Saving Gateway Accounts Bill

This group of amendments focuses on eligibility, a topic that we discussed at some length during what were relatively short Committee proceedings. Today provides an opportunity to retrace two issues covered in this group of amendments. First is the issue that we debated on the first day of the Committee proceedings about what happens to those who move on and off benefits during the time it takes to send out notices of eligibility. The second issue relates to the fact that the Bill is designed to encourage people on low incomes to save, and the Government use benefit entitlements as their proxy for that group. We need to understand the difference between the number of people who are entitled to receive benefits that effectively passport people on to the savings gateway account and the number of people in the low-income group. I set out two different approaches in amendments 3, 4 and 13 to address that issue. I shall deal first with amendments 11 and 12. As I said in my opening remarks, they arise from a debate that we had in Committee. The Bill sets out the requirement for someone to be issued with a notice of eligibility on the relevant date, and we debated in Committee at some length what happens when someone becomes eligible for jobseeker’s allowance at the start of a period just after the last batch of notices have been sent out, then ceases to be eligible for that allowance before the next batch are sent out. Given that the notice of eligibility drives the ability to open a savings gateway account, we identified in Committee the risk that people who have moved on and off benefit between those two dates of issue may well, although eligible to open a savings gateway account in principle, miss out on that opportunity because they did not qualify on the date that the notice was sent out. That is why amendment 12, in particular, focuses on that matter. It would insert a new subsection (4) into clause 1, stating:"““If a person was eligible to receive a notice of entitlement by virtue of section 3(1) but had ceased to be eligible before the notice of eligibility was issued, then the person is still entitled to receive that notice.””" That matter was left hanging in Committee. The Economic Secretary assured us that"““we do not want to stop people who fit our normal criteria receiving support under the Bill””.––[Official Report, Saving Gateway Accounts Public Bill Committee, 3 February 2009; c. 47.]" I have tabled amendment 12 to take that matter a little further today. Since I tabled it, and perhaps even triggered by that, the Minister has kindly written to the Chairmen of the Public Bill Committee and circulated the letter to other Committee members, stating that people who ceased to be eligible by the date on which the notice of eligibility was sent out would still receive that notice. We are grateful for that clarification, but it would be helpful for that to be on the record in the House rather than in a letter. I am sure that he will want to make that clear. Amendments 3 and 4 are the first way in which we wish to ensure that people who would be eligible for the saving gateway by virtue of being on low income are picked up by the system. As I said, the Government have used eligibility for certain benefits as the criteria for eligibility for the gateway. That means that only people in receipt of those benefits can take part and qualify for a saving gateway account. There may be people on low incomes who do not qualify for benefits and who will miss out as a consequence. In Committee, the hon. Member for South Thanet (Dr. Ladyman) tabled amendments intended to increase the number of benefits that would enable eligibility. My amendment takes a different direction. It would set out in the Bill the fact that the group that we are targeting is people on low income. It is worth remembering that some categories of people on low income are ineligible to receive some of the qualifying benefits. For example, somebody who is unmarried, childless and under the age of 25 does not qualify for tax credits. A person on low income below that age would not have a route to access saving gateway accounts, and the same applies to a married couple under that age. In considering how to implement the idea of providing an incentive for those on low income to save, I wonder whether the Government have considered the number of people who fall outside the specified categories and who, despite being on low incomes, will not be eligible because they cannot claim a benefit. I appreciate that there is a cost attached to my suggestion, because the method that the Government have adopted builds on existing data that the Government hold either at Her Majesty’s Revenue and Customs or the Department for Work and Pensions, and it is relatively easy to use the existing databases to send out a notice of eligibility. It would be much harder for the Government to capture people on low incomes who do not qualify for benefits, and it would require a new apparatus of means-testing and forms to be completed when making a claim. The Government might argue that the cost of that additional apparatus is disproportionate to the benefit that it would confer on a new group of recipients, in addition to the costs that would arise through more people saving and qualifying for matching contributions. The amendment is probing rather than one to be pressed to a vote, but it is also meant to be almost a reserve power that the Government could deploy if they believed that the proportion of people who are brought within the scope of the saving gateway through qualifying for the benefits in clause 3 is too small compared with the total population of people on low incomes whom they feel should benefit. A Government could deploy that power in future. Part of the challenge is that we do not know what the gap is. We do not know how many people should be eligible on the basis of low income and how many are eligible through passporting benefits. Amendment 13 tries to establish the populations as well as identifying the take-up of the savings gateway account in a particular year. It is important to ascertain the effectiveness of the scheme’s take-up rate. Perhaps the Economic Secretary will be so taken with the logic of amendment 13 that he would like it to be in the Bill.