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by leave, withdrawn.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
10Account
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. 6.45
pm 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. Members
of the Committee will be interested to know what will happen to the
savings and match payment when a saving gateway account matures. We
shall obviously discuss that in more detail when we reach clause 16,
but it might be helpful if I explain briefly what will happen. We
believe that savers should be able to choose what happens to their
money, so that there is no specified end use for the money built up in
a saving gateway account
or for the maturity payment. We do, of course, hope that many account
holders will choose to keep the money in a savings account of some sort
and continue saving. The evidence of the pilot showed that many will.
We shall also be amending the ISA regulations so that saving gateway
account balances and maturity payments can transfer to an ISA as a
transfer of previous years’ subscriptions, meaning that it will
not count towards an individual’s normal annual subscription
limits for the year in which the transfer is made. I hope that I have
provided some clarification of the Government’s intentions with
regard to how the regulations will operate. Question
put and agreed
to. Clause
10 ordered to stand part of the
Bill.
Clause
11Returns
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
12Returns
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. In
practice, any sums that are to be recovered by HMRC in relation to
saving gateway accounts will be dealt with by the same staff who
recover HMRC debts
generally. The application of part VI of the Taxes Management Act allows
those staff to make use of the normal collection and recovery powers
used to collect tax. The same approach, of treating sums to be
recovered for the purposes of part VI of the 1970 Act as though they
were tax due, is also used, for example, when recovering sums in
relation to child trust funds and tax credits. My hon. Friend rightly
makes a number of points about those areas. What we are doing is
regarded as quite normal, but obviously we hope that the
situations in which the overpayments might arise will be
extremely
few. 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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