Saving Gateway Accounts Regulations 2009

My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, for their contributions to the discussion. I am pleased to note that, as I anticipated, we have continued to see broad support for the concept of the saving gateway, as evidenced during the passage of the Bill. The noble Lord, Lord Newby, is right to point to the timeliness of the proposal in the context of current economic circumstances. I agree with the noble Baroness about the Joint Committee once again showing its effectiveness and directing us towards improvements, which we have welcomed. I also note the noble Baroness’s comments about the taxpayer as opposed to the Government. I have to say that I regularly struggle, when talking about our investments in the shares of a number of banks, in deciding whether I should say that these are in public ownership, owned by the taxpayer or owned by the Government, but I think that we all understand the noble Baroness’s point, which is that the state has no money of its own; it acts in that respect on behalf of the taxpayers and must be accountable for the Government’s decisions. I believe that that accountability has been evident in the thorough research that has taken place in support of this proposal. On timing, we have announced that the scheme will be available nationwide from 2010. The precise starting date depends on a number of factors, including in particular the progress of our discussions with potential providers about when they would be ready to offer accounts. They need to make significant systems investment and we do not want the accounts to be launched until such time as there are sufficient account providers to ensure that we have national coverage and accessibility for the eligible community and that the account providers are able to operate the scheme effectively. It is with that in mind that I continue to have regular engagement with a number of banking institutions in connection with the provision of saving gateway accounts; indeed, I have been in such discussions in the past week or so. As has been noted in debate, the Post Office has indicated a wish to provide a saving gateway account, which would be entirely compatible with its ambition to improve the range and quality of its banking offer. My words on timing were, therefore, carefully chosen and are importantly predicated on reaching a point when we can be assured that the scheme will launch effectively without any administrative problems. The noble Baroness, Lady Noakes, was also right to remind us that, for a bank, the question whether to offer such accounts is one in which the economics need to be carefully evaluated. However, we have always been very clear that we would not expect the decision to be made solely on the basis of economics. At a time when the banking industry has to face serious challenges around reputation and utility, there is clearly an opportunity for retail banks to evidence their commitment to provide something that has a social good to it and, importantly, reaches out to the large group of people who are not part of the financial system and could be welcomed into it through the saving gateway. However, I repeat that we shall not launch the saving gateway account until we believe that adequate provision will be accessible to the community at which it is targeted. The noble Lord, Lord Newby, asked why the gateway should be time-limited to 24 months. It certainly needs to be time-limited, although whether 24 months is the right period is debatable. Research suggests that the combination of the amount of monthly deposit, the matching benefit and the time should be sufficient to establish the saving habit. This is a proposal to kick-start saving and initiate people into the formal financial sector, giving them the habit of saving. One hopes that, with the encouragement that the taxpayer’s support provides, people will then continue to save, through ISAs or some other mechanism. We have committed to review the effectiveness of the saving gateway account. One of the most critical questions that we will need to answer is whether it has led to the establishment of a saving culture for those who had previously not saved or who had not saved through the formal financial system. We hope and expect that some of the larger credit unions will offer saving gateway accounts. Officials have been in detailed discussions with their representative bodies. I think that I have answered most, if not all, of the questions raised in debate. As I said at the start, these regulations will be an important part of the legislative framework for the new national saving gateway accounts to be introduced next year. I am delighted that they have received support from all sides of the House and am grateful, once again, to noble Lords who contributed both to today’s debate and during the passage of the Bill. I express my thanks to the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, for their contributions. In a number of cases, as I have shown, we have taken on board their very helpful contributions, as a result of which we have a better Act and a better set of regulations. Motion agreed.