 House of Commons |
Session 2008 - 09 Publications on the internet General Committee Debates Saving Gateway Account |
The Committee consisted of the following Members:Chris Stanton, Sarah
Hartwell-Naguib, Committee
Clerks † attended the
Committee Public Bill CommitteeTuesday 3 February 2009(Morning)[John Bercow in the Chair]Saving Gateway Accounts BillWritten evidence to be reported to the HouseSG
01 Personal Finance Research
Centre 10.30
am Mr.
Mark Hoban (Fareham) (Con): On a point of order,
Mr. Bercow. I understand that regulations were published
yesterday that relate to the Bill. They have not been circulated to
Committee members; nor are there copies in the room this morning. Will
the regulations be provided to Committee members to enable us to
deliberate the Bill
properly?
The
Economic Secretary to the Treasury (Ian Pearson): Further
to that point of order, Mr. Bercow. I apologise that the
draft regulations are not before the Committee. They were published for
the assistance of the Committee in deliberating the Bill. We appreciate
that much of the detail under discussion will be passed in secondary
legislation. I understand that the regulations were in the Vote Office
by 4 o’clock, and they are certainly on the website. I will
ensure that they are available to the Committee as quickly as possible.
Perhaps if I look at the officials in the Box in the right way, one of
them will go and ensure that the regulations are available during the
morning.
The
Chairman: I am grateful to the hon. Gentleman for the
point of order and to the Economic Secretary for the gracious apology
and clarification that he issued. Attempts will be made to ensure that
copies are available to Committee members speedily. We do not need to
labour the point, but the point of order was fair and reasonable. As a
matter of good order and practice in the future, it is important that
material germane to the Committee’s considerations is available
in an easily accessible form for Committee members when
deliberating.
Clause 1Saving
Gateway
accounts Mr.
Jeremy Browne (Taunton) (LD): I beg to move amendment 1,
in
clause 1, page 1, line 4, leave
out from ‘by’ to end of line 5 and insert
‘an eligible person (within the meaning
given by section
3).’.
The
Chairman: With this it will be convenient to discuss
amendment 2, in
clause 1, page 1, line 15, leave
out subsection (3).
Mr.
Browne: I welcome you, Mr. Bercow, and everyone
else to the Committee. I am sure that I will be first of many to say
what a pleasure it is to serve under your
chairmanship. By
way of introduction, may I say that the Liberal Democrats support the
Bill’s broad principles? We see virtue in incentivising people
who are on low incomes to save money. The savings will serve as a
buffer against unexpected emergency expenditure. Such accounts should
inculcate a savings culture and spread a sense of asset-owning stakes
in
society. As
one might expect, clause 1 defines the savings gateway account. I
confess that amendments 1 and 2 are somewhat finickity. They are
designed to improve the Bill’s drafting, rather than to make a
broader political point. Clause 1 states that the account holder must
first receive a notice of eligibility and secondly
be “an
eligible person at the relevant
date”. However,
they will not receive a notice of eligibility unless they are an
eligible person at the relevant date. The wording is therefore
unnecessarily complicated. Amendment 1 would delete the requirement to
have received a notice of eligibility. There is no reason why a person
who is eligible under clause 3 should have to wait for Her
Majesty’s Revenue and Customs to issue a notice. If they have to
wait, the danger is that they will be subject to any administrative
inadequacies that arise at HMRC. For example, if there was a backlog or
a notice was lost in the post, a person who was deemed to be eligible
would
suffer. I
could speak at greater length, but I have made the point. It is not a
major point, but one about drafting. The Economic Secretary may wish to
consider not putting that additional obstacle in the way of people who
want an account. If they are eligible, the additional criteria are
unnecessary.
Mr.
Hoban: I assume that the notice is required because an
account provider will know that somebody is eligible if they can
furnish them with the notice. If there is no requirement to produce the
notice, how will a person who qualifies under clause 3 prove to the
account provider that they are
eligible?
Mr.
Browne: My understanding is that such people would be
deemed eligible. The essential point is that, if they have received the
notice, they must by definition have been eligible on that date;
otherwise they would not have received the notice. I am willing to have
further light shed on that by the Economic Secretary before we get on
to the more substantial aspects of the
Bill. Dr.
Stephen Ladyman (South Thanet) (Lab): I welcome you,
Mr. Bercow, to the Committee and look forward to serving
under your chairmanship.
I have a
quick question along the same lines as that asked by the hon. Member
for Taunton, who tabled these amendments. Given our experience of the
occasional inefficiencies of HMRC, I wonder how many of our
constituents will not get their notice of eligibility when required,
and how many will end up in their MP’s office, asking for help
to get them. I would like assurance from my hon. Friend the Economic
Secretary that notices will be issued as soon as someone becomes
eligible, that some mechanism will be put in place to ensure that they
are routinely issued and that we can count on everyone eligible having a
notice as soon as they are entitled to go to the relevant account
provider and open one of the savings accounts. It seems to me that we
might be adding possible inefficiency to the process by doing things in
this way. I should like to hear his
comments.
Ian
Pearson: It is a pleasure to serve under your
chairmanship, Mr. Bercow. I hope that I can persuade the
Committee that we are not placing burdens or, in the words of the hon.
Member for Taunton, being pernickety and overcomplicated. We are
actually providing opportunities, and I would like to explain why the
legislation should stand as it is.
As the
Committee is aware, clause 1 sets out the general features of the
saving gateway account, including specifying that it is an
account
“held by a
person who has received a notice of eligibility...and who was an
eligible person at the relevant date.”
We will discuss
eligibility in more detail when we come to clause 3, but, broadly, to
be an eligible person someone must be entitled to one of the qualifying
benefits or tax credits and have a specified connection with the UK. In
most cases, the relevant date will simply be the date when a notice of
eligibility is issued to the person by HMRC. I tell my hon. Friend the
Member for South Thanet that we will make sure that that is done in an
orderly and timely way.
Our intention
is for data to be transferred from the Department for Work and Pensions
to HMRC, which will issue the eligibility notices frequently, possibly
fortnightly or monthly. Some people might move off a qualifying benefit
before they receive their notice of eligibility. In those
circumstances, because we do not want to stop people who fit our normal
criteria receiving support under the Bill, it is important to have both
elements of the eligibility criteria: receiving a notice of eligibility
and being eligible at the relevant date.
Under
amendments 1 and 2, anyone whose eligibility status changed would have
to lose their saving gateway account. That would be confusing for
account holders and costly and complicated for account providers.
Amendment 2, in particular, would remove the definition of the relevant
date for the purposes of subsection 1(a), and if amendment 1 was not
agreed, the conditions set out in subsection 1(a) for a saving gateway
account holder to be someone who was an eligible person at the relevant
date could not be satisfied. As a result, no account held could be a
saving gateway account, because there would be no way of identifying
the relevant date. I hope, therefore, that the hon. Gentleman will
withdraw the
amendment. I
will say something more specifically about subsection
(1)(a), under which people who are eligible on the relevant date will
be able to keep their accounts and receive the match payment,
regardless of whether they remain eligible. Removing an account from
people whose eligibility status changed could, though this is unlikely,
provide a perverse incentive for eligible people not to seek to move
back into work, or into higher paid work, to maintain tax credit or
benefit status. It would also make the accounts more complicated for
providers and the Government to administer, as accounts would have to
be closed frequently. That would be extremely burdensome for providers,
which is another good reason for us to resist amendments 1 and
2.
Dr.
Ladyman: I want to clarify something that arose in the
evidence sessions, and I will want to return to it under clause 3. Am I
right to think that my hon. Friend said that, if someone is eligible
for a savings account and opens one but goes back to work the next day
and is therefore not eligible, he or she is allowed to keep the account
until it has run its
course?
Ian
Pearson: Yes, that is right, and with that I ask the hon.
Gentleman to consider withdrawing the amendment.
Mr.
Browne: I am grateful to the Economic Secretary for his
comments and to have had the opportunity to get the ball rolling, but I
am happy to beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
1 ordered to stand part of the
Bill.
Clause 2Notices
of
eligibility
The
Chairman: With this it will be convenient to discuss
amendment 23, in
clause 2, page 2, line 12, at
end add ‘The expiry date is either
three months after the issue of a notice of eligibility or cessation of
eligibility as defined in section 3, whichever is
earlier.’.
Mr.
Browne: The territory here is similar to that which
concerned the amendments that I tabled to the previous clause. Clause 2
will require HMRC to issue a notice of eligibility to each person who
qualifies under clause 3. The crucial point to draw out with the
amendment is the requirement that the notice of eligibility should
include an expiry date. If one is eligible, one continues to be so
until eligibility ceases. Unless one can see into the future, the
expiry date would not necessarily be an accurate prediction of
eligibility.
For example,
if one were to leap forward to clause 3, one of the eligibilities is
severe disablement allowance. One can imagine that unless an amazing
cure were invented in the meantime, that allowance would continue
beyond the recorded expiry date. However, eligibility for
jobseeker’s allowance may not. The Economic Secretary clarified
that that would continue for the whole period; even if one were only
eligible for a day and then became employed as a premiership footballer
on £70,000 a week, one would still be eligible for the remaining
two years to draw this very generous support from the
taxpayer. Some
of the criteria, however, would be permanent. An expiry date in those
circumstances may create an extra administrative burden on the people
who would have to reapply, or who may allow their eligibility to lapse
unwittingly. They would then have to demonstrate their eligibility
again, even though they were claiming on the same basis as the first
time around.
The point is
one of ease of access for people who may be disinclined to partake in
such initiatives and incentives. It would not be desirable to put extra
barriers in their
way; we all share the same objectives. If people are eligible to start a
saving gateway account, it does not necessarily need to be made clear
when they may or may not cease to be eligible in the
future. 10.45
am
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