Saving Gateway Accounts Bill

My Lords, this is a modest seeming Bill that embodies important, progressive principles. It dispels the commonly held illusion that poorer people do not save, do not want to save and cannot save, and it confirms what the Institute for Fiscal Studies and others have shown: that matching payments of this kind can provide people on poor incomes with an effective incentive to save. It can make a real difference to their lives, notably in dealing with the problems of indebtedness. As my noble friend has observed, previously higher paid people have had benefits through the tax system: for example, up to 40 per cent tax relief on ISAs. The Bill is an attempt to deal with lower paid people, and is therefore an attempt to deal with an implicit class bias in our current savings and taxation system. At a time when ordinary people feel powerless in the face of unaccountable and irresponsible capitalists in our society, it takes a perhaps modest step towards empowerment, and the Treasury and its officials should be congratulated on it. It is not a rash experiment, as we have heard; it has been thoroughly tested in two major Treasury schemes in which, I believe, 22,000 people took part. The schemes proved the popularity and effectiveness of regular savings among less well-off working people of working age, and showed that new savers can be generated and the pattern of saving behaviour altered. The Bill offers, as we have heard, a clear and simple structure for saving, with the Government matching savings by 50p per £1. Perhaps £1 per £1 would be an even more attractive scheme for people in the gateway scheme. It covers up to 8 million people: a wide range of poorer people on various allowances, benefits and tax credits. A simple system of passporting makes it straightforward to proceed from entitlement to benefits to eligibility for the gateway scheme, and the fact that there is no means test is of enormous merit, given all the indignity that has been associated with means-testing. The Bill is very helpful to women, among others. Women with scant means who are trying to manage household budgets will find it helpful, and it will reinforce one of the points made in a debate last week in your Lordships’ House on the impact of our current economic problems on women. In that connection, I was pleased to hear that carers will be included in this scheme. We have been pressed, strongly and rightly, to include carers, who are commonly on lower incomes. It is difficult to see why people receiving a particular allowance should be included and people receiving a carer’s allowance should not. The role of carers was recently highlighted in the Carers (Equal Opportunities) Bill passed in the Commons by my honourable friend and former pupil, Hywel Francis, the MP for Aberavon. I am glad that that principle is now to be extended. The Bill has many good features. It will run for a reasonable period and is due to start in 2010, which may be a better year than 2009 to launch such a scheme. There is to be a variety of providers, and important among them will be the Post Office with its wide accessibility for ordinary citizens. I should like to think that a savings gateway account would be an ideal scheme for the proposed post office bank that has been discussed in connection with the Postal Services Bill. Advice will be available from the Government and bodies like credit unions, and as we have heard, no restrictions will be put on the use of the savings accumulated. That is unlike the schemes of a somewhat similar nature in the United States where purposes like housing are specified. As we have heard, the Bill should be welcomed on all sides of the House. It enjoyed cross-party support in the House of Commons as a measure for financial involvement, financial education and financial inclusion. For people of a conservative outlook, you would think that a saving gateway would be a welcome form of escape from the dependency culture in which so many working-class people have been imprisoned over the generations. It should encourage a greater mood of self-reliance and enable categories of people not hitherto involved in saving to become familiar with the principles of financial management. That is particularly valuable in the middle of this economic turmoil, when the basic principles of financial management personally, let alone nationally, have clearly not penetrated into many people. For those of us on the left, the idea of a saving gateway scheme should be welcomed as a way of extending social equality and opportunity. It will do something modest but none the less important in principle towards weakening the entrenched class divide in this country. It offers help to those who need it the most. Tackling financial exclusion is a way of tackling social exclusion more generally. I believe therefore that important social as well as financial principles are embodied in the Bill and I warmly support it.