Saving Gateway Accounts Bill

Apropos of nothing at all, at some point I hope that Her Majesty’s Treasury will be able to link the child trust fund, the saving gateway and pensions, including the tax-free lump sum, into a lifetime account so that we string the beads on to a necklace instead of having a series of separate though highly desirable initiatives. Whether that time will come, we shall see. I am revisiting an issue I raised at Second Reading, which is to allow pensioners on pension credit to come within the saving gateway. My noble friend responded, as always, fully and courteously but, on rereading, I was not persuaded even by the elegance of his arguments—and he offered us five. The first argument was that pensioners are already incentivised to save by tax relief of some £30 billion attached to pension contributions during one’s working life. If that results in a pension, that is great, but someone on pension credit almost by definition—though not entirely—has not got an occupational pension, otherwise they would not be eligible for pension credit, and so has not enjoyed those tax reliefs which, as the noble Lord knows and accepts, favour the better off. The typical pension credit recipient is a widow, who probably has no history of full-time work and, if there were an occupational pension in the family, it probably died with him. Pension tax relief as a support for pensioners does not particularly help the group on pension credit, which the amendment seeks to help. That was my noble friend’s first argument. The second argument suggested that they will enjoy personal accounts. That is great and wonderful, and it will take something like 25 years for it to make pension credit redundant and therefore to overcome the need now for the saving gateway. Thirdly, he argued that pensioners have higher rates of savings. His statistics—I have not rechecked them, but I am sure that I did not misread what he said—were that one in four working households do not have savings, but only one in five or six pensioner households do not, and therefore that is a reason to discriminate in favour of the one and against the other. That is just about statistically significant, but it is not particularly policy significant. Either way, there is a sizeable group without savings who need them. This should be based on need, not on age, gender, or where you live. We can target it. Pension credit is a very good proxy for low income and low or negligible savings up to £6,000. After all, sizeable savings will disqualify you from pension credit. Fourthly, my noble friend rightly reminded us of the excellent track record that this Government have delivered to pensioners, from free prescriptions to bus passes; like others here today, I am delighted about that. But a free TV licence for the over 75s does not help those under 75 to purchase a new TV set; or indeed if you over 75. My noble friend is right about what has been done, but we have equally done admirably for people of working age. I will not bore the Committee, but I could gratefully recite a list of excellent initiatives that the Government have offered to people of working age, from benefit rollover on entering work, to linking rules, to New Deal support, to pathway bonuses, to earnings disregards, to tax credits. It is not clear to me that working people are more disadvantaged than pensioners in terms of the support received from the Government, and that this is therefore a reason for including the one and excluding the other. They have both been helped, absolutely rightly, and it is arguable that working people have been helped even more proportionately than pensioners. My noble friend quotes the rise in the basic state pension. I am sure that he would agree—this is the debate about the IPPR report—that a helpful rise in income, which is wonderful, absolutely does not vitiate the need for some modest savings as well. They are not either/or. Indeed, I hope that the extra income offered by the Government in their proposed increases in basic state pension from 5 April will generate some modest margin which, if supported by the saving gateway, could allow pensioners, one of that 17 per cent, for the first time to have some savings. She—it is usually she—would then be better able to manage lumpy expenditure, such as the washing machine, without going into debt or seeking loans from her family, who may be equally hard pressed. She would have the psychological as well as the financial security of a few hundred pounds behind her. I repeat that this amendment is targeted only on those on pension credit, who are the poorest pensioners, mostly older, single women, but also some men and women who have always had a difficult relationship with the labour market, for whatever reason. I calculate that perhaps half of those on pension credit have no savings at all, and the rest have very little. Old age is full of risk, so many older people feel highly vulnerable, in a literal sense in terms of their health and personal safety but also through their financial precariousness. This would make a difference—a modest one, but a difference. Finally, given the forthcoming Equalities Bill and its welcome measures to end age discrimination in the provision of goods including financial services, does not a new savings product which effectively has an upper age limit challenge the spirit—and possibly also the letter, for all I know, although we have not yet seen it fully—of such a Bill? In the light of all this, can I today persuade my noble friend to reconsider?