Mr.
Browne: Amendment 7 which is being considered at the same
time as amendment 30 is in my name. I concede that it is a rather blunt
instrument. It deletes the whole of subsection (5). Perhaps I could
have made these comments in a stand part debate rather than
specifically to an amendment, but this nevertheless gives me an
opportunity to make a similar point to the one just made by the hon.
Member for Fareham. I have some unease that so much of the Bill is left
to regulations that will be introduced at a later date. I was slightly
uneasy when we discussed the clause 5, as the hon.
Member for South Thanet seemed keen that, once we had completed our
deliberations in Committee, and the Bill was back in the main Chamber
to be approved by Parliament, the Government would go away and change
the nature of the legislation. [Interruption.]
Well, that is what I took him to be encouraging the Minister to do to
retain flexibility, even when we had approved the measure in its
existing
form.
Dr.
Ladyman: I hope that the hon. Gentleman is not accusing me
of inappropriate exploitation of parliamentary procedures. I was simply
asking for powers to be included in the Bill so that they could be used
quite properly at a later date through regulation. The regulation and
the statutory instrument process is as much a part of the parliamentary
procedure as anything else we do in this place. It is perfectly
reasonable to use it at a later date if one wishes to do
so.
Mr.
Browne: I am grateful for that clarification. I think that
most Members of Parliament would accept that a degree of flexibility in
most legislation is desirable, but I am uneasy that the Bill allows so
much flexibility that it would be possible for the Government, after
the measure had been approved by Parliament, fundamentally to change
the nature of the scheme as it would apply to my constituents and those
of other Members. That is what I am driving at with my
amendment.
Subsection
(5)(a) is not too bad, but subsection (b)
specifies “a
period, after the end of the maturity period of a Saving Gateway
account held by a person, during which the person may not open another
Saving Gateway
account”. That
period could be one week, or it could be 20 years. It could be never,
or it could be beyond anyone’s realistic lifespan. That seems to
be allowing too much flexibility. Regulations may be made under
subsection (c),
“preventing a
person from holding more than a specified number of Saving Gateway
accounts, or Saving Gateway accounts which are held until the end of
the maturity period, during the person’s
lifetime.” Something
that is
“more than a
specified number”
could be anything. The
regulations might as well have said, “The Minister may at any
point decide all the details of the scheme,” in which case we
could get on with wafting it all through without having any
understanding of what is intended. As the hon. Member for Fareham said,
the Bill does not make it clear whether people can have more than a
single saving gateway account in their lives and, if they can, the
length of the period between the first and second account, if indeed
there is such a period—perhaps they can overlap. There is a
reasonable school of thought that perhaps the number should be limited,
but it would be useful to have that discussion. If only one account is
allowed in a lifetime, we can discuss the merits and demerits of that
proposal. As it is, however, the whole proposal is so vague that the
Economic Secretary is inviting us to endorse a scheme for which he
could subsequently put in place almost any details that he wants. That
is what I am uncomfortable with, and that is the reason behind the
amendment.
Ian
Pearson: I do not think that the proposal is vague; it is
a sensible contingency plan. Without wanting to feel as if I am in
repertory theatre, I shall rehearse some
of the arguments that the hon. Member for Fareham invites me to rehearse
about what should be in the Bill and what sensibly and prudently we
should provide the Government with flexibility to do in future, should
they be so minded. Amendments 7 and 30 would delete clause 6(5).
Amendment 7, tabled by the hon. Member for Taunton, leaves it at the
deletion, whereas amendment 30, tabled by the hon. Member for Fareham,
would insert the
words: “Regulations
shall make provision preventing a person from holding more than one
Saving Gateway account during the person’s
lifetime”. We
are not ignoring advice from Sharon Collard, Brian Pomeroy and others
with whom we have spoken and engaged on this matter. Our firm intention
is that people should be limited to one saving gateway account per
lifetime, as set out in the published draft regulations.
However—we come to the rehearsal—we believe that it is
sensible to retain some flexibility, which is what subsection (5)
provides. While not committing this or future Governments to any
particular course of action, it provides the option of introducing
regulations permitting people to have more than one account per
lifetime, if that is thought desirable. Where that is the case, it
would allow regulations to set a minimum period between accounts or a
maximum number of accounts that may be held. Keeping open those options
is sensible planning. It means that this and future Governments may
keep the position under review and respond to the experience of
operating the scheme and any other developments without the need for
primary legislation. We have discussed that theme already.
That
flexibility would be removed by amendment 30. Amendment 7 would also
remove that flexibility, as well as any power to limit the number of
saving gateway accounts that a person can hold, either consecutively or
concurrently, which could increase dramatically the costs of the scheme
and encourage people to recycle money into another account. It would be
regressive, because it would allow eligible people who are able to save
more to receive more. We believe therefore that it is necessary to be
able to limit the number of accounts that people can hold through
regulations, rather than in the Bill. We also believe that in framing
such regulations, Governments should have the range of options set out
in subsection (5) from which to choose, rather than specify in primary
legislation that people can hold only one account, as the hon. Member
for Fareham suggested. I repeat that it is our intention that
individuals should have only one saving gateway account per lifetime,
but I ask on a contingency basis that we have legislation that
prudently allows the Government to change their mind at a later date,
if future experience suggests that it is appropriate.
5.15
pm
Mr.
Hoban: The Economic Secretary is better at arguing why
there should be flexibility than he is at arguing the principle of why
one account is the right number.
Ian
Pearson: There is no debate about
that.
Mr.
Hoban: If the case is cut and dried, why require that
flexibility to be enshrined in legislation? One account sounds like the
right number, although in his evidence,
Brian Pomeroy suggested that someone might be allowed to have a second
attempt under certain circumstances—if they had had to terminate
their saving gateway account for reasons beyond their control, for
example. I am not quite sure what reasons he had in mind, but there
could be exceptional circumstances in which people would be allowed to
have more than one account.
If the case
is cut and dried, I find it hard to understand why the Economic
Secretary cannot put it in the Bill. There are other areas where there
is more debate— such as the maturity period or the monthly
contribution—where the basis for leaving it to secondary
legislation is much more robust. My other comment is that regulations
relating to the first exercise of this power and the number of accounts
will need to be approved through the affirmative procedure. My
understanding of clause 27 is that if the Government decide
at a later date to increase the number of saving gateway accounts that
people can have, they would not require the use of affirmative
procedure. The first use of this power would be approved, but not any
subsequent use. Therefore, if the Government use affirmative procedure
to agree on one account—as they will do when the regulations
come before us—they could later decide to use the powers under
subsection (5) to increase that number to 10. In that case, the
affirmative procedure would not be used, although there would clearly
have been a significant change in the Government’s mind as to
why they preferred a number higher than one.
The Economic
Secretary should think about changing that, so that when the number of
saving gateway accounts are increased—should the Government seek
to use that power—that increase would be subject to the
affirmative procedure rather than the negative. That would be helpful
and, given the costs that might be attached to the change, it would
give people confidence that there had been proper parliamentary
scrutiny. I will leave that thought in the mind of the Economic
Secretary, and beg to ask leave to withdraw the amendment.
Amendment,
by leave,
withdrawn.
Question
proposed, That the clause stand part of the
Bill.
Mr.
Mudie: I should like to raise a matter that has been
mentioned by the Economic Secretary. It is the example of a person
going into a bank and not being allowed to open an account. The
Economic Secretary specifically referred to money laundering. When we
did an investigation on basic bank accounts, we found that the banks
behaved very badly—intolerably—towards those individuals
we were trying to encourage to open such accounts, which are the key to
a great number of things. These people had to wait in separate queues
and money-laundering regulations were cited to them. The staff did not
advertise the basic bank accounts and when asked about that, said that
they knew nothing about them.
I am
conscious that there are individuals who are not used to saving or to
going into banks, and who might easily be overawed, but who
nevertheless goes in—that is the aim of the
Bill—clutching proof of their identity and a letter from the
Department saying that they are eligible for an account. I genuinely
wonder whether asking questions about money laundering is simply a
requirement that must be put in every piece of financial
legislation—if the Economic Secretary gives me a nod and
confirms that as a reason, I will sit down straight away. If that is
not the case, I think that it is a step too
far. You will have
read The Guardian yesterday, Mr. Taylor. It said that
FTSE 100 companies are avoiding tax of between £3 billion and
£13 billion a year by moving money to overseas companies. Only
two of the FTSE 100 companies would tell The Guardian what their
tax arrangements were. I am not making the point that these companies
were money
laundering.
The
Chairman: Order. The hon. Gentleman is wandering a little
wide of the
clause.
Mr.
Mudie: I was just on the point of bringing it back to
that, Mr. Taylor. I will bring it back to the Department.
Faced with that sort of money, its priority should be clawing some of
it to give relief to the British taxpayer. On average, the people
covered by the Bill will put in £4 per week or
£25 a month. If we could confine money laundering to that amount
and to that number of people, it would be at a level we could
accept. In
the past, people were refused basic bank accounts. I am sure that the
Minister will accept that the object of this exercise is to persuade
people for the first time in their lives to go into a bank, open an
account, stop all the worries and fears over a new environment and do
something that will change their lives. I do not think that we want to
make that more complicated than taking in the eligibility form and some
identification, and getting them signed up as quickly as
possible.
Ian
Pearson: I do not want to make the process any more
complicated than it needs to be. Some checks are required and it is a
matter for the providers to decide what evidence they will accept as
proof of identity or address. As my hon. Friend said, we are talking
about relatively small sums of money. The money- laundering regulations
are therefore not an appropriate
model. My
hon. Friend referred to basic bank accounts. Industry and Government
data suggest that there has been substantial progress on the provision
of basic bank accounts. In the year to March 2007, 600,000 new accounts
were opened. The Banking Code Standards Board has taken the view that
work done by providers, the enhancements to the code and the monitoring
carried out by the BCSB have led to basic accounts being more readily
available. It goes on to say that where an individual is financially
excluded, they should be able to obtain information and open a basic
bank account relatively easily. A lot of work has gone into that. As a
member of the Treasury Committee, my hon. Friend will be aware of the
work that has taken place in this
area. We
must consider carefully what lessons can be learned from the basic bank
account when working on the design process for the saving gateway
account. Our intention is not to put unnecessary obstacles in the way,
so that the process is as simple as possible. We want to encourage
people to save. The purpose of the Bill is to kick-start
saving.
Mr.
Mudie: Does that mean that the Minister will look again at
the draft regulation that states that a person can be refused an
account if they do not satisfy money-laundering
legislation?
Ian
Pearson: I am advised that the money-laundering rules were
introduced for good reason. It would not be sensible to disapply them
for these accounts. As I indicated previously, the simple fact that we
are talking about relatively low balances means that if banks are
taking a risk-based approach in these areas, which one would expect
them to do, they should not ignore money-laundering regulations.
However, I do not think that they should necessarily be treating a
saving gateway account as if it were going to have £10,000 or
more going through it. It needs to be proportionate and we will
continue to have dialogue with the banks and other potential saving
gateway account providers on this issue. If we need to revisit the
regulations before we debate them in this House we will certainly do
so.
Question
put and agreed to.
Clause
6 ordered to stand part of the
Bill.
Clause
7Transfers Question
proposed, That the clause stand part of the
Bill.
The
Chairman: With this it will be convenient to discuss new
clause
1— Transfers— ‘The
only circumstances in which a Saving Gateway account held with one
account provider may be transferred to another is when the account
provider is subject to the Banking Special Provisions Act
2008.’.
Mr.
Hoban: This is a probing new clause. It goes back to the
evidence session we had last Tuesday afternoon, when it became clear in
the conversations we had with the potential account providers that one
of their concerns was the administrative cost of running saving gateway
accounts. The income to the providers was quite limited and one of the
factors they would need to think about was the cost of the operation of
these accounts. When we probed them on this, one of the issues raised
by Helen Banks of the British Bankers Association was transferability.
She expressed the view that the ability to transfer accounts from
provider to provider could add to the costs that they would face. Part
of the challenge comes from the way in which saving gateway accounts
are structured. If one transferred an account from one bank to another,
the transferring bank might normally just need to provide name, address
and balance at date of transfer, but for a saving gateway account,
given the way in which the matching contribution is calculated, a bit
more information is required, and that falls outside the banks’
normal systems. The banks who gave evidence said that the transfer
process would probably have to be a manual workaround and, of course,
that is always more costly than automated systems. Helen Banks made an
argument against transferability, which certainly addressed cost-based
issues around the account.
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