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Saving Gateway Accounts Bill

I rise a disappointed and unhappy man, because I like nothing more than coming to this place and giving the Government a good old-fashioned partisan lashing; that is the very oxygen of politics. Today, however, I find myself agreeing with a lot of what the Government have done. That is disappointing from a personal perspective. Even if I wanted to pick a fight with the Government, there is only the hon. Member for Luton, North (Kelvin Hopkins) on their Back Benches to pick a fight with, and he is quite a good friend of mine outside this Chamber. I would not want to pick a fight with him anyway. I am disappointed because I have to say to the Government that the scheme is a pretty good idea. Of course, the devil will be in the detail. I imagine that I will serve on the Committee. If not, I shall be deeply disappointed once again. Saving is the cornerstone of good financial planning. It does not matter whether one is at the bottom, middle or top of the income scale: putting money aside for a rainy day is a very good discipline, because, as we are discovering, rainy days do come, and they strike people at any point on the income scale—from the highest paid banker right down to someone who, tragically, loses their job on the factory floor. For those on a low income, it must be very difficult to save. I talk to many constituents who are left with a few pennies at the end of the week, once they have set aside money for the essentials in life, such as food and heating. We must be aware of that, and we must not be guilty of patronising people. Education is critical to the ingraining of a savings culture in our society, and Members on both sides of the House have recognised that. Financial literacy is crucial, and we must start educating young people while they are at primary school—perhaps in year 5 or 6—about the importance of managing their money and budgeting. The process of education must continue throughout secondary school, and even beyond. Many hard-working families find it difficult to budget. I am a relatively prosperous Member of Parliament, and I find it difficult to budget and could probably manage my finances far better. Financial education is critical to making the measure work and ingraining a savings culture, and the taxpayer has a limited role to play. It is a useful allocation of taxpayers' money in the short to medium term to support or reward savers for setting aside a small amount each month. Although it is a small amount, for many people it is a considerable sum from their monthly income. Confidence is another critical part of encouraging a savings culture: people must be confident that their money will be there when they need it. One of the disasters of Farepak was that it damaged confidence among people on low incomes. It was a disaster not only for people who had put money aside in the Farepak scheme, as all their Christmas savings were wiped out and their thrift was penalised, but because of the message it sent to other families on low incomes about the benefits of setting money aside and saving for the important things in life. People must have confidence in the institutions in which they place their money. The last thing we want to do is to drive people to the doorstep lenders, who fill a vacuum left by mainstream lenders. If there is a criticism to level at the banking sector it is that it has not done enough to help low-income communities. Until the beginning of this year, banks were making enormous profits. They talked merrily about their social responsibility, but Members know full well that in the most deprived communities that we represent the high-street clearing banks were conspicuous by their absence. As the banks try to restore their credibility with taxpayers and the citizens of this country, they should take a good, hard look at themselves and the way in which they work with the poorest communities. That is a good place to start on the road to rehabilitation. Thrift should be rewarded throughout the income scale. I very much like the suggestion that we should ensure that the income and returns that people generate from their savings in interest accounts remain tax free. We all know pensioners in our constituencies who are not rich by traditional measures, but who have saved in the belief that it would allow them a comfortable retirement. However, the interest that they have earned on their accounts has diminished and, on top of that, they continue to pay tax. It would therefore be a good idea if we rewarded saving throughout the income scale. May I conclude by saying that we all recognise that budgeting is difficult? I bet that in our own lives we all tend to take the best-case scenario when setting our budget. Perhaps we gloss over the things that we do not like to think about, such as the car breaking down or a pipe bursting. As part of the education process to encourage people to save, we must not be frightened to say that bad things can happen: the washing machine, dishwasher or car might break down, a pipe might burst or we might lose our job. The good times do not last for ever, and any Government who try to convince the electorate otherwise should be shouted out of court. Let us embrace the Bill, examine the detail and regard it as one very small step, probably in a generational process, to re-entrench saving as the cornerstone of good financial planning in this country.