Saving Gateway Accounts Bill

My Lords, I know from our debate at Grand Committee that these matters are of concern to the noble Baroness, and I hope that I can allay some of those concerns with my response. Amendment 12 concerns cases in which a provider has been paid an amount by HMRC in respect of an account where it is later necessary for HMRC to recoup that payment. We listened carefully to the points made at Grand Committee and said that we would look again at the published draft regulations on this point. I can confirm that we now intend that regulations will only require a provider to account to HMRC for such payments to the extent that the provider still has assets relating to the account, or assets directly or indirectly representing any of the payment, in its possession or control. I trust that that reassures the noble Baroness that we intend to achieve by regulations the outcome that is being sought through this amendment. I should explain to noble Lords that we believe that it is appropriate for this matter to be addressed alongside other provisions on HMRC collection and recovery in regulations, rather than in the Bill. Turning to Amendment 11, I should point out to the noble Baroness that Clause 12 already contains flexibility for the outcome that is being sought through the saving gateway regulations. It is therefore not necessary for the achievement of the noble Baroness’s objective for there to be any further provision in the Bill. However, I am of course happy to address the issues that have been raised. The noble Baroness cites HMRC’s approach to tax credit overpayments made in error, and suggests that a similar approach may be desirable in relation to the saving gateway. We have considered that carefully, but do not believe that this would be either appropriate or necessary. First, the saving gateway is very different from tax credits. As noble Lords will be aware, tax credits is a flexible system designed to be responsive to people’s changes in circumstances. Regular payments are made directly from HMRC to claimants, and it was always anticipated that there would be a need within the tax credit system for end-of-year adjustments. This necessitated a tailored HMRC policy for recovering overpayments. The saving gateway is very different. It will not reflect changes of individual circumstances and there will be no need for an end-of-year adjustment process. Once an account has been opened, a change to the account holder’s circumstances will not make any difference to their entitlement or payments under the scheme. That means that overpayments will not be a normal part of the saving gateway system in the same way that they can be for tax credits. There will also only ever be a one-off maturity payment made to an account holder once the account matures, and that will be paid through the account provider. There is also an in-built safeguard with the saving gateway system that should prevent payments made in error by HMRC reaching account holders. Payments by HMRC under the scheme, including any made in error, will be made to an account provider only on the basis of a claim made by that provider. It is reasonable to expect that an account provider will check the payments that they receive from HMRC against the claim that they have made and discuss any incorrect or unexpected payments with HMRC, rather than simply pass an incorrect amount on to a customer. Furthermore, because HMRC will not make payments under the saving gateway until the relevant account has matured, any HMRC errors could—and, we hope, will—be picked up and addressed during the lifetime of the account, before any maturity payment has been made by HMRC. My first argument is that the saving gateway is very different from tax credits and that overpayments to account holders under the saving gateway should be very rare. This reflects the current experience of the child trust fund. Secondly, we do not believe that people can legitimately expect to retain taxpayers’ money that has been wrongly paid to them under the saving gateway, even where they have not materially contributed to the error. It is right that HMRC should be able to recover public funds where appropriate to prevent individuals obtaining a windfall at the taxpayer’s expense. In this respect, the saving gateway is closer to the child trust fund—where one-off payments are made through an account provider and there is no requirement for any adjustments once a payment has been made—than it is to tax credits. Under the child trust fund system, HMRC seeks recovery of any payments that have been made incorrectly without there being any specific procedures relating to official error. For these reasons, HMRC should have the right to recover overpaid amounts in the circumstances that the noble Baroness outlined. It is important to remember that, in each case, HMRC will consider the facts and circumstances to assess whether it is appropriate to take recovery action. There will, for example, be issues of cost and proportionality to consider. The maximum single payment made to an individual under the saving gateway is £300. In using its powers of recovery, HMRC is guided by value-for-money considerations, so where the cost of pursuing a debt would likely outweigh the debt collected, or the debt is unlikely to be collected due to the individual’s circumstances, HMRC may take the view that it would not be appropriate, in such circumstances, to pursue recovery of such amounts. If HMRC were to decide to recover the amount, it would allow time to pay where this is justified and will have arrangements in place to deal with financial hardship. In conclusion, I know that the noble Baroness is concerned to avoid a repetition of some of the problems that arose in the early days of tax credits. I hope that I have assured her that these problems should not arise from the saving gateway, which is a very different system in structure and character. If I have not managed to reassure the noble Baroness on this matter, I point out again that, should the Government choose to adopt the course that the noble Baroness advocates, there is already sufficient flexibility in the Bill to support that. The amendment is, therefore, unnecessary. In the light of this explanation, I hope that the noble Baroness will withdraw the amendment.