Mr.
Hoban: I add my welcome for your chairmanship, Mr Bercow,
to the welcomes offered by other hon. Members. I want to speak to my
amendment 23, which looks at the question of when the eligibility
notice expires and is very much probing. Clause 2(2)(a) states that
there will be an expiry date, but that date will be specified in
regulations. Of course, the amendments were tabled before the
regulations even appeared in the Vote Office
yesterday. Our
suggestion here is that the expiry date be either three months after
the date of issuance of the eligibility notice or cessation of
eligibility, as set out in clause 3, which specifies the benefits that
someone is entitled to, which then triggers their
eligibility—whichever is earlier. I am trying to set out a
sensible parameter for the expiry of the notice and I suggest three
months; it may take someone a while, once they become eligible for
benefits, to decide whether to open a saving gateway. They may need to
consider whether their income would enable them to save £25 a
month, or whatever amount happened to be specified. Perhaps there
should be a reasonable period in place before the expiration of the
notice and perhaps people would then have an incentive to think about
it, rather than leaving things until the latest possible
moment. Also,
considering the other qualifications on cessation of eligibility, once
someone stops being eligible for a benefit, surely they should stop
being eligible for a saving gateway. We touched on that
topic when we debated the previous clause. That is the
thinking behind amendment
23.
Dr.
Ladyman: Again, I have just a few questions for my hon.
Friend the Economic Secretary. Is it envisaged that the expiry date of
one’s eligibility notice will be short term—a month,
perhaps—or will it be longer term? If one’s eligibility
for the saving gateway continues after the expiry date, will another
eligibility notice be issued? For example, if someone has a three-month
expiry date and is eligible for a saving gateway account for 12 months,
will they get four notices in that period? Will there be a process in
place to ensure that people get a notice immediately on the expiry of
their old notice or will there be a gap between the
two?
John
Howell (Henley) (Con): It is good to sit under your
chairmanship once again, Mr. Bercow. I want to raise a point
in relation to clause 2(2) on the notice of eligibility. We are talking
about a number of aspects relating to the expiry date. Is this the
right occasion to ask the Economic Secretary whether this is a good
place to ensure, as it is not in the regulations, that there is also a
health warning on the notice of eligibility as to what happens in the
event of withdrawal? There seems to be no other place for that aspect
to be rammed home at the beginning, given the somewhat chaotic lives of
some of the people who would be eligible for the
account.
Ian
Pearson: Clause 2 deals with the notices of eligibility
that HMRC will send to eligible people. The amendments tabled by the
hon. Members for Taunton and for Fareham are very different, so let me
deal with them in turn. Amendment 3, which stands in the name of the
hon. Member for Taunton, would remove the need for the notice of
eligibility to contain an expiry date, along with any other information
about the participant that was set out in the regulations. Obviously,
it is essential that notices of eligibility contain information about
the eligible person—for example, their name and address. This
will allow account providers to carry out their account-opening checks
and prevent those who are not eligible for the scheme from opening an
account using a notice issued to another person. However, going by the
hon. Gentleman’s comments, I strongly suspect that his main
point is about the expiry
date. Considering
the amendment in isolation, its impact would be that once the notice of
eligibility had been issued it would be valid indefinitely. That would
mean someone who was at one point eligible for a saving gateway account
could open their account at any point in the future, regardless of any
change in their tax credit entitlement circumstances. That is clearly
undesirable. Including an expiry date on a notice of eligibility is
essential to ensure that eligibility for the saving gateway account is
targeted on working-age people on lower incomes, rather than people who
were in that group in the
past. As
I explained to my hon. Friend the Member for South Thanet, it is
certainly our intention that those who are eligible and who take up the
saving gateway within the three-month period, even though their
circumstances might have changed, should still open an account.
However, we do not think it is a sensible approach to say that the
notice of eligibility would last for all time and that in five, 10 or
20 years a person would be allowed and be eligible to open a saving
gateway
account. Amendment
23, which stands in the name of the hon. Member for Fareham, provides
that notices of eligibility would expire after three months, or when
the holder of the notice ceased to be an eligible person. Again, let me
say that our intention is to provide in regulations that all notices of
eligibility will have an expiry date of three months from their date of
issue. However, we do not believe that that should be put in the
Bill. Our
intention is that the notice of eligibility should contribute to the
simplicity of the scheme for account applicants and account providers.
Where an eligible person receives a properly issued notice, we believe
that they should be certain that that entitles them to open an account
with an approved account provider until the expiry date printed on the
notice—provided that they have the necessary connection with the
UK.
We believe
that account providers and eligible people will welcome that approach.
It provides certainty and should minimise the number of accounts that
are opened wrongly, as well as allowing people to plan ahead and
consider when they should open an account. However, if amendment 23 was
agreed to, the change in circumstances could mean that that person was
no longer eligible to open an account. In other words, a person who
wanted to open an account would need to be eligible not only at
the relevant date, which we have just discussed in relation to clause 1,
but at the date on which they opened their
account. We
considered that aspect carefully and decided against it. If individuals
were required to be eligible at account opening, that would obviously
need to be confirmed in some way. It would also not be possible for the
account provider to check with HMRC, because the saving gateway
database will not have a real-time record of people’s
entitlement to qualifying benefits and tax credits. As I indicated to
my hon. Friend the Member for South Thanet, the information will be
transferred periodically. That will be done regularly—probably
fortnightly or monthly, but not in real time.
Therefore, if
we were to accept the proposals tabled by the hon. Member for Fareham,
we would have to introduce a new bureaucratic system to ensure that
people were eligible on the date that they opened the account. It would
not be available then to people who were eligible at a particular
time. The
other approach would the individual needing to self-certify their
entitlement to one of the qualifying benefits or tax credits.
Self-certification could also mean accounts needing to be disclosed if
HMRC later found that someone had opened an account when no longer
eligible to do so. Again, that would place additional burdens on
account providers. We are very keen indeed to minimise the burdens
placed on those who intend to offer saving gateway
accounts.
Mr.
Hoban: I am grateful to the Economic Secretary for his
explanation and I understand his point about the administrative
convenience of having, say, a three-month eligibility period before the
notice
expires. What
assessment has the Economic Secretary made of the proportion of people
opening an account who will no longer be eligible for the benefits set
out in clause 3? I am not sure whether dead-weight cost is the right
phrase, but there is a big cost there for people who are not eligible
for the benefits, but who are, due the three-month period, eligible to
open a saving gateway account and perhaps are not in the low-income
categories that the Bill
targets.
Ian
Pearson: That is a perfectly valid point for the hon.
Gentleman to raise. The work that we have done suggests that there will
clearly be some people who are in that category, having moved off
qualifying benefits in the period before the notice of eligibility is
received by them. We do not think that those numbers are likely to be
very high. We believe that the people that we are talking about, who
might have moved off those qualifying benefits, are those we would
generally want to target anyway. While it is true that some people
might move out of entitlement, we estimate that that will be the case
in about 4 per cent. of the accounts that are opened. It is not a
significant
figure.
Mr.
Browne: I would like to follow on from the point made by
the hon. Member for Fareham. Does the Economic Secretary envisage that
people who, for example, do seasonal work—where they are perhaps
quite well paid for nine or 10 months of the year, but then do not work
for the remaining two or three months—may see this as an
enticing way to bulk up their savings by
qualifying during the period when they are not working, even though
their earnings during the year would make them far too wealthy to
qualify in any other circumstances? Have I misunderstood? As I
understand it, they would be eligible to put their names forward so
long as they were claiming benefits during the short period of the year
when they were not working for seasonal
reasons.
Ian
Pearson: If people are on a qualifying benefit, they are
entitled to open a saving gateway account. We have to remember that we
are trying to encourage people who are working but are on relatively
low incomes to save for the future. It is entirely appropriate that
seasonal workers, who might spend some time on qualifying benefits,
should have the opportunity to have a saving gateway
account. Mr.
George Mudie (Leeds, East) (Lab): I am taking the
opportunity to ask a question. I want to follow on from the Economic
Secretary’s first contribution about the inefficiencies of HMRC,
which we have found on many occasions. If a qualifying individual turns
up at their MP’s surgery and says, “I did not receive a
notice, I have just heard about it,” will the Department give
that individual a fresh date, provided that they are suitably
qualified?
Ian
Pearson: Specifically on that question and the question
raised by my hon. Friend the Member for South Thanet, as we made clear,
the expiry date on the notice will normally be three months after it is
issued. We think that that is the right period for people to be able to
access an account. We do not intend that there will be an automatic
repeat notice when that three-month period expires if somebody has not
opened an account. We do not want to keep bombarding people with pieces
of paper, but people who are still eligible can request new notices if
they want to open an account and there will be publicity about saving
gateway accounts because we want to encourage take-up. We will also
have the flexibility to allow us to issue repeat notices, if at some
point in the future we decide that we want do so. We think that that is
a sensible thing to
do.
Dr.
Ladyman: I am grateful to my hon. Friend for that answer.
I want to take him back to the issue of people who move off eligible
benefits. Is it his intention for the gap between when somebody goes on
to eligible benefits and when they receive an eligibility notice to be
used for targeting the accounts on those who are not on benefits for
only a short time? In other words, if it was a month before somebody
got their eligibility notice and they were out of work for only a week
or two, they would not receive a notice in time to open an account. Is
it the intention deliberately to use that gap in some way to try to
limit the people who might access
it? 11
am
Ian
Pearson: No, it is not our intention deliberately to use
that gap in the way my hon. Friend suggests. We are planning to adopt
the process of a data transfer of names of eligible people from the DWP
to HMRC, which we expect to happen fortnightly or monthly. Some people
who are eligible according to DWP records will have moved off in the
period before HMRC issues
the notices and we estimate that figure to be about 4 per cent. We think
it reasonable for those people to be eligible to open a saving gateway
account. Given the administrative complexity involved, we do not think
it sensible to prevent them from opening an account, which is, in
effect, what the amendment tabled by the hon. Member for Fareham would
do. The overall eligibility criteria are well targeted and the
Committee heard in evidence what our intentions are and that the Bill
has widespread support.
Mr.
Hoban: Following on from the point raised by the hon.
Member for South Thanet, may I have clarification of whether everyone
who claims JSA, for example, will receive a notice of eligibility, even
if they move off that benefit in the processing time between when they
register and when the information is passed on to HMRC? Therefore, will
everybody who claims JSA receive a notice of eligibility, even if they
are on the register for only a week or a few
days?
Ian
Pearson: I understand that that will depend on the time
between when the DWP transfers information and when HMRC receives it.
Somebody might sign on and claim JSA with the DWP, but get a new job
extremely quickly and therefore remove themselves from the record, so
their information would not be transferred. It is likely that an
estimated 4 per cent. of people whose names are on the transferred DWP
data will have a notice issued by HMRC but will have moved on in that
time. I hope that that clarifies the
situation.
Mr.
Hoban: To be absolutely clear, the Economic Secretary is
saying that a snapshot will be taken of the people claiming JSA when
the data are transferred from the DWP to HMRC. If a person has moved on
between one snapshot and the next, and is no longer eligible for JSA,
that will not be picked
up.
Ian
Pearson: That is certainly my understanding of how the
system will work. We have been talking about transferring data
regularly—fortnightly or monthly—and few people will fall
into that category. The bigger category will be those who have been
frictionally unemployed and have moved from qualifying benefits into
the mainstream labour market where they do not qualify. That is a
relatively small number of people, but we still believe it right that
they should be entitled to open saving gateway
accounts.
Mr.
Browne: The point made by the hon. Member for Fareham is
important, or will at least be thought of as important by those who
come across other people whom they feel are being treated differently
from them. Let us say, for the sake of argument, that person A has been
eligible for JSA for a fortnight and then finds another job. Person B
has also been eligible for JSA for a fortnight and then finds the same
job—they are working together—but person A happens to
come at the point in the cycle at which HMRC is processing that
information and is therefore able retrospectively to apply for a saving
gateway account because he got the letter, even though he is doing the
same job for the same pay as person B.
Person B will
ask why he cannot retrospectively save for the next 102 weeks, or
whatever it is, at the generous 50p matching rate and we will have to
say, “Sorry, HMRC did not process you in the same way.”
That will cause people to come to our constituency surgeries asking why
person A is being treated differently from person B, will it
not?
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