Saving Gateway Accounts Bill

Amendment 19 would add a new subsection to Clause 4, which deals with requirements relating to accounts. Subsection (1) sets out the basic rule that HMRC will approve account providers in accordance with the ever-present regulations. My amendment says that when HMRC does this, it must have regard to the desirability of choice being available to persons who wish to open a saving gateway account. This is not a mere doctrinal issue about choice, although that is important; my amendment speaks to the difficulties that the Government may have in getting account providers to put themselves forward for inclusion in the saving gateway scheme. We debated that at Second Reading, when the noble Lord, Lord Newby, and I both drew attention to the evidence given in the Public Bill Committee in another place about the willingness and enthusiasm to take part in the scheme from potential account providers. The banks’ view, as expressed in another place and in subsequent briefing to noble Lords taking part in this Bill is based on commercial viability. They believe that the accounts may be too costly to be worth taking on, and we shall return to some of the issues that lie at the heart of their concerns in later amendments. The noble Lord, Lord Myners, seemed not to recognise this; he told us at Second Reading that banks, together with building societies, ""now recognise the increased value of a loyal depositor base from retail deposits, rather than reliance on wholesale deposits".—[Official Report, 17/3/09; col. 138.]" I believe that the Minister chose not to understand that banks and others will welcome a depositor base only if it can be operated profitably. There is no point in attracting deposits if it costs money to maintain the accounts. A saving gateway account will not amount to more than £600 before a maturity payment, and let us say that the average is half that. I do not think that the Minister can seriously claim that accounts at that level are likely to be attractive to banks as they will face costly record-keeping and potentially face transfer requirements and the like. The record-keeping is exacerbated by the fact that this is designed to encourage regular saving and not lump-sum saving, which means a lot of transactions. The Post Office, which also gave evidence in another place, was extremely keen on the saving gateway scheme and would very much like to offer it. However, Mr Alan Cook, the managing director, made it clear that the Post Office could participate only with a partner to do the administrative work, and doubtless also to invest in the basic infrastructure. He also referred to the need for an unspecified market share being necessary to make the scheme work economically. It is far from clear that the Post Office’s clear enthusiasm about the saving gateway scheme will convert to actual participation in the scheme. That is all down to economics. Against this background, I have a concern that HMRC may well end up grasping whatever willing provider comes its way. I think that it could be undesirable if HMRC went with one provider of saving gateway accounts because the service levels provided to saving gateway account holders will, in effect, be set by that one provider on a monopolist basis. That one provider will call the long-term shots on how the scheme operates because the barriers to entry by other participants may well be erected on a de facto basis. Keeping HMRC focused on choice, which is all that my amendment does, will keep it focused on the uneconomic aspects of the saving gateway scheme in its detailed application of the regulations. It may also force HMRC to come back to the Treasury if some of the draft regulations prove to be a barrier to getting account providers to sign up or, more specifically, to get more than one account provider to sign up. On Second Reading, the noble Lord, Lord Myners, was somewhat complacent about the willingness of financial services providers to take part in the scheme. Our understanding continues to be that the banks are far from comfortable with it. On Second Reading we also debated the role of the nationalised banks. The Minister did not like our using the term "nationalised banks". We could call them "public sector banks" if there is sensitivity around the other term, but they mean much the same. Whatever we call them, it is clearly possible that the Government could lean on them to provide saving gateway accounts—it is like kicking a man when he is down. I believe that it would be undesirable for that to happen, as genuine choice would not be available if the choice were only between nationalised or public sector banks. I have raised this issue because having more than one provider is important if the saving gateway scheme is to be counted as anything like a success, not only in the short term but in the longer term, for the reasons I have given. When the Minister replies, I hope that he can update the Committee on whether there is any realistic possibility that there will be a choice of providers for saving gateway accounts and whether that will result in real choice for consumers. I beg to move.