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Mr. Robinson: I cannot give advice to anyone on these matters, but I can tell the hon. Gentleman that we have had a warm welcome from his organisation. I shall not embarrass him by reading the letter that I have in my pocket from his chairman, a most distinguished City figure, congratulating us on our consultation process. Indeed, the chairman of Autif said that it was a model of consultation. It did not always feel like that from my side of the--

Mr. St. Aubyn rose--

Mr. Robinson: If the hon. Gentleman wants to make a point on the amendments, I give way to him.

Mr. St. Aubyn: Is the Minister telling us that the process is a model of consultation because he listened to Conservative representations to lift the cap on the size of ISAs?

Mr. Robinson: It was a model of consultation because we listened and acted on what we heard, and because the Government are not afraid to consult, to change their mind and to improve things in the light of consultation. That is what it is all about. Two or three things came out of the consultative phase--nothing that relates to the amendments, or to much that Conservative Members have said about them today.

The sole purpose of the proposals was to re-balance the system within the existing tax costs and, in doing so, to encourage those who do not save, to save. There is, therefore, no point in focusing on 55-year-olds and over any more than on anyone else. We are focusing on the half of the population who make no savings. That is why

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it is so encouraging that Schroder, Safeway, Halifax, Pepma, M & G, Fidelity, Virgin and Barclays, to name but a few, say that they will offer the ISA programme--the cash ISA in particular. If we are to make a breakthrough in savings, it must be through the cash ISA, and at £1,000 a year, with £2,000 extra in the first year if it is taken up in that way, it is already at a more than adequate level at which to target those who do not save.

Mr. Loughton rose--

Mr. Robinson: I shall give way once more, but I must make progress.

Mr. Loughton: On a technical point, will the Paymaster General admit that the policy that a 55-year-old could buy with his insurance money within an ISA would be substantially less attractive than the amount that a25 or 35-year-old could buy because of his age, health and so on, so there is good reason for giving him extra favourable treatment later in life?

Mr. Robinson: Conservative Members do not seem to want to take the point that we want to encourage the half of the population who do not save at all to save. That is the sole criterion; that is what we are trying to encourage. The hon. Gentleman, unlike the hon. Member for Guildford, welcomed the ISA--they might decide where they stand on this matter--and raised a raft of valid technical points. I assure him that the draft regulations will be published next month, and that we shall get down to the hard work that is needed in that regard. I can reassure him on one point now, however, and that is that the TESSAs to be transferred will be capital only, as was the case, as he will readily concede, when the Conservatives were in government. That is what they did in rolling over TESSAs.

Amendment No. 8 deals with charges. We can see no point in the official Opposition's proposal that costs should be limited to the average of those currently charged for administering PEPs. We are trying to drive down costs, and we are driving them down; that is the point of benchmarking. However, it is a free market, so if people want to offer a complicated product, it is up to them, and it is up to sophisticated investors who would be tempted by it to decide whether to take it. To be prescriptive in that way runs so counter to the Opposition's usual thinking that I am surprised by the amendment.

For all those reasons--

Mr. St. Aubyn: Will the Paymaster General give way?

Mr. Robinson: I give way one last time.

Mr. St. Aubyn: The Paymaster General has told us that he believes in a free market in charges. Will he explain why, under the Bill, those who have PEPs--which, as he says, will now be frozen--will be unable to switch their frozen PEP to another fund manager, to allow competition to continue on charges for those on-going PEPs?

Mr. Robinson: We have arranged that a very good system of competition will apply to the ISA product, and

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that is the important benefit on which we must concentrate, which seems to be lost on Conservative Members.

I have done my best to explain our reasoned opposition to these interlinking amendments, which have rightly been taken together, and I must advise the Committee to resist them.

Mr. Michael Fallon (Sevenoaks): First, I should declare that I, too, have a PEP, but I have not received the glossy leaflet that the Financial Secretary has had. Perhaps we should christen her bank the crawling bank--the bank that likes to say, "Yes, yes". I look forward to hearing from my PEP provider in similar vein.

We tabled amendment No. 8 simply because it is important to get some control of the administrative costs of what the Paymaster General, I notice, now calls the RSS--his revised savings scheme. I do not know whether he is officially christening it in that way. As he is aware, the PEP rules run to more than 100 pages. They were composed under an efficient, benevolent Government. What is the point of having a new set--another 100 pages--of administrative rules for the ISA?

Would it not be better if the Paymaster General accepted that the Government have got all this wrong? Why should not the ISA simply be a PEP 2, or why did he not allow an instant-access TESSA? If he is going ahead with this bureaucratic new savings account, it is important that we reduce costs.

We have other concerns about costs, which is why we want a statutory cap on them. First, will the ISA lie inside or outside the provisions of the Financial Services Act 1986? Perhaps the Paymaster General will help us on that point. If the ISA lies outside the 1986 Act, there will, presumably, have to be a compensation scheme if ISAs are mis-sold, and those who are inside the provisions of the 1986 Act will presumably have to fund such a scheme. Will advisers who come under the provisions of the 1986 Act be allowed to retail ISAs under the same rules as non-regulated retailers, or will the Paymaster General regulate covertly those who retail ISAs generally? We have heard in speech after speech on financial services and from the Paymaster General that the Government want to drive down costs. The best way in which to do that is to put a statutory cap in the Bill, which is the purpose of amendment No. 8.

8 pm

We had a brief but revealing debate on amendments Nos. 5 and 7. Almost nothing in the Bill does anything for pensioners. The Red Book devotes only six lines to them, three of which repeat part of the pre-Budget report. We knew that the Bill ignored the interests of pensioners, but this is the first time since the Budget that pensioners have been attacked.

In an extraordinary speech, the hon. Member for Northampton, North (Ms Keeble) described the pensioners' amendment as mean minded. Was she describing Saga as mean minded? Was she describing those who want to protect the interests of older pensioners who have never saved before as mean minded? If she examines her speech in the cold light of tomorrow, she will see its illogicality. She rightly went on to argue that she wanted ISAs to be most attractive to those who have no other savings. To achieve that, the ISA must be right for older new savers as well as for younger new savers.

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Our amendment would not reduce the attractiveness of the ISA for younger savers; it would deal with the position of those who are getting on and are over 55--the hon. Lady is one of the younger members of the Committee--who will not be able to take the same advantage of an ISA as she might. The life assurance limit of £1,000 offers far less protection for a 55-year-old than for a 35-year-old. The account would be held for a briefer period, so people of that age would have less time to ride out market fluctuations and build up an account that would serve them well in retirement.

The amendment would ensure that, within the annual limit that is being imposed, the proportion that goes into life assurance could be greater for older people than is prescribed by the Bill.

Ms Keeble: Does the hon. Gentleman accept that I referred to over-55s in the top decile of income earners?

Mr. Fallon: Some over-55s will be in the top decile of income earners, but we are both discussing helping those with no savings. We must encourage some of the people in that group to take out an ISA, which is why the life assurance limit must not discriminate against people who happen to be 55 or over. I hope that the hon. Lady will support us on the amendment.

The Paymaster General should reconsider his view on the amendment, for three reasons. First, he will be 60 next month, so he has an interest in it. He may not have had time to concentrate on his life assurance policy, among his other investments and financial affairs. We want to ensure that he is not disadvantaged against other hon. Members, so I hope that, for his own sake, he will reconsider and speak up for pensioners.

Secondly, the Paymaster General has repeatedly said that he will listen. The £1,000 limit is not in the Bill; like almost every other matter that we are debating, it will be dealt with in regulations. I hope that he is prepared to reconsider, because those who are getting on in life will not be able to take the same advantage of the £1,000 limit as those who are younger.

Thirdly, the Paymaster General has listened before, which is why we hope for a change of view. The previous time that he faced us over the Dispatch Box, he was still defending the £50,000 limit. On the surface, that limit has disappeared. Other aspects of the ISA have gone as well--we have not heard much of the proposed annual raffle--but the internal limits remain, and they deeply discriminate against the over-55s. For those reasons, I invite the Committee to support the amendment.

Question put, That the amendment be made:--

The Committee divided: Ayes 118, Noes 275.

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