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Madam Deputy Speaker (Sylvia Heal): Order. I wonder whether the hon. Gentleman might return a little more to the subject of debate.
Mr. Robathan: Of course, Madam Deputy Speaker. I am trying to establish what young people of 18 want to do with their money, and I do not blame them for wanting to do such things. When I was 18, I wanted to travel, and I suspect that the same is true of the Financial Secretary and others. It is travelling to exotic parts with other young people that makes being young fun. We see that in the culture of gap-year students and of backpackers, and I do not blame them.
Mr. Michael Jabez Foster: Would it not be a good idea to give young people a choice? At the moment, if they have no cash they have no choice.
Mr. Robathan: We are all in favour of choice, but is the hon. Gentleman suggesting that young people should be able to say, "Can you give me some money, as I want to go on holiday?" If so, I doubt whether the Minister would back it. In a funny sort of way, however, that is effectively what the Bill proposes.
I applaud the intention of giving small amounts, but I do not believe that it will work to encourage savings. I suggest that matching funds are what really encourage savings. If a young person—or their parents—puts aside £100 and the Government match it with a further £100, that is truly rewarding actions and encouraging people to take a prudent look at life. We could encourage savings by not taxing pensions in the way that the Government have taxed them. What message does that send to people who have put some money aside?
We could also encourage savings by not having so many means-tested benefits. I am sure that I am not the only Member of Parliament whose constituents include pensioners who complain at surgeries that their savings count against them. They might say that they have a small pension or have saved £5,000—soon the threshold is to be £6,001—so they cannot get the minimum income guarantee or the benefits that they would otherwise receive. Many people rightly complain about that. The Government have discouraged people from making small savings.
What message does the Bill send out about savings? I suggest that it will turn people against the savings culture. The Government have discouraged savings and I understand that the savings ratio has halved under the Government and is now only 4.5 per cent. compared with 9 per cent. in 1997—[Interruption.] I am advised that it was 10 per cent.
The Bill will not address the problem of low savings, which is why it amounts to just a gimmick or stunt—albeit perhaps a not very expensive one. My hon. Friend the Member for Tatton suggested that it could have something to do with the fact that the vouchers will arrive shortly before the next general election. It seems to me to be an expensive way of giving back to some taxpayers a little of what the Government took from them in the first place.
6.41 pm
Mr. David Cameron (Witney) (Con): I am grateful for the opportunity to contribute to the debate and pleased to follow my hon. Friend the Member for Blaby (Mr. Robathan). I thought that he was perhaps a little tough on the Government. He is in favour of saving and I am in favour of encouraging it. He is probably looking more towards the lifetime savings product. Perhaps that could be done better than through the Bill, but if the Government come up with a simple and neat way of encouraging saving for young people, we should support it tonight.
I draw attention to my entry in the Register of Members' Interests. As my hon. Friend the Member for Tatton (Mr. Osborne) implied, it is important to declare that my wife has a baby on the way in February, so if the vote goes the right way tonight, I shall obviously be a beneficiary. I hope, in passing, that my paternity leave will last a little longer that that of my hon. Friend the Member for Buckingham (Mr. Bercow). He was in his place earlier today, just nine days after the great event, and made one of his very good interventions. We also have a son, Ivan, who was born in April 2002, so sadly he is going to miss the cut—though I shall return to him later.
Bob Spink: No, he will receive it.
Mr. Cameron: No. September 2002 is, I believe, the cut-off date.
My hon. Friend the Member for Tatton introduced our position clearly. We believe that saving is a good thing and that encouraging saving—if done simply—is a proper aim for the Government, as the Minister set out. Vitally, we believe that encouraging people to build up assets gives them independence, freedom and the ability to make choices for themselves rather than being too reliant on the state. As my hon. Friend said, the privatisations, council house sales and many other policies of the last Conservative Government did spread the ownership of assets, which is to be encouraged.
I do not want to be churlish—indeed, I want to avoid some of the churlishness that we heard from Liberal Back Benchers—but the Government have to examine the backdrop to the Bill. As my hon. Friend the Member for Blaby said, the Government did much to discourage savings. We have had 60 tax increases and advance corporation tax changes that sucked money out of people's pension funds. We have seen an enormous increase in means-testing. If they do not own their own home, a couple now have to save £180,000 to avoid a means test on becoming a pensioner. There are still anti-saving taxes such as inheritance tax, which bites far too early on, and the capital gains tax regime, though reduced and reformed, is hideously complex. That too discourages saving.
Instead of a broader, more sweeping approach, we have a range of small initiatives. I agreed with the hon. Member for Yeovil (Mr. Laws) that, in general, we should be promoting simplification, tax reduction and encouragement of independence. Again, in general, I fear that the Government are moving in the opposite direction. Nevertheless, it would be churlish not to welcome a relatively simple scheme that provides people with an opportunity to build up savings. As the hon.
Member for Dumbarton (Mr. McFall) said, the need is quite clear when 35 per cent. of parents with children under 15 save nothing and a further 26 per cent. save only occasionally.I have four small suggestions and one bigger one about how to improve the Bill. The first, as I mentioned in an intervention, is about children in care. They do not receive child benefit, but they will get child trust funds. As the Bill stands, however, no one is going to contribute on their behalf. Such children have the toughest start in life, with 18 years in care. The state acts in loco parentis, so it could contribute by using the child benefit that would otherwise be paid. The money could be put into the child trust fund so that when the children came out of care at 18, they would have some money to give them a decent start. If not, these children will be greatly disadvantaged by comparison with others. I hope that the Minister will reflect seriously on that point, which my hon. Friend the Member for Tatton promised to debate further in Committee.
Mr. Dawson: I commend the hon. Gentleman for that first-class suggestion. Does he agree that we often denigrate and overlook the potential and abilities of young people on leaving care? In fact, there could be no more important group to encourage into an entrepreneurial future.
Mr. Cameron: Absolutely. It is good that we have secured agreement on both sides of the House. The more hon. Members we can encourage to agree, the more pressure we can exert on the Minister to carry out this reform, which would not be too expensive and would give some of the most disadvantaged people in our society a better start in life.
My second point is means-testing. I know that it is a simple idea, but it is worth saying again that means-testing discourages saving. The Minister should have that stencilled on her desk. In my earlier intervention, I pointed out that a family on £13,230 would get the £500 voucher for their child while one on £13, 231 would get only £250. The Minister said that she could see the logic behind my argument that that might discourage saving. The logic is simple: someone who puts money aside and has some income from savings could well be placed beyond the threshold. The Chancellor now goes over more thresholds than Zsa-Zsa Gabor: there are thresholds all over the place. If people save a bit to have a little more money, they could be denied a benefit. That does put people off saving.
Means-testing applies to the child trust fund in two ways. The first is, as I have already mentioned, on the way in, where either £250 or £500 is to be provided. What do we say to families who are just above the threshold? What message does it send to them? There is also a concern, which was expressed to the Treasury Committee by the National Consumer Council, that companies selling these products might use the means-tested additional endowment as a signal and decide that it is better to market to the family with the £250 rather than the £500 vouchers.
Mr. Cameron: The Minister shakes her head, but the National Consumer Council, which is a serious
organisation, was concerned about that point, which provides another reason why means-testing is unwelcome.
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