Clause 4
12:30 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
I beg to move amendment 28, in clause 4, page 3, line 20, at end insert—
‘(d) The Maturity Period shall not be less than 2 years.’.
Clause 4 contains two key parameters in determining how the account will operate. One is the maturity period—the period over which the matching contribution will be calculated—and the other is the maximum monthly contribution. In keeping with the general spirit of the way in which this Bill has been put together, these important details have been relegated to secondary legislation. My amendment probes—at this stage, rather than waiting for the discussion of secondary legislation—the rationale the Government have used to justify a maturity period of, say, two years. In considering the next amendment, I will talk about why the figure of £25 a month has been suggested.
The argument about the maturity period made in the evidence session last week by people such as Teresa Perchard and Sharon Collard was that if someone had not learnt the saving habit in two years, it was very unlikely that they ever would and that two years was reasonable. I wonder whether the Economic Secretary gave consideration to a period longer than two years to enable people to learn the saving culture—say, three years—to get it embedded. One point discussed last week was the likelihood that people would continue to save after the two-year period expired. There was evidence that a significant minority of people did continue to save, but not the majority.
There are reasons why people would want to take money out of their account—perhaps they had saved with a particular purpose in mind, perhaps there was an urgent need to meet an unexpected expense—so there may have been good reasons why the participation did not continue beyond two years. However, it does raise the question—given that it was only a significant minority, rather than majority—whether a longer period would be needed to encourage more people to save, to ensure that the saving habit is fully inculcated. That is the thrust behind my amendment as, other than that, there is not much to say about inserting two years as a maturity period.