Ian
Pearson: I understand the sentiment behind the amendment,
which is that it should be made as easy as possible for account holders
to continue to save once their accounts have matured. We also agree
about the advantages that the ISA offers: the benefits of tax
advantage, saving and ISAs are enjoyed by 18 million people in this
country.
However, my
hon. Friend the Member for South Thanet makes a good point, and we
considered the issue carefully before reaching the decision that we did
not want to mandate a roll-over account. Let me explain why and briefly
mention something about the process. We want to make it as easy as
possible for people to continue to save, so we need to make sure that
people have a choice. However, we also need to ensure that something is
in place for those people who do not make an active decision. Providers
will therefore put in place default roll-over accounts, about which
customers will be told when they open their saving gateway accounts.
That information will be there up
front. As
the end of the two-year maturity period of each saving gateway account
approaches, providers will remind savers of the default option at
maturity, as well as inform them about other options. If the saver does
not make any active decision about what should happen to their money,
it will move into the providers’ default roll-over account.
Providers will be able to choose what that default account should be;
it might be a cash ISA, or it might not. The amendment would take away
that element of choice, and I understand why the hon. Member for
Fareham thinks that that is a good
idea. We
have considered carefully whether the type of default roll-over account
should be mandated, and specifically whether it should be mandated to
be an ISA. However, we have decided to take a flexible approach for
three reasons. First, different potential providers have different
views on the matter, as the Committee heard in the evidence sessions. A
further reason is the point made by my hon. Friend the Member for South
Thanet: if people are in different circumstances, it might be that
mandating an ISA would not be in their best interests. Secondly, in
support of that, last week, Adrian Coles from the Building Societies
Association said that doing
so “could
preclude an institution offering a better account in some
circumstances.”——[Official Report,
Saving Gateway Accounts Public Bill Committee, 27 January
2009; c. 42,
Q78.] Again, I
think that we can all envisage what those circumstances might be.
Thirdly, we want to make sure that potential saving gateway providers
who do not offer ISAs—and there will be some who do not do so,
for whatever reason—are not
excluded. For
those reasons, it is right not to be too prescriptive about the matter.
Obviously, we will want to keep the issue under review and the
Government would, indeed, be very concerned if we thought that the
default roll-over accounts that were being proposed when the saving
gateway accounts were initially offered were not going to offer
reasonable levels of
interest. Different
savers will have different needs and we want them to have a choice
about what should happen to their money. An ISA will certainly be the
right choice for many people, but not necessarily for all. Having heard
those reasons, I hope that the hon. Gentleman will seek leave to
withdraw his
amendment.
Mr.
Hoban: I am not entirely convinced by the Economic
Secretary’s argument and neither was I convinced by the
arguments made by some of the potential account providers at the
evidence session. The Economic Secretary occasionally accused
me—jokingly, I think—of being the banker’s friend
in debates on the Banking Bill. I was not entirely convinced by the
evidence that potential account providers gave that they might wish to
offer higher rate accounts and a cash ISA. I hope that my scepticism is
ill founded and that in reality, they will offer higher rate accounts.
The Economic Secretary has said that he will keep this under
review. Mr.
Jeremy Browne (Taunton) (LD): One of the best ways to sell
this legislation to the taxpayer—who, it is estimated, will pay
in excess of £100 million a year to finance the scheme—is
that it should imbue a saving culture among the people who participate.
Surely, that goes to the nub of the issue. We should not compel people
to save, but we should do our best to ensure that there is some easy
provision for continuing to save beyond the two-year
period.
Mr.
Hoban: I agree completely. The default should be an easy
way of ensuring that people continue to save and put into practice the
habits that they develop over the two-year period. That is
important. The
Committee should send a clear message to potential providers that we
expect them to provide a reasonable rate of return on the default
account—it should not pay only a fraction of 1 per cent.
interest, as some accounts do at present. These people should not be
treated as second-class citizens. They should have access to default
accounts with a good rate of return, and I believe that we all agree
about that. I would prefer a bit more compulsion and less emphasis on
encouragement, but I beg to ask leave to withdraw the
amendment. Amendment,
by leave, withdrawn.
Clause 16
ordered to stand part of the Bill.
Clauses 17
to 20 ordered to stand part of the
Bill.
Clause
21Penalties:
non-compliance by account
provider
Mr.
Browne: I beg to move amendment 12, in clause 21, page 9,
line 39, leave out ‘£300’ and insert
‘£3,000’. Good
morning, Mr. Taylor. We just passed clause 19 rather
quickly, but Members who look at it will see that it includes a
provision for imposing a £3,000 penalty on account holders who
break the rules. We have just agreed to put that into
effect. Clause
21 sets out the penalties and sanctions for account providers if they
break the rules, but we can see if we compare clause 19 with clause 21
that, whereas an account holder can be fined up to £3,000 for
violating the rules, an account provider can be fined only one tenth of
that amount—£300. There is a long list of rules that they
are compelled to keep—nine of them in subsection (1). It would
seem reasonable that account providers who break the rules should be
subject to the same penalties as account holders who break the rules.
That is the purpose of my
amendment.
Ian
Pearson: It might be helpful if I explain that the penalty
regime for saving gateway accounts has been modelled closely on the one
for child trust funds, as the schemes share several common features. We
have not experienced any difficulty with the operation of child trust
funds, and this penalty structure closely mirrors that one. The penalty
will not exceed the greater of £300 or £1 per account
affected. Saving gateway providers may also be child trust fund
providers, so having the same penalties will provide
consistency. In
any event, we consider that setting the penalty at £300 is
proportionate in all circumstances. Banks and other institutions that
may offer saving gateway accounts—there are other providers of
child trust fund accounts, including credit unions—will be
familiar with this regime. We do not expect it to cause any
complication and so do not believe that the amendment is necessary. I
ask the Committee to resist
it.
Mr.
Browne: I wanted to test the water on that one. It was
helpful to hear the Economic Secretary’s comments, although the
situation still seems somewhat anomalous. I hope that there will be no
violations and that we will therefore never find out whether the
anomaly would be keenly felt by my constituents. With that, I beg to
ask leave to withdraw the
amendment. Amendment,
by leave, withdrawn.
Clause 21
ordered to stand part of the
Bill.
Clause
22Decisions
and
notices
Mr.
Browne: I beg to move amendment 13, in
clause 22, page 10, line 24, leave
out ‘issued’ and insert
‘received’. This
amendment is more likely to affect our constituents than the one that I
have just tried, unsuccessfully, to make to the Bill. Subsection (7)
states: “A
penalty must be paid within 30 days beginning with the date on which
the notice of the penalty was issued.”
The amendment would
replace “issued” with “received”. I accept
that that change would not make much difference in most cases. However,
I am told that I will struggle to get back to my constituency later,
because the west country is covered in snow, and although I accept that
it is unlikely that snow will continue to lie deep on the ground for
the next month, one could imagine how an extreme weather event, as BBC
meteorologists have started to call them, or a postal strike could mean
that the 30-day period would be considerably reduced by the time
someone received the notice. Similarly, someone who lives in two places
or who works away from home for a period or who comes back from a
two-week holiday to find that a notice was issued in their absence will
have a reduced period in which to pay. In such cases, the period of 30
days, which sounds generous, might be less generous if taken from the
date of issue, rather than the date of receipt. I suspect that the
Economy Secretary will say that it will be difficult to measure the
date on which a notice is received, but, nevertheless, my purpose is to
try to ensure that no one is unfairly penalised, because of factors
outside their
control.
Ian
Pearson: I have a great deal of sympathy with what the
hon. Gentleman is trying to do. He wants the penalty charge to be
payable within 30 days of its receipt, rather than its issue from HMRC,
and he rightly points out that the notices could be delayed in transit.
If a big freeze-up lasted for a considerable time and post could not
get to account holders, HMRC would want to address that issue and, I
expect, allow some flexibility. The key reason why the time limit runs
from the date of issue is to provide certainty, because HMRC will know
that date without needing to investigate further.
It would be a
complete change from HMRC’s normal operating procedures to do
what the hon. Gentleman suggests for saving gateway accounts. As he is
aware, there is frequently debate about whether documents have been
received, and creating potential for dispute between HMRC and people
who have been issued with penalty charges about when notices were
received and whether penalties have been paid within the permitted time
period would add unwarranted complexity. We do not expect that
penalties will be required on many occasions, and it is right to mirror
current provisions, such as those on the issuing of notices in relation
to child trust funds. Similar provisions on tax debts, which are
charged under section 100(3) of the Taxes Management Act 1970,
established the normal way of doing things. If the hon. Gentleman
thinks about this at any great length, he will appreciate the
difficulties of using the date of receipt, such as the lack of legal
certainty that would be involved in any dispute between parties. I
hope, therefore, that he will withdraw his
amendment. 9.30
am
Mr.
Browne: The Economic Secretary is helpful and if I were in
his shoes, I would take the same view. I am sympathetic to the
Government’s position that there is greater clarity in the
current legislation, because it has allowed me to make a valid point. I
sign letters that are sent to me in big bundles from my constituency
office sometimes a few days after they have been dated, so I hope that
the Economic Secretary will do his best to ensure not only in this
legislation but more generally that HMRC does not routinely send out
letters or
penalty notices several days after the letters have been dated. There is
no provision to prevent that from happening. HMRC could send out
letters several weeks later and people could be unreasonably penalised,
even though, in law, HMRC is entirely in the wrong. I hope that that
scenario is entirely hypothetical, and on that note, I beg to ask leave
to withdraw the amendment.
Amendment,
by leave, withdrawn.
Clause 22
ordered to stand part of the Bill.
Clause
23 ordered to stand part of the
Bill.
Clause
24Exercise
of rights of
appeal
Mr.
Browne: I rise to speak to amendment 14, in
clause 24, page 11, line 7, leave
out ‘given’ and insert
‘received’. The
amendment has exactly the same purpose as that which we have just
rejected. The clause says that an appeal must be given
“30 days after
the date on which the notice of the decision was
given”, and
the amendment seeks to change “given” to
“received”. However, I think that we examined the issue
during our previous discussion, so I do not know whether it is good
form to carry on. I shall let the Economic Secretary say his bit and
then I shall defer, unless he says something truly shocking.
[Interruption.] I am happy—unless he feels
it discourteous—not to move the
amendment.
The
Chairman: The amendment is not
moved.
Ian
Pearson: I beg to move amendment 40, in
clause 24, page 11, line 8, leave
out ‘an appeal’ and insert ‘a
tax appeal or a Northern Ireland
appeal’.
The
Chairman: With this it will be convenient to discuss
Government amendment
41.
Ian
Pearson: These are the only two Government amendments to
this Bill, unlike the Banking Bill, in which the hon. Member for
Fareham and I have participated, which required extensive amendment. I
congratulate my team on this Bill for the diligence and thoroughness
with which they have prepared the original legislation.
The
Government propose a minor amendment to subsection (2). Hon. Members
will know that the subsection sets out the requirement for the content
of the notice of appeal to be submitted by the appellant when an appeal
is made under clause 23. The amendment would restrict those
requirements so that they applied only to those saving gateway appeals
that concerned tax matters, and to tax and non-tax saving gateway
appeals in Northern Ireland. We intend that other saving gateway
appeals should be covered by the separate provision on this point, and
that was recently made in the tribunal procedure rules for the social
entitlement chapter of the first-tier tribunal. There is little
difference in substance between
the requirements set out in this Bill and those in the tribunal
procedure rules. Both require that the notice of appeal be signed and
the grounds for appeal be specified. However, the Government believe it
neither necessary nor appropriate for the Bill to contain provision on
that point when provision has already been made in the tribunal
procedure rules. The rules can be amended in due course so that they
apply to saving gateway appeals where appropriate. The amendment would
remove any scope for confusion about which set of rules
apply. Amendment
40 agreed
to. Amendment
made: 41, in
clause 24, page 11, line 14, at
end insert— ‘( ) In
subsection
(2)— “tax
appeal” means an appeal in any part of the United Kingdom
against a requirement to account for an amount under regulations made
under section
14; “Northern Ireland
appeal” means an appeal in Northern Ireland against any other
requirement or decision.’.—(Ian
Pearson.) Clause
24, as amended, ordered to stand part of the Bill.
Clauses 25
and 26 ordered to stand part of the
Bill.
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