about the seven years. We must take into account the fact that any review of the effect of the saving gateways accounts will have to consider account holders’ attitudes and behaviour during the two years that the account will last and for a reasonable period afterwards. It would also be desirable for the research sample of participants to include both those people who opened their saving gateway account when the scheme was launched and those who opened theirs later, once the scheme was up and running. We also have to bear in mind that within that seven year period, the researchers must have appropriate time to prepare their conclusions and findings and HMRC and HM Treasury must have time to consider those findings carefully and to prepare a report. We must remember that that is the latest time at which a report can be published, not the earliest. If there are benefits to conducting and publishing the review earlier, the new clause provides sufficient flexibility for that to happen. The hon. Member for Fareham (Mr. Hoban) asked about take-up. My noble Friend Lord Myners announced in the other place that HMRC would be publishing data on the saving gateway at least annually. That will include data on the number of notices of eligibility issued by HMRC and the number of accounts opened, so take-up rates will be clear. The independent review can also consider that in the context of barriers to the opening of accounts under subsection (1)(d) of the new clause. Finally, on financial education, the advice, information and education available to people who are seeking to open an account or whose account is nearing maturity can also be considered by the review when it considers barriers to the opening of accounts and the effects of the scheme on participants’ saving behaviour and their involvement with financial institutions. If a more detailed focus on advice and information on the saving gateway is considered appropriate, the new clause has the flexibility to allow that as part of the review. I hope that we will be able to agree to Lords amendment 7. Lords amendment 7 agreed to. Lords amendment 8 agreed to.
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