| Previous Section | Index | Home Page |
We on the Conservative Benches recognise that the Government want the Bill to have in-built flexibilities, but it is crucial that Parliament should know whether the Bill is a success. Amendment 13 goes to the heart of that. It is right for Parliament to know whether the Bill is working. There is a need for a proper debate. There has been much discussion about eligibility, including on
Second Reading and in Committee, and even already this afternoon. There was also quite a lot of discussion about the appropriate financial limit and, I recall, some probing questions from my hon. Friend the Member for Broxbourne (Mr. Walker) in the witness sessions of the Public Bill Committee. I would ask that amendment 13 be supported, because it would introduce a welcome element of report-back on a central part of the success criteria of the Bill.
The Economic Secretary to the Treasury (Ian Pearson): Let me begin by adding my condolences to those expressed by other right hon. and hon. Members to David Cameron and his wife on their tragic loss.
The amendments in this group cover three areas, relating to eligibility and the notices of eligibility. Amendments 11 and 12, which the hon. Member for Fareham (Mr. Hoban) covered, deal with the circumstances in which a person has ceased to be an eligible person but has not been issued with a notice of eligibility, and they seek to ensure that such a person will be sent a notice. We discussed that matter in Committee, as the hon. Gentleman mentioned, and I have since written to explain and clarify the position. The purpose of clause 1(3)(b) is to allow the commissioners for Her Majesty’s Revenue and Customs to issue a notice of eligibility to a person who is not an eligible person on that date, but who was eligible for the scheme at an earlier date as determined by them. We have now got to the bottom of the matter. People will be sent a notice of eligibility automatically. Therefore, amendments 11 and 12 are not needed, because the issue is already covered in the Bill.
Amendments 3 and 4 relate to eligibility for the scheme. As hon. Members will know, the saving gateway is targeted at people of working age on lower incomes. The hon. Gentleman’s amendments seek to ensure that people in that group who are not entitled to one of the qualifying benefits and tax credits listed in the Bill would still be eligible for a saving gateway account. We have carefully considered the best way of determining eligibility for the saving gateway, including whether it should be based on a means test or on passporting from benefits and tax credits. Again, we rehearsed some of those arguments in Committee.
We believe that passporting is the most simple and effective method available for determining saving gateway eligibility. In particular, passporting will mean that people will not be required to fill out a form or complete a means test to prove that they are eligible for the saving gateway. Instead, they can automatically be sent a notice of eligibility. We also believe that the majority of our target group—working-age people on lower incomes—will be eligible for the saving gateway through the system of passporting set out in the Bill. We expect about 8 million people to be eligible.
A number of hon. Members asked about the specific numbers who might be included if amendments 3 and 4 were accepted. The best figures that we have available are based on taking those on low income to be individuals with incomes of up to £11,000 and couples with incomes of up to £16,000, which is approximately in line with the highest incomes of those claiming one of the qualifying
benefits and tax credits. Using that as our yardstick, we estimate that around 4.5 million people of working age on lower incomes will currently not be eligible for the saving gateway through passporting.
However, more than half that number—2.7 million—are eligible for one of the qualifying benefits and tax credits; they just have not claimed them. An important issue of take-up is involved. We are actually talking about 1.8 million people who would not be eligible for those credits who, if they could claim them, could open a saving gateway account. However, this is of course a particular point in time. Many of those of working age who are on a lower income but are not eligible for one of the qualifying benefits and tax credits are likely to become eligible for a saving gateway at some point in their lives. That is an important point.
The amendments would introduce a means test alongside passporting. We have carefully considered that option, too. I accept that it would give some additional people a way of accessing the saving gateway, but it would also introduce extra complexity and costs, and we do not believe that they would be proportionate. First, there would be extra costs for HMRC, estimated at about £2.5 million a year and reducing to about £1 million a year in a steady state. Secondly, there would also be an increased compliance risk in operating a means test, as individuals would be allowed to open a saving gateway account without having previously been through Department for Work and Pensions and HMRC checks to establish their eligibility for other benefits or tax credits. Inevitably, some accounts would be opened but would subsequently have to be closed, in cases where people who would not otherwise have been eligible had mis-stated their income. That would be burdensome for providers of saving gateway accounts.
Thirdly, having two methods of determining eligibility for the saving gateway could be confusing and would certainly add complexity to the system. Some people who are eligible through passporting may think that a means test was required and be put off applying, for example. There are therefore several downsides to introducing a means test alongside passporting. It is also important to remember that although some working-age people on lower incomes may not be eligible for those qualifying benefits or tax credits at a particular point in time, people’s circumstances change. For many people, therefore, it will not be a case of missing out on eligibility; rather, it might be one of having to wait until they qualify. Also, people will be able to have only one saving gateway account in their lifetimes in any case.
Members of the Public Bill Committee will remember that the experts who gave evidence were positive about the eligibility criteria and the approach that the Government have adopted. Citizens Advice, for example, compared the system of passporting with the alternative, which Teresa Perchard said was
“an expensive system of targeting, recruitment and application,”
“load costs on to the accounts and will also be a barrier to take-up.”
“If the intention is to attract people to save for the first time in their lives, or in their family’s history, the Government have come up with an approach that gets the balance right.” ——[ Official Report, Saving Gateway Accounts Public Bill Committee, 27 January 2009; c. 7, Q15.]
I appreciate the point that the hon. Member for Fareham has made. Indeed, I have a lot of sympathy with what he has said, because we want people on low incomes to get the savings habit. However, there are a number of practical downsides to introducing a means test alongside the approach of simple passporting, which is why we have taken the decisions that we have.
The last point that was raised on eligibility related to whether people would be eligible at the age of 16 or even earlier. I want to make it clear that, in using a passporting system, we will be depending on the eligibility criteria for the underlying benefits. Some of those will have an age limit of 16; others might have other age limits. However, we are not doing anything in this legislation to change the age limits.
Finally, I will deal with amendment 13. I agree with the hon. Member for Fareham that the saving gateway should be carefully evaluated and monitored. However, I do not agree that it would be appropriate to set out in the Bill an information requirement of the type that he suggests. Similar legislation, such as that relating to individual savings accounts, contains no such reporting requirement. However, as hon. Members may be aware, HMRC publishes details annually on individual savings accounts subscriptions and valuations, as well as a more detailed distributional analysis of the scheme. A similar approach might well be appropriate for the saving gateway; that will need to be considered in due course. However, we do not believe that it is appropriate to set down in the Bill an inflexible commitment to publish certain data.
As for the data that the amendment would require, I recognise that they might allow some basic calculations to be made about the take-up of the accounts or the coverage of the scheme. At best, however, they could give only a partial evaluation of the scheme’s success, against measures such as the take-up of accounts. As hon. Members will appreciate, our objectives for the scheme are far broader than could be encompassed by the metrics that the hon. Gentleman proposes. We could not assess the success of the scheme purely against those factors, because a broader range of factors than those detailed in his amendment will need to be considered. I therefore hope that he will not press it to a vote. I assure him and the House that we want to ensure that information will be made available and that the saving gateway scheme will be properly monitored and evaluated.
My hon. Friend the Member for South Thanet (Dr. Ladyman) asked about the carer’s allowance. I was going to address that matter on Third Reading, but I am happy to confirm that I am certainly minded to table an amendment for consideration in the other place that would ensure that people of working age in receipt of carer’s allowance should be able to qualify for opening a saving gateway account. It is my understanding that the cost involved would be about £5 million in 2012-13, and a few million in subsequent years, but based on our discussions in Committee and on further reflections and discussions with other groups, I believe that extending the qualifying benefit in that way would be a good thing to do. I hope to be able to table that amendment at a subsequent stage.
Dr. Ladyman:
I am grateful to my hon. Friend for those comments, and I am glad that I was able to get back into the Chamber in time to hear them. When
Ministers show themselves to be open minded and genuinely reasonable, we ought to put on record how grateful we are to them. I should therefore like to record my thanks to my hon. Friend, and I am sure the thanks of all those carers who will get a positive benefit from the opportunity of having a saving gateway account, assuming that the Lords and then this House agree to his amendment. I thank him very much.
Ian Pearson: I welcome my hon. Friend’s comments. It is right that the Government should always be open to listening to arguments, and when we find good, persuasive arguments, we ought to respond to them. That is what I have tried to do here.
I have listened to the arguments on amendments 11 and 12, which I think are unnecessary, and I hope that the hon. Member for Fareham accepts that. On his amendments 3 and 4, I have a lot of sympathy with wanting to extend the target group, but I do not want to introduce a means test alongside a simple passporting system. We have a good basis for proceeding as we are at the moment. There is a strong case for encouraging greater take-up of qualifying benefits, and that has been an objective of the Government. We will need to continue to persuade people who are entitled to claim benefits actually to do so, and then to go on to open a saving gateway account.
1.15 pm
I appreciate the probing way in which the hon. Gentleman spoke to amendment 13. It is right that we should monitor and evaluate the saving gateway account. It is also right that we should provide sufficient information to people. We will do that, but I do not think that doing so in the way that he has specified needs to be put in the Bill. That is not the normal way in which we do things. I therefore hope that he will not press his amendments to a vote.
Mr. Hoban: I thank the Minister for the way in which he responded to the amendments, and for his suggestion that an amendment will be tabled in the other place to include those in receipt of carer’s allowance, which demonstrates the Government’s ability to listen to proposals made in Committee.
I am pleased that the girl guides of South Thanet did not detain the hon. Member for South Thanet (Dr. Ladyman) for much longer; otherwise he might have missed hearing about that concession. I am sure that a girl guides badge is winging its way to the hon. Gentleman for being punctual and timely in his appearances, both in and outside the Chamber.
I am pleased that the Minister put it on record that clause 1(3)(b) covers the circumstances that we debated in Committee. It was not clear what circumstances the subsection applied to, so it is useful that he made it clear that it applies to a situation in which people cease to be eligible for qualifying benefits between the times at which the notices are sent out.
On amendments 3 and 4, the Minister helpfully set out the scale of the challenge that we face. He said that 8 million people will be eligible by virtue of qualifying for the benefits in question, but that there were 4.3 million people with incomes of less than £11,000 for a single person or £16,000 for a couple—
Ian Pearson: It was 4.5 million.
Mr. Hoban: I will come back to the Minister’s 4.5 million, because his maths did not quite add up. I had a figure of 4.5 million as well, but he then said that 1.8 million people would not be eligible and that 2.7 million were not taking the benefits up. There are 12.5 million people who would qualify for the saving gateway account on the basis of their income or their eligibility for benefits, and half of them are effectively excluded because they do not take up their benefits. There are 4.3 million on low income who might qualify if a means-tested scheme were introduced, and 8 million are eligible by virtue of claiming the qualifying benefits. So there is a large number of people on a low income to whom the scheme will not be relevant at the moment.
The hon. Member for Taunton (Mr. Browne) mentioned the tension between those who are on benefits and those who are not. This topic crops up in our surgeries and our correspondence. People ask, “Why are they entitled to that when they are on benefit?” and “Why aren’t I entitled to it?” We need to consider the equity involved, and to get the balance right.
Ian Pearson: I just want to be clear about the numbers of people involved. Our estimate is that 8 million people will qualify for a saving gateway account. We estimate that about 4.5 million working-age people on lower incomes will not qualify through passporting, 2.7 million of whom would qualify if they decided to take up the qualifying benefits. My suggestion is that if they are not at the moment taking up qualifying benefits to which they are entitled, they might not want to fill in a means test. That leaves out 1.8 million people, who represent a real issue. We would like to provide assistance to them, just as we would like the 2.7 million people to get the benefits to which they are entitled and to consider opening a saving gateway account. I hope that this intervention has provided some information so that we are all talking about the same numbers.
Mr. Hoban: Indeed, I was coming on to the issue of the 2.7 million people who are eligible to claim those benefits but do not take them up. It is important to take that into account as we look to any extension of the scheme. As the hon. Member for Taunton (Mr. Browne) said, there is a tension resulting from differences in perceived levels of entitlement. However, if 2.7 million people are eligible to take up these benefits but do not do so, I share the Minister’s view that they are unlikely to go for a different form of means-testing to open a saving gateway account. Our debate on numbers has been helpful, because it has shown the scale of the problem. The additional costs that would be incurred by having to set up a means-testing scheme lead one to question whether there is sufficient merit behind the argument to extend the scheme to people on low incomes who are not currently in receipt of benefits.
I also accept the point about the flow of people through the system. We touched on that issue occasionally in Committee, and it certainly applies here. The Public Bill Committee debated the issue of people coming on and off jobseeker’s allowance and we discussed a contribution-based benefit for those on low incomes. People will qualify for these benefits at different points in time, raising the question of the best time to capture them. Until people receive benefit, however, they will not be eligible for a saving gateway account.
The Bill is a partial solution to encouraging people on low incomes to save. It is probably the most cost-effective solution, but it is not necessarily the ultimate answer, as more work needs to be done to encourage people on low incomes to save, particularly those who are not eligible for this scheme. Perhaps the Financial Inclusion Taskforce could work on how to target that group.
Amendment 13 was intended to probe different means of identifying whether the scheme targets all those on low incomes. As the scheme is evaluated, I hope that the mismatch between eligibility through the passporting route and the proportion of the population on low incomes who are eligible will be a central feature because it will enable us to determine whether the scheme needs to be refined, not just in respect of the additional benefits but in relation to whether other ways can be found to roll out the saving gateway account to meet the needs of those who do not currently qualify for it.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Hoban: I beg to move amendment 5, in page 3, line 33, at end insert—
‘(1A) Conditions imposed under subsection (1)(a) shall have regard to
(a) location of the provider’s premises;
(b) the provider’s commitment to financial education; and
(c) the provider’s willingness to expand access to broader financial services.’.
Mr. Speaker: With this it will be convenient to discuss amendment 6, in clause 11, page 5, line 25 leave out paragraph (e).
Mr. Hoban: This second group of amendments deals with two particular points. Let me deal with amendment 5 first. The seven lines of clause 5 are designed to deal with the fact that account providers need to be approved. Subsection (1) refers to the conditions that might be imposed on “an approved account provider”, but there is no further description in the Bill—much of it gives enabling powers—or the explanatory notes of the conditions that a provider might be required to fulfil.
We had some debate in Committee about the type of providers that we should encourage—or discourage—to take part. I am not going any further down that road, although the hon. Member for South Thanet (Dr. Ladyman) might want to enter the debate on this group to make those points again. It is important, however, that published guidelines are available to provide some clarity to providers about the conditions and their application. Pilots have already taken place, so it might be possible to draw out three conditions, which the Government might like to reflect on for approving providers.
| Next Section | Index | Home Page |