Saving Gateway Accounts Bill

These amendments are concerned with the relationship between a person’s eligibility and the notices of eligibility that the HMRC will issue. Clause 1(3)(b), which Amendment 2 would remove from the Bill, is necessary to ensure that a notice of eligibility can be issued to every person who becomes eligible for a saving gateway account. It may be helpful if I explain the background to, and purpose of, this provision. As noble Lords will be aware, Clause 1(3) defines the "relevant date"—that is the date on which a person must be entitled to a qualifying benefit or tax credit in order for their account to be a saving gateway account. In most cases, this relevant date will be the date on which the notice of eligibility is issued. However, as I will explain, it will be necessary for there to be exceptions to this rule, and Clause 1(3)(b) would allow for these exceptions. Eligibility for the saving gateway will be passported from entitlement to certain benefits or tax credits. The HMRC systems will be updated with periodic transfers of information from DWP and the DSD in Northern Ireland. By the time that the HMRC receives these periodic transfers and issues notices of eligibility, some people whose details it has received from DWP or DSD may no longer be entitled to a qualifying benefit or tax credit. They would not therefore be an eligible person on the relevant date specified at Clause 1(3)(a). An example would be a person who has had a short period of entitlement to jobseeker’s allowance within the period between transfers of information from DWP or DSD to the HMRC. I am sure that noble Lords will agree that it would not be right for people in these circumstances to be excluded from an opportunity to have a saving gateway account, just because their benefit status has changed by the date on which the HMRC receives information from DWP or DSD. Clause 1(3)(b) allows the HMRC to consider that a date earlier than that on which the notice of eligibility is issued should be "the relevant date", ensuring that every person who becomes eligible for the saving gateway can be issued with a notice of eligibility. Amendment 5 would require the notices that the HMRC issue to eligible people to contain an expiry date not later than the date when a person ceases to be eligible under Clause 3, which will generally be when they move off the qualifying benefits or tax credits. This would obviously be rather challenging since the HMRC will not be able to anticipate any future changes in a person's circumstances. However, I appreciate that the intention behind the amendment is to ensure that notices of eligibility issued by the HMRC will not be valid once a person’s claim to the qualifying benefit or tax credit ceases. I agree that it is important for eligibility to the saving gateway to be appropriately targeted, and we have considered this point carefully, but we have decided to take a different approach so that notices of eligibility will be valid for a set period of time, regardless of changes in people’s circumstances. Let me explain why we have taken this approach. We want people to be clear, when they receive a properly issued notice of eligibility, that they are entitled to open up an account until the point when that notice expires, provided they have the necessary connection with the United Kingdom. That makes the scheme simple for potential account holders to understand and simple for providers to operate. As I have said, it would be impossible for the HMRC to anticipate when a person’s eligibility might cease and print that date on the notice. To operate the scheme in the way that is envisaged in this amendment would therefore require individuals to declare their benefit or tax credit entitlement to the provider at the point of account opening. That is likely to deter people from opening an account and we do not think that providers would welcome having to ask about, record and report information on benefit entitlement to the HMRC. Where the HMRC later found out that a person had wrongly reported their eligibility status, this would lead to more accounts having to be closed, which we know would be burdensome for account providers and a deterrent to their offering a saving gateway account. Allowing notices of eligibility to remain valid up to their expiry date avoids these problems. It gives providers certainty and it makes it easier for people opening accounts to know where they stand. However, as I said earlier, we recognise the importance of properly targeting eligibility for the saving gateway and I understand the noble Baroness’s concerns in this area. We anticipate, though, that only in a minority of cases will a person move out of entitlement to the qualifying benefits and tax credits between being issued with a notice of eligibility and opening an account. We estimate that this will apply to only around 4 per cent of accounts that are opened. As I have said, there is a balance to be struck between achieving marginally more precise targeting of the scheme on the one hand and ensuring that the scheme is simple to use and to operate on the other. We feel we have struck the right balance and that this amendment would introduce unwelcome complexity and may well inhibit take-up of the scheme by either account holders or providers. I hope that the noble Baroness will seek leave to withdraw the amendment.