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Help-to-Save accounts: further provision

Savings (Government Contributions) Bill – in the House of Commons at 6:30 pm on 12th December 2016.

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Amendment proposed: 2, page 17, line 36, at end insert “(d) a credit union.”—(Mr Gareth Thomas.)

Question put, That the amendment be made.

The House divided:

Ayes 227, Noes 279.

Division number 106

See full list of votes (From The Public Whip)



Question accordingly negatived.

Amendments made: 4, page 18, line 20, after “amount”, insert “(which may be nil)”.

This amendment would allow Treasury regulations to specify that the maximum monthly amount that may be paid into an account is nil in certain circumstances (for example where the saver is not in the UK).

Amendment 5, page 19, line 15, at end insert—

“Account provider to be notified about absence from UK

11A (1) Treasury regulations may, in connection with any stipulation that (directly or indirectly) links entitlement to bonus in respect of a Help-to-Save account with the presence in the United Kingdom of the individual for whom the account is opened—

(a) impose duties to notify the account provider about absences of the individual from the United Kingdom;

(b) make provision for the imposition of a penalty, which must not exceed £300, for failure to comply with a duty imposed under paragraph (a).

(2) Paragraphs 44, 45, 46(1), 47 to 49 and 52 of Schedule 36 to the Finance Act 2008 (penalties: liability, assessment, appeals and enforcement) apply in relation to a penalty under regulations under sub-paragraph (1)(b) as they apply in relation to a penalty under paragraph 39 of that Schedule.

(3) An assessment of a penalty under regulations under sub-paragraph (1)(b) must be made—

(a) within the period of 12 months beginning with the date on which the failure first came to the attention of an officer of Revenue and Customs, and

(b) within the period of six years beginning with the date on which the person became liable to the penalty.

(4) Without prejudice to paragraph 49(2) of Schedule 36 to the Finance Act 2008 (enforcement) as applied by sub-paragraph (2), regulations under sub-paragraph (1)(b) may (in particular) provide for a penalty under such regulations to be deducted from amounts to be paid by way of bonus in respect of the Help-to-Save account concerned.”—(Jane Ellison.)

This amendment would allow Treasury regulations to impose duties requiring that account providers are informed about an individual’s absence from the UK, where that absence could be relevant to the amount of bonus which is payable in respect of a Help-to-Save account.

Third Reading

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury 7:11 pm, 12th December 2016

I beg to move, That the Bill be now read the Third time.

I thank all right hon. and hon. Members who have taken the time to scrutinise the Bill during its passage through the House for the good, constructive debates, which have been very helpful. We want to make it easier for everyone to build up savings, to meet their ambitions and to feel secure in their personal finances, and we have already set to work to make that the case. We put an end, for example, to 17 million people having to pay tax on the interest they received on their savings and we announced the biggest ever increase in the ISA allowance, to £20,000 from April next year. This Bill, legislating as it does for the lifetime ISA and the Help to Save account, carries on that hugely important work.

As we have heard, the lifetime ISA provides a new option for young people looking to save for the long term. It is a positive move for savers that complements pensions and is yet another way in which we are supporting people who are doing the right thing and putting money aside.

Help to Save has received cross-party support in the House. We know why this is so important. Research from the Centre for Social Justice estimates that 3 million low-income households have no savings at all, so we can be in no doubt that moving forward with this account is a hugely important step.

The Savings (Government Contributions) Bill is important, and its passage through the House has been met with thoughtful and constructive challenge. We have debated a number of important principles during our deliberations, but the Bill is fundamentally about people who are trying to save for the future so I have no hesitation—indeed, I take great pleasure—in commending it to the House.

Photo of Peter Dowd Peter Dowd Shadow Financial Secretary (Treasury) 7:13 pm, 12th December 2016

I echo the Minister’s sentiments about the scrutiny the Bill has received. I am grateful to the witnesses who came to our sessions, as well as for all the written evidence, informal information and contact that we received.

Of course, the provisions are in two parts: the lifetime ISA and Help to Save. No one has any objection to helping people to save; it is a question of how to do it. We are not convinced that the Bill will help people to save. We do not think that there is sufficient evidence to back up what the Minister said and we do not think that it sorts out the problem with the shortage of housing. It sets aside £1.8 billion by 2019-20, there are questions about its value for money, and we think that it complicates the market and might introduce a Trojan horse. Not everybody is convinced about it.

I am not sure that Help to Save does the business for those on a low income. It comes in the wake of major cuts to tax credits and only puts a little drop back into a very big ocean. The Government should listen to what many people, including our witnesses, have said. Nevertheless, we accept that we need to help people save for the future, and all the information that has been provided to us sets the scene for continued future debates. I thank the Minister for her helpfulness and civility throughout the process.

Photo of Ian Blackford Ian Blackford Shadow SNP Spokesperson (Pensions) 7:15 pm, 12th December 2016

I must say that I think we will repent of this legislation in due course. We cannot get away from all the evidence that was presented to us. The evidence from the Association of British Insurers makes it abundantly clear that anyone who has the opportunity to invest in a workplace pension will be worse off investing in a LISA than investing in their pension. I listened to the Minister talking about those who are self-employed and who do not have the opportunities and advantages of auto-enrolment when what we should have been doing was introducing legislation to deal with that problem.

We have the opportunity to do that when we review auto-enrolment next year. There is no need for this legislation for ordinary people; they will not benefit from the LISA. I put it to the House that this will reward those who have already maxed out their pension schemes by giving them another opportunity that will help them through this Government bonus. It is not so much a LISA as what we would call a “Rupert”—a really useful perk for extremely rich Tories. They are the only people who will benefit from the Bill.

When it comes to what is really important, I am delighted that True Potential has published its evidence today. Let me give two statistics from that. First, 30% of people aged between 25 and 30 would, if given the opportunity, choose a LISA instead of a pension, and 58% of 25 to 34-year-olds would choose the LISA for retirement savings. We know that those with the opportunity to invest in a pension will always be better off. As I said on Second Reading, the Government have wilfully created circumstances in which young people in this country will be mis-sold LISAs. The Government should be utterly ashamed.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 7:18 pm, 12th December 2016

I was a member of the Bill Committee and I made many of the points I wish to make at that time. I was not able to be in the Chamber for the first part of this debate, but I wanted to say a few words in support of what we have heard from the Opposition Front Bench. My hon. Friend Peter Dowd and Ian Blackford, speaking for the Scottish National party, have expressed strong words of scepticism about the Bill. I reinforce those words.

The very poorest need a much bigger state pension. For many people, a compulsory earnings-related state pension scheme would be much better value and would guarantee that everybody saved some of their earnings for a decent old age. That would be a much more positive way forward. I echo what has been said by the Opposition Front Benchers and am grateful for this opportunity to speak.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party, Shadow Minister (Communities and Local Government) 7:19 pm, 12th December 2016

It is a pleasure to follow my hon. Friend Kelvin Hopkins. I did not have the privilege of serving on the Bill Committee, but I spoke on Second Reading and on Report. I welcome Ministers’ commitment to continue to engage with credit unions, which was the primary issue I sought to raise.

There is one issue we did not address in relation to Help to Save. With a national provider—National Savings & Investments—it would be relatively easy to disaggregate the data on who is taking advantage of the Help to Save product and to publish them in an anonymised form. We could track the postcodes to see where people are taking advantage of it. I raise that issue in the context of work that the Treasury is doing with the British Bankers Association to encourage banks to publish data about what financial services products are being offered to whom and who is taking advantage of them. The banks have been forced, reluctantly, to reveal where they are lending, but the information being provided is not yet perfect—we are on a journey with the banks.

One thing the Treasury could do once it gets this Bill through both Houses, as it seems likely to, is to require NS&I to publish on a postcode basis where people are taking up the Help to Save product. I commend that point to Ministers, and I hope they will take it up. I also hope that Members of the other House will explore this additional issue in a little more detail.

Question put and agreed to.

Bill accordingly read the Third time and passed.