Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)

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 (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

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.

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.