I join other right hon. and hon. Members in sending my condolences to David and Samantha Cameron on the death of their son, Ivan.
I beg to move amendment 11, page 1, line 15, at beginning insert 'Subject to subsection (4) below,'.
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With this it will be convenient to discuss the following:
Amendment 12, page 1, line 19, at end insert—
'(4) If a person was eligible to receive a notice of entitlement by virtue of section 3(1) but had ceased to be eligible before the notice of eligibility was issued, then the person is still entitled to receive that notice.'.
'or the person is aged between 18 and 65 and has an annual income of less than that prescribed by regulations;'.
Amendment 4, page 2, line 35, clause 3, leave out 'subsection' and insert 'subsections (1) and'.
Amendment 13, in page 3, line 3, clause 3, at end insert—
'(8) The Treasury will each year lay before Parliament a report which sets out the number of people who—
(a) are eligible to hold a Savings Gateway account by being entitled to each of the benefits and tax credits listed in subsection (2) above;
(b) are aged between 18 and 65 years old and earn less than any amount prescribed under regulations made under subsection (4) above; and
(c) have opened a Savings Gateway account in that year.'.
This group of amendments focuses on eligibility, a topic that we discussed at some length during what were relatively short Committee proceedings. Today provides an opportunity to retrace two issues covered in this group of amendments. First is the issue that we debated on the first day of the Committee proceedings about what happens to those who move on and off benefits during the time it takes to send out notices of eligibility. The second issue relates to the fact that the Bill is designed to encourage people on low incomes to save, and the Government use benefit entitlements as their proxy for that group. We need to understand the difference between the number of people who are entitled to receive benefits that effectively passport people on to the savings gateway account and the number of people in the low-income group. I set out two different approaches in amendments 3, 4 and 13 to address that issue.
I shall deal first with amendments 11 and 12. As I said in my opening remarks, they arise from a debate that we had in Committee. The Bill sets out the requirement for someone to be issued with a notice of eligibility on the relevant date, and we debated in Committee at some length what happens when someone becomes eligible for jobseeker's allowance at the start of a period just after the last batch of notices have been sent out, then ceases to be eligible for that allowance before the next batch are sent out. Given that the notice of eligibility drives the ability to open a gateway savings account, we identified in Committee the risk that people who have moved on and off benefit between those two dates of issue may well, although eligible to open a savings gateway account in principle, miss out on that opportunity because they did not qualify on the date that the notice was sent out. That is why amendment 12, in particular, focuses on that matter. It would insert a new subsection (4) into clause 1.
That matter was left hanging in Committee. The Economic Secretary assured us that
"we do not want to stop people who fit our normal criteria receiving support under the Bill". ——[ Official Report, Saving Gateway Accounts Public Bill Committee,
I have tabled amendment 12 to take that matter a little further today. Since I tabled it, and perhaps even triggered by that, the Minister has kindly written to the Chairmen of the Public Bill Committee and circulated the letter to other Committee members, stating that people who ceased to be eligible by the date on which the notice of eligibility was sent out would still receive that notice. We are grateful for that clarification, but it would be helpful for that to be on the record in the House rather than in a letter. I am sure that he will want to make that clear.
Amendments 3 and 4 are the first way in which we wish to ensure that people who would be eligible for the saving gateway by virtue of being on low income are picked up by the system. As I said, the Government have used eligibility for certain benefits as the criteria for eligibility for the gateway. That means that only people in receipt of those benefits can take part and qualify for a saving gateway account. There may be people on low incomes who do not qualify for benefits and who will miss out as a consequence.
In Committee, Dr. Ladyman tabled amendments intended to increase the number of benefits that would enable eligibility. My amendment takes a different direction. It would set out in the Bill the fact that the group that we are targeting are people on low income. It is worth remembering that some categories of people on low income are ineligible to receive some of the qualifying benefits. For example, somebody who is unmarried, childless and under the age of 25 does not qualify for tax credits. A person on low income below that age would not have a route to access saving gateway accounts, and the same applies to a married couple under that age. In considering how to implement the idea of providing an incentive for those on low income to save, I wonder whether the Government have considered the number of people who fall outside the specified categories and who, despite being on low incomes, will not be eligible because they cannot claim a benefit.
I appreciate that there is a cost attached to my suggestion, because the method that the Government have adopted builds on data that the Government hold either at Her Majesty's Revenue and Customs or the Department for Work and Pensions, and it is relatively easy to use the existing databases to send out a notice of eligibility. It would be much harder for the Government to capture people on low incomes who do not qualify for benefits, and it would require a new apparatus of means-testing and forms to be completed when making a claim. The Government might argue that the cost of that additional apparatus is disproportionate to the benefit that it would confer on a new group of recipients, in addition to the costs that would arise through more people saving and qualifying for matching contributions.
The amendment is probing rather than one to be pressed to a vote, but it is also meant to be almost a reserve power that the Government could deploy if they believed that the proportion of people who are brought within the scope of the saving gateway through qualifying for the benefits in clause 3 is too small compared with the total population of people on low incomes whom they feel should benefit. A Government could deploy that power in future.
Part of the challenge is that we do not know what the gap is. We do not know how many people should be eligible on the basis of low income and how many are eligible through passporting benefits. Amendment 13 tries to establish the populations as well as identifying the take-up of the savings gateway account in a particular year. It is important to ascertain the effectiveness of the scheme's take-up rate. Perhaps the Economic Secretary will be so taken with the logic of amendment 13 that he would like it to be in the Bill.
Amendment 13 is insightful, but proposed new subsection (8)(b) refers to those aged between 18 and 65. In a week when a 13-year-old has fathered a child, will my hon. Friend encourage the Economic Secretary to consider whether people would be eligible at 16 or even younger? I do not suggest 13 as an appropriate age, but 16 might be.
My hon. Friend makes an important point, and I wish I had consulted him before tabling the amendments—perhaps I could have benefited from his wisdom in setting a more flexible starting date for the benefits. I am not sure how 13-year-old fathers fit into the benefits system and whether, as a consequence of claiming tax credit, they would be eligible for a notice to be issued to them under the Bill. However, my hon. Friend makes an important point about understanding who will be excluded from the measure through the Government's criteria. It is important to tease that out from the Economic Secretary today. I do not believe that we addressed it specifically in Committee. Given the aim of the measure, which is to encourage people on low incomes to save, it is important to understand how many people who are on low income but not eligible for benefits will be excluded from participating in the saving gateway account.
The five amendments are straightforward. Two of them give the Economic Secretary the opportunity to put on record the assurances that he gave the Committee in writing. The other three try to probe how many people will be excluded from participating in the Bill, despite being on low income, because of the route that the Government have chosen of using qualification for existing benefits to establish their entitlement to the saving gateway account.
The Committee stage was consensual, but that does not mean that the Bill could not be improved a little, certainly by one addition. My hon. Friend the Economic Secretary will recollect that I tabled an amendment in Committee to include recipients of carer's allowance among those who were eligible for saving gateway accounts. The Liberal Democrats tabled a similar amendment. I have not tabled such an amendment on Report, and Mr. Speaker would rule me out of order if I sought to debate the merits of including carers in the scheme.
I believe that the amendments that Mr. Hoban has tabled, however, would bring some carers within the ambit of the Bill and make them eligible for the saving gateway account. Amendment 13, which calls on the Government to publish an annual report of account recipients or those who are eligible for the accounts, would allow us to calculate how many carers had been excluded from such accounts, even though we would rather want such people to get the accounts.
I am using that proposal as an excuse to give my hon. Friend the Economic Secretary the opportunity to tell us, hopefully, that the Government intend to table an amendment at some point in the Bill's passage, presumably in the other place, to include recipients of carer's allowance. I understand that he might wish to limit the provision to carer's allowance recipients of working age because, after all, saving gateway accounts are aimed at people on low incomes who are of working age. I would be happy to accept that, but I would be most grateful if he confirmed whether he intends to table such an amendment.
Having said that, I apologise to colleagues in all parties and to the Economic Secretary; a group of girl guides from my constituency wants to see me at 1 o'clock and I know that hon. Members will not want me to disappoint them. If I do not hear my hon. Friend's response, I assure him that I will read it assiduously afterwards, and I will be back as soon as I have spoken to my constituents and presented them with the awards that they have come here to receive.
I hope that my hon. Friend can comment on the important issue of carers' eligibility to take up the wonderful opportunity that the Government are giving those on low incomes.
Without the distraction of girl guides, I can give my full attention to the important considerations before us. I have some sympathy with the comments of Dr. Ladyman about carers and I am interested in the Economy Secretary's view, because carers seem to be a group that could be included, and many people who fall into that category but not into others that would make them eligible, would appreciate such a gesture. If the Economic Secretary could outline the cost implications of extending the scope of the Bill in the way that the hon. Member for South Thanet suggests, that would be interesting for everybody who has followed the Bill's passage.
The points about eligibility, which amendments 11 and 12 cover, have already been made, and I have nothing to add to the comments of Mr. Hoban, who tabled all the amendments in the group.
I have some sympathy with amendments 3 and 4. I assume that the motivation is to try, when possible, to avoid introducing legislation that creates poverty traps, which lead to what some people call a benefit culture, whereby those who are able just to provide for themselves but are on low incomes are eligible for far fewer benefits or means of support from the state than those who do not make that effort. The former come to regard themselves, with some justification, as being penalised for just about managing to provide for themselves, while others, whom they perceive as striving less hard to be self-reliant, qualify for a greater range of benefits than them. If that is the motivation, I have some sympathy with it, because it is a justifiable grievance. However, there are some concerns, and it would be interesting to know the Economic Secretary's estimate of the number of additional people who would be covered if the amendment were accepted. Would it be a small top-up or are we considering having many tens or even hundreds of thousands of extra people? Obviously, that would have considerable cost implications.
The hon. Member for Fareham cited the example of someone under 25 without children not qualifying for the tax credits. However, I am struggling slightly to think of large numbers of people whose incomes mean that they would be caught by the amendments but are not eligible for benefits. If people can give further examples, that would be interesting.
I suppose that, as a spokesperson for an Opposition party, I should support amendment 13, because Opposition parties are always in favour of the Government being compelled to make more reports to Parliament. Were I pushed to take a view, I suppose I would say that the amendment was a good idea, but I would not be surprised if the Economic Secretary perceived it as a bit onerous. When we pass legislation, we tend to forget about it and move on, but it would be useful and interesting to know how successful the legislation has been and how many people have been enticed by the scheme, so I hope that the Economic Secretary will engage constructively with amendment 13.
A number of hon. Members have pointed out that there was a high degree of consensus on the Bill in Committee. One area where there was perhaps less consensus, and where there is still lingering disappointment, is the extent of continuing parliamentary involvement in and scrutiny of the Bill. I suspect that that sense is likely to arise again today over the third group of amendments, given that we spent considerable time in Committee considering whether much of the delegated legislation should be subject to affirmative or negative resolutions. The essence of that debate also applies today; indeed, it is what lies behind amendment 13, which I am happy to support.
We on the Conservative Benches recognise that the Government want the Bill to have in-built flexibilities, but it is crucial that Parliament should know whether the Bill is a success. Amendment 13 goes to the heart of that. It is right for Parliament to know whether the Bill is working. There is a need for a proper debate. There has been much discussion about eligibility, including on Second Reading and in Committee, and even already this afternoon. There was also quite a lot of discussion about the appropriate financial limit and, I recall, some probing questions from my hon. Friend Mr. Walker in the witness sessions of the Public Bill Committee. I would ask that amendment 13 be supported, because it would introduce a welcome element of report-back on a central part of the success criteria of the Bill.
Let me begin by adding my condolences to those expressed by other right hon. and hon. Members to David Cameron and his wife on their tragic loss.
The amendments in this group cover three areas, relating to eligibility and the notices of eligibility. Amendments 11 and 12, which Mr. Hoban covered, deal with the circumstances in which a person has ceased to be an eligible person but has not been issued with a notice of eligibility, and they seek to ensure that such a person will be sent a notice. We discussed that matter in Committee, as the hon. Gentleman mentioned, and I have since written to explain and clarify the position. The purpose of clause 1(3)(b) is to allow the commissioners for Her Majesty's Revenue and Customs to issue a notice of eligibility to a person who is not an eligible person on that date, but who was eligible for the scheme at an earlier date as determined by them. We have now got to the bottom of the matter. People will be sent a notice of eligibility automatically. Therefore, amendments 11 and 12 are not needed, because the issue is already covered in the Bill.
Amendments 3 and 4 relate to eligibility for the scheme. As hon. Members will know, the saving gateway is targeted at people of working age on lower incomes. The hon. Gentleman's amendments seek to ensure that people in that group who are not entitled to one of the qualifying benefits and tax credits listed in the Bill would still be eligible for a saving gateway account. We have carefully considered the best way of determining eligibility for the saving gateway, including whether it should be based on a means test or on passporting from benefits and tax credits. Again, we rehearsed some of those arguments in Committee.
We believe that passporting is the most simple and effective method available for determining saving gateway eligibility. In particular, passporting will mean that people will not be required to fill out a form or complete a means test to prove that they are eligible for the saving gateway. Instead, they can automatically be sent a notice of eligibility. We also believe that the majority of our target group—working-age people on lower incomes—will be eligible for the saving gateway through the system of passporting set out in the Bill. We expect about 8 million people to be eligible.
A number of hon. Members asked about the specific numbers who might be included if amendments 3 and 4 were accepted. The best figures that we have available are based on taking those on low income to be individuals with incomes of up to £11,000 and couples with incomes of up to £16,000, which is approximately in line with the highest incomes of those claiming one of the qualifying benefits and tax credits. Using that as our yardstick, we estimate that around 4.5 million people of working age on lower incomes will currently not be eligible for the saving gateway through passporting.
However, more than half that number—2.7 million—are eligible for one of the qualifying benefits and tax credits; they just have not claimed them. An important issue of take-up is involved. We are actually talking about 1.8 million people who would not be eligible for those credits who, if they could claim them, could open a saving gateway account. However, this is of course a particular point in time. Many of those of working age who are on a lower income but are not eligible for one of the qualifying benefits and tax credits are likely to become eligible for a saving gateway at some point in their lives. That is an important point.
The amendments would introduce a means test alongside passporting. We have carefully considered that option, too. I accept that it would give some additional people a way of accessing the saving gateway, but it would also introduce extra complexity and costs, and we do not believe that they would be proportionate. First, there would be extra costs for HMRC, estimated at about £2.5 million a year and reducing to about £1 million a year in a steady state. Secondly, there would also be an increased compliance risk in operating a means test, as individuals would be allowed to open a saving gateway account without having previously been through Department for Work and Pensions and HMRC checks to establish their eligibility for other benefits or tax credits. Inevitably, some accounts would be opened but would subsequently have to be closed, in cases where people who would not otherwise have been eligible had mis-stated their income. That would be burdensome for providers of saving gateway accounts.
Thirdly, having two methods of determining eligibility for the saving gateway could be confusing and would certainly add complexity to the system. Some people who are eligible through passporting may think that a means test was required and be put off applying, for example. There are therefore several downsides to introducing a means test alongside passporting. It is also important to remember that although some working-age people on lower incomes may not be eligible for those qualifying benefits or tax credits at a particular point in time, people's circumstances change. For many people, therefore, it will not be a case of missing out on eligibility; rather, it might be one of having to wait until they qualify. Also, people will be able to have only one saving gateway account in their lifetimes in any case.
Members of the Public Bill Committee will remember that the experts who gave evidence were positive about the eligibility criteria and the approach that the Government have adopted. Citizens Advice, for example, compared the system of passporting with the alternative, which Teresa Perchard said was
"an expensive system of targeting, recruitment and application," which would
"load costs on to the accounts and will also be a barrier to take-up."
She also said:
"If the intention is to attract people to save for the first time in their lives, or in their family's history, the Government have come up with an approach that gets the balance right." ——[ Official Report, Saving Gateway Accounts Public Bill Committee,
I appreciate the point that the hon. Member for Fareham has made. Indeed, I have a lot of sympathy with what he has said, because we want people on low incomes to get the savings habit. However, there are a number of practical downsides to introducing a means test alongside the approach of simple passporting, which is why we have taken the decisions that we have.
The last point that was raised on eligibility related to whether people would be eligible at the age of 16 or even earlier. I want to make it clear that, in using a passporting system, we will be depending on the eligibility criteria for the underlying benefits. Some of those will have an age limit of 16; others might have other age limits. However, we are not doing anything in this legislation to change the age limits.
Finally, I will deal with amendment 13. I agree with the hon. Member for Fareham that the saving gateway should be carefully evaluated and monitored. However, I do not agree that it would be appropriate to set out in the Bill an information requirement of the type that he suggests. Similar legislation, such as that relating to individual savings accounts, contains no such reporting requirement. However, as hon. Members may be aware, HMRC publishes details annually on individual savings accounts subscriptions and valuations, as well as a more detailed distributional analysis of the scheme. A similar approach might well be appropriate for the saving gateway; that will need to be considered in due course. However, we do not believe that it is appropriate to set down in the Bill an inflexible commitment to publish certain data.
As for the data that the amendment would require, I recognise that they might allow some basic calculations to be made about the take-up of the accounts or the coverage of the scheme. At best, however, they could give only a partial evaluation of the scheme's success, against measures such as the take-up of accounts. As hon. Members will appreciate, our objectives for the scheme are far broader than could be encompassed by the metrics that the hon. Gentleman proposes. We could not assess the success of the scheme purely against those factors, because a broader range of factors than those detailed in his amendment will need to be considered. I therefore hope that he will not press it to a vote. I assure him and the House that we want to ensure that information will be made available and that the saving gateway scheme will be properly monitored and evaluated.
My hon. Friend Dr. Ladyman asked about the carer's allowance. I was going to address that matter on Third Reading, but I am happy to confirm that I am certainly minded to table an amendment for consideration in the other place that would ensure that people of working age in receipt of carer's allowance should be able to qualify for opening a saving gateway account. It is my understanding that the cost involved would be about £5 million in 2012-13, and a few million in subsequent years, but based on our discussions in Committee and on further reflections and discussions with other groups, I believe that extending the qualifying benefit in that way would be a good thing to do. I hope to be able to table that amendment at a subsequent stage.
I am grateful to my hon. Friend for those comments, and I am glad that I was able to get back into the Chamber in time to hear them. When Ministers show themselves to be open minded and genuinely reasonable, we ought to put on record how grateful we are to them. I should therefore like to record my thanks to my hon. Friend, and I am sure the thanks of all those carers who will get a positive benefit from the opportunity of having a saving gateway account, assuming that the Lords and then this House agree to his amendment. I thank him very much.
I welcome my hon. Friend's comments. It is right that the Government should always be open to listening to arguments, and when we find good, persuasive arguments, we ought to respond to them. That is what I have tried to do here.
I have listened to the arguments on amendments 11 and 12, which I think are unnecessary, and I hope that the hon. Member for Fareham accepts that. On his amendments 3 and 4, I have a lot of sympathy with wanting to extend the target group, but I do not want to introduce a means test alongside a simple passporting system. We have a good basis for proceeding as we are at the moment. There is a strong case for encouraging greater take-up of qualifying benefits, and that has been an objective of the Government. We will need to continue to persuade people who are entitled to claim benefits actually to do so, and then to go on to open a saving gateway account.
I appreciate the probing way in which the hon. Gentleman spoke to amendment 13. It is right that we should monitor and evaluate the saving gateway account. It is also right that we should provide sufficient information to people. We will do that, but I do not think that doing so in the way that he has specified needs to be put in the Bill. That is not the normal way in which we do things. I therefore hope that he will not press his amendments to a vote.
I thank the Minister for the way in which he responded to the amendments, and for his suggestion that an amendment will be tabled in the other place to include those in receipt of carer's allowance, which demonstrates the Government's ability to listen to proposals made in Committee.
I am pleased that the girl guides of South Thanet did not detain Dr. Ladyman for much longer; otherwise he might have missed hearing about that concession. I am sure that a girl guides badge is winging its way to the hon. Gentleman for being punctual and timely in his appearances, both in and outside the Chamber.
I am pleased that the Minister put it on record that clause 1(3)(b) covers the circumstances that we debated in Committee. It was not clear what circumstances the subsection applied to, so it is useful that he made it clear that it applies to a situation in which people cease to be eligible for qualifying benefits between the times at which the notices are sent out.
On amendments 3 and 4, the Minister helpfully set out the scale of the challenge that we face. He said that 8 million people will be eligible by virtue of qualifying for the benefits in question, but that there were 4.3 million people with incomes of less than £11,000 for a single person or £16,000 for a couple—
I will come back to the Minister's 4.5 million, because his maths did not quite add up. I had a figure of 4.5 million as well, but he then said that 1.8 million people would not be eligible and that 2.7 million were not taking the benefits up. There are 12.5 million people who would qualify for the saving gateway account on the basis of their income or their eligibility for benefits, and half of them are effectively excluded because they do not take up their benefits. There are 4.3 million on low income who might qualify if a means-tested scheme were introduced, and 8 million are eligible by virtue of claiming the qualifying benefits. So there is a large number of people on a low income to whom the scheme will not be relevant at the moment.
Mr. Browne mentioned the tension between those who are on benefits and those who are not. This topic crops up in our surgeries and our correspondence. People ask, "Why are they entitled to that when they are on benefit?" and "Why aren't I entitled to it?" We need to consider the equity involved, and to get the balance right.
I just want to be clear about the numbers of people involved. Our estimate is that 8 million people will qualify for a saving gateway account. We estimate that about 4.5 million working-age people on lower incomes will not qualify through passporting, 2.7 million of whom would qualify if they decided to take up the qualifying benefits. My suggestion is that if they are not at the moment taking up qualifying benefits to which they are entitled, they might not want to fill in a means test. That leaves out 1.8 million people, who represent a real issue. We would like to provide assistance to them, just as we would like the 2.7 million people to get the benefits to which they are entitled and to consider opening a saving gateway account. I hope that this intervention has provided some information so that we are all talking about the same numbers.
Indeed, I was coming on to the issue of the 2.7 million people who are eligible to claim those benefits but do not take them up. It is important to take that into account as we look to any extension of the scheme. As Mr. Browne said, there is a tension resulting from differences in perceived levels of entitlement. However, if 2.7 million people are eligible to take up these benefits but do not do so, I share the Minister's view that they are unlikely to go for a different form of means-testing to open a saving gateway account. Our debate on numbers has been helpful, because it has shown the scale of the problem. The additional costs that would be incurred by having to set up a means-testing scheme lead one to question whether there is sufficient merit behind the argument to extend the scheme to people on low incomes who are not currently in receipt of benefits.
I also accept the point about the flow of people through the system. We touched on that issue occasionally in Committee, and it certainly applies here. The Public Bill Committee debated the issue of people coming on and off jobseeker's allowance and we discussed a contribution-based benefit for those on low incomes. People will qualify for these benefits at different points in time, raising the question of the best time to capture them. Until people receive benefit, however, they will not be eligible for a saving gateway account.
The Bill is a partial solution to encouraging people on low incomes to save. It is probably the most cost-effective solution, but it is not necessarily the ultimate answer, as more work needs to be done to encourage people on low incomes to save, particularly those who are not eligible for this scheme. Perhaps the Financial Inclusion Taskforce could work on how to target that group.
Amendment 13 was intended to probe different means of identifying whether the scheme targets all those on low incomes. As the scheme is evaluated, I hope that the mismatch between eligibility through the passporting route and the proportion of the population on low incomes who are eligible will be a central feature because it will enable us to determine whether the scheme needs to be refined, not just in respect of the additional benefits but in relation to whether other ways can be found to roll out the saving gateway account to meet the needs of those who do not currently qualify for it.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.