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Saving Gateway Accounts Bill

The hon. Gentleman slightly diverts me from the path that I was taking, but he makes a good point. People such as Members of Parliament who qualify for tax relief at the higher rate get a large subsidy from the state to save for their retirement. Obviously, someone who does not have that level of income in the first place cannot qualify for that level of subsidy. That means that a lot of people reach retirement and have to be wholly or almost wholly reliant on the state pension, which makes it difficult for them to achieve a standard of living that they would wish to achieve having worked for perhaps 50 years up until that point. Inasmuch as people can be encouraged to save, the scheme is clearly beneficial. As the hon. Member for Fareham suggested, we can try to encourage people not necessarily to say to themselves, when the scheme reaches maturity, ““Oh, here is an opportunity to buy an item””—a new car, a new fridge, or whatever—so that money is still left over after they have dealt with the emergency contingencies. They may then continue saving and put the money into different schemes or initiatives. That will mean that they have a savings culture—a point touched on by the hon. Member for Weston-super-Mare (John Penrose)—instead of seeing the scheme merely as an opportunity to qualify for an enticing state-run, taxpayer-financed, one-off way of accruing a capital lump sum without acquiring a savings habit at the end because all the eligibility for taxpayer support has been exhausted. That would be a shame. The Economic Secretary will assist us if he gives a sense of how much the Government think that the scheme is going to stimulate a wider savings culture and whether he is satisfied that the pilot studies will achieve a multiplier effect in terms of the initial taxpayer subsidy encouraging beneficial behaviour many years down the line. It is important for people to have a stake in society. This morning, I was in a debate in Westminster Hall initiated by the hon. Member for Nottingham, North (Mr. Allen) in which the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) also spoke. They have both worked hard—one Labour Member and one Conservative Member—on early intervention and social exclusion. In all of our constituencies, even in those that might be regarded as being reasonably affluent overall, there are pockets of social exclusion and deprivation where people live on very low incomes with no sense of a wider time scale than beyond the end of the week or the end of the month. There is not a culture of people planning their finances for the longer term, or for their retirement, in that way. Many people who live in those circumstances have very modest incomes, so their scope for saving is curtailed, but we should welcome the opportunity for those people to embrace a culture of saving and seek to save as much as they reasonably can within the modest means available to them, and for the Government to incentivise and encourage them to do so, particularly if it leads to the longer-term change in outlook that I have touched on. I would like to deal with a few related issues. It will be a problem for the scheme, and also for taxpayers, if those who are already saving transfer their funds into this initiative in order to qualify for the generous taxpayer assistance that it brings. The difficulty is trying to target those who would not save while not penalising those who have a slightly higher income or a slightly greater propensity to save. That is a difficult balancing act because we are creating a new kind of poverty trap where people are regarded as slightly too wealthy—even though, compared with most people, they are quite poor—or even too responsible to qualify for the scheme. There may be people on low incomes who nevertheless manage to find some scope for saving, and I would not want them to be in any way discouraged or penalised because they were already saving. We have to walk that tightrope to get best value for the taxpayer, while encouraging the maximum number of people who would not otherwise save. That requires a little second-guessing of how people might behave in the future. We can investigate and discuss those issues at greater length in Committee. I am also concerned that the scheme should not be abused. In the case of a number of Government initiatives, parents can, with some creative accounting, ensure that one side of the couple holds all the assets and income, and that the other side of the couple—particularly if they are divorced, or not married in the first place—holds none of the assets. People who are effectively one financial unit may be able to qualify through one person's status and not the other's. I am not saying that anyone is perpetrating that abuse, but it is important that the scheme, and the taxpayers' money going into it, is targeted at people who will genuinely benefit from it, rather than at those who see it as an opportunity to qualify through spurious criteria. That means it is important that we ensure, when scrutinising the legislation, that any loopholes are ironed out in Committee.