Clause 1

– in a Public Bill Committee at 10:30 am on 3rd February 2009.

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Saving Gateway accounts

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I beg to move amendment 1, in clause 1, page 1, line 4, leave out from ‘by’ to end of line 5 and insert

‘an eligible person (within the meaning given by section 3).’.

Photo of John Bercow John Bercow Conservative, Buckingham

With this it will be convenient to discuss amendment 2, in clause 1, page 1, line 15, leave out subsection (3).

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I welcome you, Mr. Bercow, and everyone else to the Committee. I am sure that I will be first of many to say what a pleasure it is to serve under your chairmanship.

By way of introduction, may I say that the Liberal Democrats support the Bill’s broad principles? We see virtue in incentivising people who are on low incomes to save money. The savings will serve as a buffer against unexpected emergency expenditure. Such accounts should inculcate a savings culture and spread a sense of asset-owning stakes in society.

As one might expect, clause 1 defines the savings gateway account. I confess that amendments 1 and 2 are somewhat finickity. They are designed to improve the Bill’s drafting, rather than to make a broader political point. Clause 1 states that the account holder must first receive a notice of eligibility and secondly be

“an eligible person at the relevant date”.

However, they will not receive a notice of eligibility unless they are an eligible person at the relevant date. The wording is therefore unnecessarily complicated. Amendment 1 would delete the requirement to have received a notice of eligibility. There is no reason why a person who is eligible under clause 3 should have to wait for Her Majesty’s Revenue and Customs to issue a notice. If they have to wait, the danger is that they will be subject to any administrative inadequacies that arise at HMRC. For example, if there was a backlog or a notice was lost in the post, a person who was deemed to be eligible would suffer.

I could speak at greater length, but I have made the point. It is not a major point, but one about drafting. The Economic Secretary may wish to consider not putting that additional obstacle in the way of people who want an account. If they are eligible, the additional criteria are unnecessary.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I assume that the notice is required because an account provider will know that somebody is eligible if they can furnish them with the notice. If there is no requirement to produce the notice, how will a person who qualifies under clause 3 prove to the account provider that they are eligible?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

My understanding is that such people would be deemed eligible. The essential point is that, if they have received the notice, they must by definition have been eligible on that date; otherwise they would not have received the notice. I am willing to have further light shed on that by the Economic Secretary before we get on to the more substantial aspects of the Bill.

Photo of Stephen Ladyman Stephen Ladyman Labour, South Thanet

I welcome you, Mr. Bercow, to the Committee and look forward to serving under your chairmanship.

I have a quick question along the same lines as that asked by the hon. Member for Taunton, who tabled these amendments. Given our experience of the occasional inefficiencies of HMRC, I wonder how many of our constituents will not get their notice of eligibility when required, and how many will end up in their MP’s office, asking for help to get them. I would like assurance from my hon. Friend the Economic Secretary that notices will be issued as soon as someone becomes eligible, that some mechanism will be put in place to ensure that they  are routinely issued and that we can count on everyone eligible having a notice as soon as they are entitled to go to the relevant account provider and open one of the savings accounts. It seems to me that we might be adding possible inefficiency to the process by doing things in this way. I should like to hear his comments.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

It is a pleasure to serve under your chairmanship, Mr. Bercow. I hope that I can persuade the Committee that we are not placing burdens or, in the words of the hon. Member for Taunton, being pernickety and overcomplicated. We are actually providing opportunities, and I would like to explain why the legislation should stand as it is.

As the Committee is aware, clause 1 sets out the general features of the saving gateway account, including specifying that it is an account

“held by a person who has received a notice of eligibility...and who was an eligible person at the relevant date.”

We will discuss eligibility in more detail when we come to clause 3, but, broadly, to be an eligible person someone must be entitled to one of the qualifying benefits or tax credits and have a specified connection with the UK. In most cases, the relevant date will simply be the date when a notice of eligibility is issued to the person by HMRC. I tell my hon. Friend the Member for South Thanet that we will make sure that that is done in an orderly and timely way.

Our intention is for data to be transferred from the Department for Work and Pensions to HMRC, which will issue the eligibility notices frequently, possibly fortnightly or monthly. Some people might move off a qualifying benefit before they receive their notice of eligibility. In those circumstances, because we do not want to stop people who fit our normal criteria receiving support under the Bill, it is important to have both elements of the eligibility criteria: receiving a notice of eligibility and being eligible at the relevant date.

Under amendments 1 and 2, anyone whose eligibility status changed would have to lose their saving gateway account. That would be confusing for account holders and costly and complicated for account providers. Amendment 2, in particular, would remove the definition of the relevant date for the purposes of subsection 1(a), and if amendment 1 was not agreed, the conditions set out in subsection 1(a) for a saving gateway account holder to be someone who was an eligible person at the relevant date could not be satisfied. As a result, no account held could be a saving gateway account, because there would be no way of identifying the relevant date. I hope, therefore, that the hon. Gentleman will withdraw the amendment.

I will say something more specifically about subsection (1)(a), under which people who are eligible on the relevant date will be able to keep their accounts and receive the match payment, regardless of whether they remain eligible. Removing an account from people whose eligibility status changed could, though this is unlikely, provide a perverse incentive for eligible people not to seek to move back into work, or into higher paid work, to maintain tax credit or benefit status. It would also make the accounts more complicated for providers and the Government to administer, as accounts would have to be closed frequently. That would be extremely burdensome for providers, which is another good reason for us to resist amendments 1 and 2.

Photo of Stephen Ladyman Stephen Ladyman Labour, South Thanet

I want to clarify something that arose in the evidence sessions, and I will want to return to it under clause 3. Am I right to think that my hon. Friend said that, if someone is eligible for a savings account and opens one but goes back to work the next day and is therefore not eligible, he or she is allowed to keep the account until it has run its course?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am grateful to the Economic Secretary for his comments and to have had the opportunity to get the ball rolling, but I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.