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Saving Gateway Accounts Bill

If the hon. Gentleman will forgive me, I will forgo the opportunity to make such a major spending commitment on the hoof. However, I was going to suggest an alternative way of dealing with the problem. First, let me finish the point that I was trying to make. The conclusion that people who have saved will reach, which is that they have not benefited anything like how they hoped to do from saving over 20, 30 or 40 years of their working lives, is an acid dripping at the foundations of the savings culture. It is undermining the savings instinct for a great many people. The danger is not just that pensioners are affected but that they are tremendously influential on younger generations. If people say, ““We saved and it didn't pay, so you shouldn't,”” to their children and to their grandchildren, that is an incredibly powerful negative marketing ploy further to erode the savings culture in this country. I urge the Government to say that the measures in the Bill are fine as far as they go, but are limited and do not go far enough to achieve the Government's stated aims. I want to offer a potential solution, different from the one suggested to me just now by the hon. Member for Luton, North (Kelvin Hopkins). The Government might like to consider some of my party's fairly recent suggestions about trying to remove the tax burden for basic rate taxpayers on interest income. That would have the effect of achieving many of the Government's stated aims but would have a much broader impact than the Bill, which will have a relatively narrow impact. Given the amount of money that the Government are willing to spend on a temporary cut in the VAT rate—I believe it is £12 billion—if they did not carry out that measure they could probably afford not only to introduce the measures in the Bill but those that I have just suggested. They would still have plenty of money left over to do other things to stimulate savings elsewhere in the economy. On the assumption that the Economic Secretary does not want publicly to commit his party to that measure right this second—although I would be delighted if he did—may I ask a couple of small but technical questions that I hope he will be able to answer in summing up? In particular, I would like him to give us a bit more detail about what discussions he or his Department have had with representatives of the credit unions movement. I am sure that we all have pockets of comparatively high deprivation in our constituencies. Weston-super-Mare South ward in my constituency is a classic example of a deprived area that, according to the Government's figures, is in parts in the bottom 2 or 3 per cent. of indices of multiple deprivation. When I visit the credit union that has an office there and the money advice centre that is dedicated to trying to provide better financial advice and improved financial literacy in the area, one of the things that comes across tremendously starkly is that the area is largely unbanked. It does not have a great number of different bank branches and, as my hon. Friend the Member for Fareham noted, that is especially important if we are to have a vibrant and highly competitive market for these saving gateway accounts. When an area has only one provider or even none at all, there is no incentive to offer competitive rates of interest. Although a one-off bonus from the tax man might be welcome, we need the competition that will spur a vibrant savings culture where people get genuine interest. Such a culture is much less likely to be established in places where there is only one local bank branch, or none at all, than in places where there are many. An alternative way to produce that vibrant, competitive culture is to use credit unions as additional providers of the saving gateway accounts. Credit unions tend to be very local and closely rooted in their communities, and they have very good contacts—what might be called a good footfall or footprint—in the most deprived parts of the communities that we all separately serve. I hope that the Minister will give us more details about the discussions that he has had with representatives of the credit union movement. Are credit unions willing to become providers of these accounts? If so, do the Government consider them to be satisfactory providers of the accounts? Are the Government willing to give approval for credit unions to start providing the service, on a large or even small scale? This is a tremendously useful and welcome Bill. It clearly espouses a principle that has the agreement and approval of hon. Members in all parts of the House, but it is very limited. The Government could have done more in the past, and I hope that they will take the opportunity to do a great deal more in the future. The foundations of our nation's economy and the equally vital need to spread the notions of a savings culture and an asset-owning democracy require that they do.