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Clause 5 - Drawdown requirements for SaRA schemes

Part of Rights of Savers Bill – in a Public Bill Committee at 3:15 pm on 14th December 2005.

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Photo of Stephen Timms Stephen Timms The Minister of State, Department for Work and Pensions 3:15 pm, 14th December 2005

Subsection (6) proposes three quite different purposes for which drawdown would be permitted. The first and third of them are interesting. The first is the purpose of

“providing financial assistance to the account investor in making his first house purchase”.

The Government are committed to extending the extent of home ownership. I can also see a case for the third, particularly with the addition of the word “accredited” as suggested by the hon. Member for Weston-super-Mare (John Penrose). However, the second purpose sits rather oddly—the purpose of assisting a child to make

“the child’s first house purchase for his occupation as his principal residence.”

We need to be clear in our minds about the purpose of the substantial tax advantages that would be conferred on people saving for a pension. Why are those substantial tax benefits provided? It would be difficult to argue plausibly that it was right for the generous tax advantages of pension saving to be extended to providing access to funds to a child, let alone a grandchild, to buy a first house. Indeed, if we were to extend them to grandchildren, why not other people?

I am interested in purposes (a) and (c), but purpose (b) is much harder to justify, especially if it is to be amended as suggested by the hon. Gentleman.