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All banks publish voluminous annual reports, and at the back they include corporate social responsibility statements. There is no better way for the banks to demonstrate their corporate social responsibility than by seizing this initiative and driving it through their branch network. At the moment, banks are rightly held in very low esteem by the vast majority of people and banks need to make some headway in the community. Traditionally, banks have ignored low income groups in favour of chasing those people whom they deem to be
more profitable—those who can take out significant mortgages or rack up large credit card debts.
I do not want to see any financial sector excluded from delivering these accounts. I sincerely hope that the Post Office is involved in their delivery, because for many people the post office is their local shop and at the centre of their community. I also hope that credit unions play their part in delivering these accounts, but the credit union sector is still small—although it is growing—and many communities will not have a local credit union over the next decade or so. So banks will have an important role to play in delivering these accounts.
I am sure that when the whiz kids in the banks sit down and look at the accounts they will conclude that they will not make a lot of money out of them. Indeed, banks might make a small loss in delivering the accounts. However, that should not deter them. We have heard many declarations of contrition for the banks’ failures in the past year and the failures that undoubtedly lie ahead, but if they are to restore confidence, the provision of these accounts would be a good place to start. I hope that banks will seize the opportunity to volunteer to be at the forefront of this initiative, instead of being dragged to do so.
Ian Pearson: These amendments cover two distinct areas, but they have in common that they both relate to the requirements to be placed on account providers. I wish to stress that the Government want to maximise customer choice and access, and we are keen to secure as broad a range of appropriately qualified authorised account providers as possible. That includes the Post Office, credit unions, banks and building societies.
The Bill Committee heard from representatives from a variety of potential providers, and the message was that while their members support the objectives of the saving gateway, they want to consider carefully any costs associated with the provision of saving gateway accounts before committing to offer them. It is similarly important to remember that most of the requirements that we impose will apply equally to all approved providers, from the large high-street bank to the smallest mutual society. We must therefore ensure that the requirements that we impose on saving gateway account providers are appropriate and proportionate, as they will affect the number of providers that opt to offer the accounts.
I immediately took a more charitable interpretation of amendment 5 than did my hon. Friend the Member for South Thanet (Dr. Ladyman). I thought that the hon. Member for Fareham (Mr. Hoban) was trying to be helpful and to probe our intentions. As drafted, the Bill already provides the coverage for conditions and requirements to be imposed on account providers in the areas mentioned in amendment 5. I agree with all the opinions that have been expressed about the importance of appropriate access to account providers, to financial services and to financial education. However, there is nothing in those points that makes them particular to people who decide to open a saving gateway account. As hon. Members will be aware, the Government support a wide range of measures and initiatives to improve financial capability and widen access to financial services. That covers some of the points made in the amendment.
As hon. Members will see from the draft regulations, we have restricted the conditions that we propose to impose on providers to those that ensure that they have the appropriate regulatory permission and can offer
and operate accounts as set down in the Bill and regulations. That strikes the right balance. It is important to guarantee the saver regulatory protection and consistency of account features, while ensuring that the conditions on providers are not excessively burdensome.
An important point was made about local branch access. We want easy access for people to open accounts. The draft regulations provide that account holders must be able to make account deposits in several ways, including in cash. That is likely to mean that providers must offer a counter service, or similar. However, nothing would prevent the offering of saving gateway accounts that could be opened electronically. We have had discussions with potential account providers who want to deliver the saving gateway accounts in several different ways. We believe that providers should be required to accept cash deposits, which might make things difficult for a web-based provider. However, it may be possible for a provider to have a web-only account for some customers, if those customers prefer that.
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Let me turn to amendment 6. I should explain to hon. Members that we consider the requirement that an account provider’s returns and declarations should be submitted electronically to be a reasonable and proportionate requirement on providers. It is not only consistent with broader developments in Government practice, but central in many cases to the smooth operation of the scheme and the prompt payment of match amounts earned by savers.
We set out in the consultation document that we published at the Budget 2008 that we intended to make online filing of returns the only means of sending returns to HMRC. We asked in that consultation document whether that would cause any problems for any particular groups of providers. The response to the suggestion of mandatory online filing was very positive—most providers recognise the benefits of that. Indeed, those benefits are considerable both to providers and to HMRC. Online filing is quicker than submitting and processing papers returns, more cost-effective and more accurate, as well as being more environmentally friendly than a paper-based system. The hon. Member for Fareham did not make a great deal of that amendment, so I do not need to explain in much further detail why we think that there is not a problem in the industry with electronic filing. The consultation confirmed that.
I think that I have addressed amendments 5 and 6. I recognise that they are probing amendments and I hope that the comments that I have made were helpful.
Mr. Hoban: It has been useful to debate the nature of the providers and the terms and conditions that we would expect as well as the things that we would expect providers to do. I want to press forward on the issue of cash, because Mark Lyonette of the Association of British Credit Unions Ltd mentioned the cost of processing cash payments, which was potentially significant for credit unions.
Although I recognise the importance of having facilities available for people to pay cash, when it comes to reducing the cost to the providers of providing the accounts, the deductions that can be made electronically through direct debits, standing orders and pay packets clearly reduce the cost of collection to providers and are
a further way of encouraging a larger number of people to participate. Having said that, I know that the Portsmouth Savers credit union not only operates a counter facility through its branch but works through PayPoint, too, spreading the network of payment points widely through the catchment area that it supports. Clearly, there are ways in which credit unions can expand their accessibility in a way that is not available to some other institutions.
Dr. Ladyman: The hon. Gentleman might like to know that Wantsum Savers offered a counter service using my office for two days a week until fairly recently. Perhaps other MPs could offer their local credit union the opportunity to provide a counter service.
Mr. Hoban: That is an interesting suggestion. One issue that credit unions face is the availability of access points and how to provide different methods of access. I am not sure that my caseworker would welcome responding to constituents’ correspondence as well as acting as a bank cashier, but that is a matter that I will explore with her. Accessibility is important, as the pilots demonstrated. Part of the rationale for tabling amendment 5 was to tease out some of those important issues that will underpin the success of the savings gateway account.
On amendment 6, the Minister confirmed that there is widespread support for the use of electronic filing by account providers. He said that most respondents welcomed mandatory electronic filing, and I would assume that the sort of systems that bodies such as credit unions are putting in place would be capable of making electronic filings of their returns and if they are, that is welcome. My amendment was a plea for a degree of discretion where systems are not up to electronic filing and where the cost of updating systems might be a barrier to credit unions and other institutions that are prepared to offer saving gateway accounts. Based on the debate, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Hoban: I beg to move amendment 2, in page 4, line 19, at end insert—
‘(6) After the first exercise of the powers in subsection (5), the Treasury will be required to consult interested parties on any changes to those regulations and lay a copy of the report on this consultation before Parliament before any further regulations are made.’.
Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: Amendment 9, in clause 27, page 13, line 4, after ‘(4)’, insert ‘, 4’.
Amendment 10, in clause 27, page 13, line 4, after ‘(4)’, insert ‘, 6’.
Amendment 7, in page 13, line 7, leave out ‘The first’.
Amendment 8, in page 13, line 10, leave out subsection (6).
Mr. Hoban:
This group of amendments tries to address one of the issues that the hon. Member for Taunton (Mr. Browne) mentioned on Second Reading, which is the fact that the Bill is an enabling Bill and contains a
large number of regulation-making powers. I think that he said that there were 29, and virtually every clause contains at least one regulation-making power. The Government have already published some draft regulations, and the amendments try selectively to enhance the parliamentary scrutiny of the regulations. I accept that there are circumstances in which the negative resolution is the appropriate route, when matters are relatively uncontentious, but I have suggested a number of areas where I felt that the affirmative procedure might be more appropriate given the implications for the taxpayer of changes to some of the criteria in the Bill.
First, let me deal with amendment 2. Clause 6 is about eligibility and it talks about people being able to open a saving gateway account having received the notice of eligibility. When we discussed the clause in Committee, there was some discussion of the regulations under subsection (5), which are very permissive and enable people to have more than one saving gateway account at any one time or more than one over their lifetime. They also restrict the number of saving gateway accounts that someone might have. We know that the intention of the Minister and the Government is that people should have only one saving gateway account and that was the consensus that was underlined in Committee and in the evidence-taking sessions that we had before the Committee scrutinised the Bill line by line. Sharon Collard and Brian Pomeroy, among others, made it clear that if people have not got into the savings culture through one account, it is unlikely that being offered further opportunities will enable them to develop the habit of saving.
Amendment 2 proposes that once the Government have made their first regulation to limit accounts to one per person, there should be a proper consultation if they seek to make any subsequent changes. The consultation should consider whether there should be more accounts and a copy of it should be laid before the House before any further regulations are made, to ensure that the House is aware of the outcome of the consultation before it is made.
Amendments 7 and 8 refer back to clause 14, which gives the Government the power to make regulations for the treatment of the accounts in the context of income tax and capital gains tax. Again, the Government’s intention is that the accounts should be free from income tax and capital gains tax. However, the Bill states that although the first regulations made under the clause will be subject to the affirmative resolution procedure, any subsequent changes will be made under the negative resolution procedure. Given that subsequent changes could make accounts subject to income tax or CGT, it is appropriate to build in a safeguard requiring proper parliamentary scrutiny, so that any subsequent orders would be made by the affirmative rather than the negative process.
Amendments 9 and 10 deal with other parts of the Bill that allow changes to be made by the negative procedure. Clause 4 is important, as it determines the maturity period that applies to saving gateway accounts and the maximum amount that can be paid into an account. The draft regulations published by the Government set the maturity period at two years and the maximum monthly payment at £25. Any amendment to those
terms would be made by the negative procedure, but lengthening the maturity period could lead to increased costs to the Exchequer as people build up higher balances that would be subject to the 50p in the pound matching process.
Similarly, increasing the monthly payment from £25 to, say, £30 or £40 would also lead to increased costs to the Exchequer. We believe that both processes should be subject to the affirmative rather than the negative procedure. That is a reasonable extension of the affirmative procedure, and it would provide some safeguard for taxpayers.
Amendment 10 makes a similar point in connection with clause 6. In amendment 2, we ask that a report be laid before Parliament when the Government propose a change to the number of accounts that can be held. In amendment 10, we argue that any subsequent use of the power after the first use should be subject to the affirmative rather than the negative procedure because, again, the cost to the Exchequer will be greater if the rules are modified to allow people to hold more accounts.
Mr. Jeremy Browne: As the hon. Member for Fareham (Mr. Hoban) rightly said, on Second Reading I spoke about what I consider to be the Bill’s excessive flexibility. I said that the Government would be able, through regulations and without sufficient reference to Parliament, to change quite fundamentally how the Bill works in practice, and I maintain that that is still the case.
I can understand that all Governments like to have some flexibility. Legislation probably benefits from a degree of flexibility, especially if there are financial considerations that mean that the Government may need to manoeuvre to some extent to respond to events. However, we are sent here to represent our constituents and to make sure that Bills are scrutinised properly, and there are a very large number of moving parts in this Bill. The word “mockery” is too strong, but it undermines the scrutiny process if Bills brought before us for our approval have so much scope for interpretation by Ministers at a later date.
I continue to hold that view about this Bill. I regard it as broadly benign, but a wider principle is at stake. However, I shall not detain the House unnecessarily, as I agree with all the accurate and wise comments made by the hon. Member for Fareham. Rather than making them all again, I shall confine myself to saying that I hope that the Minister will respond accordingly.
Ian Pearson: I hope that I can convince the House that the Government’s approach to what is put on the face of the Bill and what is contained in secondary legislation—as well as to what is subject to the affirmative and negative procedures—is fair, reasonable, proportionate and appropriate.
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This group of amendments covers two points. Amendments 7 to 10 ask whether the exercise of some of the regulation-making powers should be subject to the affirmative rather than the negative procedure, whereas amendment 2 would introduce a requirement for the Government to consult interested parties and report to Parliament before using one specific power in the Bill.
I shall begin by responding to the hon. Member for Fareham (Mr. Hoban)—and, by default, I suppose, to the hon. Member for Taunton (Mr. Browne)—on amendments 7 to 10. As I have said a number of times,
we believe that the current use of delegated powers is appropriate. The important features of the savings gateway, including the list of qualifying benefits and credits and the method of calculating maturity payments, are all set out on the face of the Bill. However, many of the details of the operation of the saving gateway are relatively technical and our view is that they are best tackled through secondary legislation, because that provides the flexibility that will allow the scheme to be amended in the future to ensure that it continues to meet its objectives.
We know that those objectives have the broad support of the House, and we want them to be amendable without the need for further primary legislation because we also know that that can suffer from the pressure of parliamentary time. We think that we have struck the appropriate balance, and I shall explain our approach to the House.
The first use of all but one of the delegated powers in the Bill will be subject to the affirmative procedure. We think that that is the right thing to do to allow appropriate parliamentary scrutiny of the details of the scheme that is being introduced. However, subsequent use of most of the powers in the Bill will be subject to the negative procedure, as that will provide the necessary flexibility to make minor or technical changes to the scheme.
Of course, we can debate which changes are minor or technical: hon. Members might have different views, and it is right that the Government be probed about such matters. However, I want to explain that there are four exceptions, under which each use of the regulations will be subject to the affirmative procedure. They include all three delegated powers relating to eligibility, which is clearly a central feature of the savings gateway. It is therefore right that any changes should be subject to full parliamentary scrutiny.
The same is true of the match rate—the amount of maturity payment earned for each pound saved. The power to set that amount in regulations under clause 8(1) is therefore the fourth delegated power that will be subject to the affirmative procedure on each use. All the key parts of the savings gateway architecture are therefore either on the face of the Bill or subject to the affirmative resolution procedure. Moreover, all changes to eligibility and the match rate will be subject to the affirmative procedure.
Mr. Hoban: Can the Minister explain why he has decided that variations to the match rate should be subject to the affirmative procedure, when the amount that can be saved in the account is not?
Ian Pearson: Yes, indeed I can. Moving from a match rate of, say, 50 per cent. to 100 per cent. would be a major decision, with serious cost implications. We think that our figure for the amount that can be paid in monthly is appropriate, and we anticipate that future adjustments will be needed only to keep pace with inflation, or something similar. We are therefore talking about two different matters: we think that a change in the match rate would be a fundamental redesign of the scheme, whereas updating for inflation would not be. As a result, it is more appropriate that such updating should be covered by the negative procedure.
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