Saving Gateway Accounts Bill

My Lords, I am delighted to speak briefly in support of this Bill and I thank my noble friend for introducing it. However, I should say immediately that this would not have been my position when it was brought forward originally. This is a cash savings account for individuals on low incomes with excellent incentives and the promise of kick-starting the saving habit among people on lower incomes by the provision of matched funding. Encouraging people who do not normally do so to engage with financial services will promote financial inclusion and will undoubtedly help those on low incomes to manage their finances, plan for the future and guard against the financial insecurity that plagues our society at present. That is all very much to be applauded, but in its original form, the Bill intended that while other income replacement benefits were to be part of the scheme, carer’s allowance was specifically to be excluded. The Treasury Minister in another place said at Second Reading: ""We have thought carefully about making carer’s allowance itself a qualifying benefit. However, although all recipients of carer’s allowance will have low earnings, many may be in higher earning households; in fact, carer’s allowance recipients are less likely to be in poverty than the average adult. Extending the scheme to all carers regardless of their level of savings or other financial circumstances would therefore mean that it was poorly targeted.—[Official Report, Commons, 13/1/09; col. 171.]" While that statement may be technically correct, it has none the less caused great concern as the figures from the Work and Pensions Committee later showed. It said: ""While the evidence suggests that Carer’s Allowance makes a modest contribution to reducing poverty among carers, further exploration of this data is needed to examine how far the differences shown are related to uneven take-up of this benefit; ineligibility for CA when the cared for person is not a recipient of relevant benefits themselves; and issues relating to age"." It is misleading to compare carer’s allowance recipients with the general population. They should be compared with people who share other characteristics; for example, gender and age. They may be clustered just above the formal poverty line but they tend to have lower incomes than the general population. Many of them have retired early and have a small occupational pension which takes them just above the threshold for means-tested benefits, but they are by no means well off. Carer’s allowance recipients are in the bottom two quintiles of income distribution compared to 37 per cent of all adults. This clearly shows that the Minister’s claim that carers may be in high-earning households was not quite accurate. Carers also spend many years on a low income and claiming benefit. More than two-thirds of carer’s allowance recipients claimed the benefit for more than two years and 40 per cent receive it for more than five years. This makes it extremely hard to accrue savings. We should remember that caring is a long-term business. Poverty statistics take into account only income, not household expenditure, and clearly carers have higher costs for things such as heating and transport. Like other families, carers are feeling the pinch in these difficult economic times but for them this is no change; they have always found that caring leads them to financial difficulties. They face higher costs associated with caring, such as heating, water and transport costs, and at the same time do not get much support from local authority services. Many families do not receive publicly funded care and are forced to arrange their own care, which can be expensive and of poor quality. That places a very heavy burden on their budgets. Research carried out by Carers UK—I declare an interest as its vice-president—published in December last year found that many carers are living in poverty. From a survey of 1,700 carers, 75 per cent reported that they struggled to pay essential bills; 52 per cent were cutting back on food; and 54 per cent were in debt, of whom nearly a third owed more than £10,000 and were resorting to bank overdrafts and credit cards. So, for all these reasons, it was inconsistent to exclude carer’s allowance but include other income replacement benefits. Carer’s allowance should be treated the same as other benefits. In addition, excluding carer’s allowance sent a negative message to carers, who saw themselves excluded from a government policy that was extending to other benefit recipients. At a time when the Government are making carers a high priority—indeed, they have a very proud record as far as carers are concerned—this was inconsistent. Following publication of the National Carers Strategy last June, the Government committed themselves to ensuring that by 2018 no carer should be forced into financial hardship by their caring role. I am absolutely delighted that the Government have seen sense and responded to persuasive arguments. I pay tribute to my honourable friend Steve Ladyman, the former carers Minister in another place, who has worked very hard to have carers included in the Bill. The Minister has now said that it is right that the Government should be open to listening to arguments and that when they find good and persuasive ones they should change their mind. I am glad that they have done so. I wish the Bill a speedy passage through your Lordships’ House.