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Ian Pearson: Let me not reiterate the previous arguments about why this issue is better dealt with by regulations than in the Bill. There is a clear case that according to the framework of legislation, the principles should be in primary legislation and much of the technical detail in regulations. This matter falls into the latter category.
The hon. Member for Fareham mentioned the evidence of Adrian Coles of the Building Societies Association. He is therefore aware that we continue to have a dialogue with potential account providers and their representative bodies. There may be alternative methods of communicating with account holders, such as through passbooks, which he mentioned. It may also be possible by e-mail, although I require convincing that contact by e-mail will be sufficient. Many of the low-income groups that we are talking about kick-starting the saving habit among are unlikely to have easy internet access. However, the BSA made a valid point that we will continue to explore.
The draft regulations indicate that six months is the appropriate period. We think it right that regulations provide the flexibility to alter the frequency of statement issue. We also think it right that savers are made aware of the current balance on their accounts. We must get the appropriate information out to savers while keeping to a minimum the burdens involved in doing so for account providers. That is another matter where we must strike the right balance.
We will continue to talk to account providers, the BSA, credit unions and others. We will return to this matter when we debate the affirmative procedure that will introduce the necessary regulations.
Mr. Hoban: From his answers, it is clear that the Economic Secretary is aware of the tensions in this issue such as the trade-off between providing information to account holders and the cost of doing so. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Timpson: I beg to move amendment No. 37, in clause 9, page 5, line 8, at end insert—
‘(d) specify that a statement may be sent electronically.’.
The intention of the amendment was touched on by the Economic Secretary in his previous answer. I tabled it to highlight that the Bill and the attached regulations do not provide account providers the option to provide statements in electronic form. That is not to say that that should be the only form in which they could provide the statement. That could be done only with the consent of the account holder because not everybody has access to e-mail or to online banking.
The intention of the Bill is not only to encourage saving and make it more accessible, but to keep the costs down in the provision of the accounts. Allowing electronic statements would fit those principles. The findings of the pilots tell us that, generally, people were happy with the information that they received in their statements. However, there was an issue with timings. It was felt that statements tended to be a few months behind when they arrived. When people were making their final deposits, they were receiving statements for deposits made a month or two earlier.
The amendment would ensure that account holders were given up-to-date information about their account and felt some ownership of it to generate that sense of saving. It would also reduce the costs to the account providers who told us in the evidence sessions that their overheads in providing these accounts are extremely high compared with other similar accounts. That is a clear objective of the amendment. I hope that the Economic Secretary will take it into account when considering what is best for the provision of these accounts and the people they are meant to assist.
Ian Pearson: To promote a saving culture, we believe that it is important that account holders can see their savings and their maturity payment building up over a period of time to demonstrate the benefits of having saved. We discussed this on amendment 33. I hope that I can assure the hon. Gentleman that it is not necessary or appropriate to include amendment 37. As he will have seen from the draft regulations, we do not intend to specify the form that statements have to take, but simply that they must be issued. This would permit them to be issued electronically and it would be a matter for the account provider to decide. He mentioned the ability to allow account providers to do that.
I draw a distinction between the suggestion that all saving gateway statements should be sent electronically—I can appreciate the environmental appeal of doing something like that—and the requirement that they have to be. I believe that there should be options here. Some account holders may prefer to receive their statements in a hard copy. I do not think that as a Government we should prevent that. We should also be mindful of the fact that not everyone has easy access to e-mail, so electronic communication could be very difficult. While I am sympathetic to the hon. Gentleman’s suggestion, I do not believe that the amendment adds anything to the Bill. Certainly this will all be contained in regulations. The way we intend to frame the regulations would permit statements to be sent electronically if that was felt the most appropriate way of contacting account providers. I hope he will feel able to withdraw his amendment.
Mr. Timpson: I am grateful to the Economic Secretary for clarifying the position in relation to electronic statements. It is clear from his answer that there will be the option for account providers to provide account holders with that facility. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 ordered to stand part of the Bill.

Clause 10

Account ceasing to be Saving Gateway account
Question proposed, That the clause stand part of the Bill.
Mr. Hoban: Will the Economic Secretary spend a few moments outlining the purpose of the clause? There are only two sentences. The explanatory notes do not make clear what the purpose of the clause is. Is it about when there is an action on behalf of the account holder and that means that the account ceases to be a saving gateway account? Is it an action on the part of the provider? I should be grateful for some clarification as to exactly what the clause entails.
Ian Pearson: I am happy to provide clarification to the Committee. The clause gives the Treasury the power to make regulations specifying when an account will cease to be a saving gateway account. Once an account ceases to be a saving gateway account, it will no longer be subject to the features of such accounts such as the monthly contribution limits, the ability to earn a Government contribution on savings and the tax-free status. The Government intend to make regulations specifying that an account will cease to be a saving gateway account for the purposes of paying the Government contribution, when that contribution has been paid to the account holder.
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For all other purposes, accounts will cease to be saving gateway accounts at the end of the maturity period. In practice, that means that an account will no longer be bound by the requirements set out under clause 4, such as the monthly contribution limit from the end of the maturity period. Of course, no match payment will be earned on deposits made after that point. However, the account holder’s entitlement to the match payment will continue until they receive the match.
Accounts will also cease to be saving gateway accounts if the account holder dies before the end of the maturity period. Those details have, in my view, been rightly left to secondary legislation as it is considered that that technical level of detail is not appropriate to primary legislation. That also allows flexibility, if experience of operating the national scheme suggests that changes need to be made—a point with which we are very familiar.
Question put and agreed to.
Clause 10 ordered to stand part of the Bill.

Clause 11

Returns of information to HMRC
Mr. Hoban: I beg to move amendment 34, in clause 11, page 5, line 34, leave out from ‘within’ to end of line 34 and insert ‘one month’.
The amendment is straightforward. The clause concerns the return of information to Her Majesty’s Revenue and Customs and subsection (4) is about the payment from HMRC to the account provider to reimburse them for the maturity payment. We are keen for account providers to make prompt payment to account holders, but it would be nice for a similar requirement to be placed on HMRC, so that the account providers—some of which could be relatively small operations such as credit unions—are not out of pocket for too long. That is why we propose that the payments be made within one month. It is a perfectly reasonable obligation to impose on HMRC, given that it would be keen to make sure that the account providers themselves cough up quickly to account holders.
Ian Pearson: Again, the Government share the hon. Gentleman’s desire to see prompt payment. As I said to the hon. Member for Taunton in our discussion on an earlier amendment, the Government want to make speedy progress in such areas. The amendment would fix the period for the payment at one month. However, draft regulations provide that, subject to checking and correction of claims and any further information required to verify a claim, the commissioners will settle timely claims from account providers within seven days. That will enable providers to receive payment from HMRC before they pass it on to account holders.
When the return and claim are submitted late or further information is required to verify a claim, the commissioners will settle the claim subject to checking and correction within seven days of the receipt of the claim or information. No doubt, the matter will be debated when we place the regulations that will specify the time period before the House and the other place. Again, the amendment is a technical detail and it is not appropriate to be put in the Bill, but it is clearly appropriate to question the Government’s intentions in that area and to ensure prompt settlement. I hope my remarks on the envisaged time scales, which we intend to include in regulations, assure the Committee that we will take prompt action.
Mr. Hoban: I am delighted that the Government’s plans are even more ambitious than my amendment in ensuring that payments are made to account providers quickly. I was slightly suspicious of the after-the-checking part of the Minister’s answer. When I talk to businesses in my constituency, often it is the checking bit that delays the payments of their invoices. It is used as a technique to manage cash flow, rather than to undertake detailed work to check whether an invoice is correct. I am sure that HMRC will not approach it in that way and will ensure that the checking is done expeditiously, so that the account providers can be reimbursed within seven days. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 ordered to stand part of the Bill.

Clause 12

Returns of information to HMRC
Question proposed, That the clause stand part of the Bill.
Mr. Mudie: I rise to ask the Economic Secretary if he will tell the Committee the meaning of subsection (2). When certain benefits were moved from the DWP to HMRC, it was clear that the philosophy, ethos and rules of HMRC differed from those of the DWP. Customers were treated differently in terms of money pulled back, appeals and so on. The subsection seems to say that certain moneys in saving gateway transactions, at some stage, can be regarded as taxable. That strikes a chord of worry with me: it is a continuation of the problems that we have had with HMRC over tax credits and the like. I note that the appeals procedure, which we will come to, relates only to subsection (3), not subsection (2). I want an explanation of what that is about and what it covers. If there is a disagreement over any part of this about sums being pulled back and such, can the Economic Secretary assure me that there will be a proper appeals procedure covering everything?
Ian Pearson: Subsection (2) enables regulations to be made treating any sums wrongly paid as tax charged in an assessment for the purposes of part VI of the Taxes Management Act 1970. It permits regulations to be made allowing HMRC to collect those sums in the same way that it collects sums of tax due, using the provisions relating to collection and recovery of tax that are contained in part VI of the Taxes Management Act. The power is exercised in paragraph (5) of draft regulation 20. The situation is as my hon. Friend alludes to. He rightly raises the probing question about whether we are applying tax legislation to the recovery of those amounts and why, because they are not tax.
Mr. Mudie: That is a worry. I understand that we have had great trouble with the issue in the Treasury Committee with HMRC. They have caused mayhem and much trauma to people throughout the country. The Economic Secretary’s response is that tax people or collectors—Inland Revenue or whatever they are dressed up as—have no sophistication when it comes to getting the money back. They demand the money back and they want it back in their period, their time, and they do not regard the personal circumstances of the individuals concerned at all. We also found with tax credits that there is no right of appeal. Those are the two things.
I would be very concerned if the Economic Secretary is confirming that an overpayment in this area is going to be dealt with under the tax regulations as I described. Secondly, there will be no appeal against overpayments—that is the important thing. The Economic Secretary and the Department can pull back the money if they wish, if they feel that they have a case, but the customer should at least have the right to go to an appeal on the merits of the case.
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