28 Oct 2005 : Column 519

House of Commons

Friday 28 October 2005

The House met at half-past Nine o'clock


The Chairman of Ways and Means took the Chair as Deputy Speaker, pursuant to the Standing Order.

[Sir Alan Haselhurst in the Chair]


Council Tax

9.33 pm

Mr. Tim Boswell (Daventry) (Con): I have the honour to present to the House a petition on behalf of the IsItFair campaign that has been signed by more than 200 of my constituents, including Rev. Alfred Ridley.

The petitions states:

To lie upon the Table.

9.34 am

Mr. Brian Binley (Northampton, South) (Con): Like my hon. Friend the Member for Daventry (Mr. Boswell), my colleague in a neighbouring constituency, I, too, would like to present a petition on behalf of the IsItFair campaign:

To lie upon the Table.

9.35 am

Mr. Eric Forth (Bromley and Chislehurst) (Con): On a point of order, Mr. Deputy Speaker. I beg to move, That the House sit in private.

Question put forthwith, pursuant to Standing Order No. 163 (Motions to sit in private):—

The House divided: Ayes 2, Noes 55.
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Division No. 72
[9.35 am


Evans, Mr. Nigel
Forth, rh Mr. Eric

Tellers for the Ayes:

Mr. Philip Hollobone and
David T.C. Davies


Alexander, rh Mr. Douglas
Anderson, Mr. David
Atkinson, Mr. Peter
Baird, Vera
Baldry, Tony
Binley, Mr. Brian
Bone, Mr. Peter
Boswell, Mr. Tim
Brennan, Kevin
Brooke, Annette
Brown, Lyn
Butterfill, Sir John
Cawsey, Mr. Ian
Clark, Greg
Clifton-Brown, Mr. Geoffrey
Creagh, Mary
Davies, Philip
Dismore, Mr. Andrew
Ellwood, Mr. Tobias
Francois, Mr. Mark
Goodman, Mr. Paul
Goodwill, Mr. Robert
Greenway, Mr. John
Griffith, Nia
Gwynne, Andrew
Harper, Mr. Mark
Heathcoat-Amory, rh Mr. David
Heppell, Mr. John
Hoban, Mr. Mark
Hurd, Mr. Nick
Johnson, Ms Diana R.
Keeley, Barbara
Laws, Mr. David
Maclean, rh David
Maples, Mr. John
McCarthy-Fry, Sarah
McFadden, Mr. Pat
McIntosh, Miss Anne
Moffatt, Laura
Morden, Jessica
Munn, Meg
Prisk, Mr. Mark
Randall, Mr. John
Rifkind, rh Sir Malcolm
Skinner, Mr. Dennis
Smith, Ms Angela C. (Sheffield, Hillsborough)
Snelgrove, Anne
Taylor, Ms Dari
Timms, Mr. Stephen
Vaizey, Mr. Edward
Walter, Mr. Robert
Waltho, Lynda
Waterson, Mr. Nigel
Williams, Mark
Winterton, Ms Rosie

Tellers for the Noes:

Justine Greening and
John Penrose

Question accordingly negatived.

28 Oct 2005 : Column 520

28 Oct 2005 : Column 521

Orders of the Day

Rights of Savers Bill

Order for Second Reading read.

9.46 am

Sir Malcolm Rifkind (Kensington and Chelsea) (Con): I beg to move, That the Bill be now read a Second time.

I am grateful to the House for the fact that the outside world will be given the opportunity to hear this important debate. It is a great privilege to have the opportunity to introduce the Bill. This is a somewhat unusual experience for me, in two respects. It is the first time since I first became a Member of the House a long time ago that I have been involved in promoting a private Member's Bill, and I must confess that it is the first time since 1979 that I have spoken from the Back Benches. That creates two problems for me: not only do I have no real knowledge of what the Minister might say in response to my Bill, but I am not even entirely certain what the shadow Minister, my hon. Friend the Member for Eastbourne (Mr. Waterson), is likely to say. I am at least heartened by the fact that his name appears as a sponsor of the Bill, so his broad sympathy is more likely than not.

I am delighted that the right hon. Member for Birkenhead (Mr. Field), who is the world's greatest expert on savings and pensions matters, has expressly said to me that he would like to be associated with the Bill. I am therefore particularly pleased that it will have bipartisan support. I hope that that will have the necessary psychological and political impact on the Minister and on the Government.

Before I turn to the details of the Bill, let us consider the wider context. We are all aware of the crisis in pensions—the problems for defined-benefit pension schemes, many pensioners falling into serious poverty and so forth—but linked to it and equally important has been the crisis in savings. It is primarily the savings side that my remarks will address, but the two are intimately linked. It is almost impossible to exaggerate the seriousness of what has happened, particularly in the United Kingdom, as regards the habit of saving.

Back in 1997, an average of something like 9 or 10 per cent. of household income was saved each year. That was a very good ratio. The figure has since fallen to about 5.5 per cent.—almost half of what it was. Before anyone suggests that it is a worldwide phenomenon because of what has happened with investments, equities and so on, I should point out that the international comparisons are not particularly attractive from the United Kingdom's point of view. Our savings ratio is down to 5.5 per cent; in Italy it is 9.5 per cent., in Japan 9.6 per cent., in Germany 9.6 per cent., in France 11.1 per cent. and in Canada 13.6 per cent. We have a particular problem in the United Kingdom, and, although the Government are entitled to say that the crisis in both savings and pensions is partially due to demographic and other reasons beyond their control, they cannot avoid all responsibility.

The Institute of Chartered Accountants has said that the single most important factor that has destroyed confidence in savings was the Chancellor's decision at
28 Oct 2005 : Column 522
the very beginning of this Government's tenure to withdraw tax relief on pension fund dividends, which not only hurt the pension funds, but sent a signal to the wider saving public that it was no longer as attractive, agreeable or important to indulge in saving.

The Adair Turner report on pensions and savings will come out in November, and before I discuss the details of the Bill, it is important to address one of the central issues that is already part of the wider public debate. The Turner report has been asked to consider the option of compulsion. Given that the public have chosen to stop saving to some significant extent, the Government appear willing to contemplate compelling them to do so.

A move towards compulsion is not only unjustified but would remove the possibility of a national consensus on the way forward on savings. Compelling people to save raises an issue of principle. The Turner committee has been asked to examine what people do with their post-tax income to influence their level of comfort in retirement, and the state cannot make that decision on people's behalf. It would be wrong in principle for the state to take powers to compel people to save to a degree that they would not otherwise choose, because that would imply that the state's priorities are far more important than those of millions of families up and down the country, who must decide their relative priorities throughout their working lives. The first objection is one of principle.

The second objection is that compulsion would be another form of taxation. Digby Jones of the CBI has said that compulsion would be another stealth tax, and he is right. Like national insurance, compulsory saving would not include a choice, so it would be taxation by another name.

The third objection is that compulsory saving would sometimes compel people to act against their economic interests, because there are circumstances in which it is extremely foolish to save. For example, if one takes out a very small occupational pension scheme, one loses one's entitlement to pension credit. What is the point of making that change if one's net standard of living is not improved as a consequence? Compulsory saving would compel some people to act against their own fundamental interest.

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