Savings Accounts and Health in Pregnancy Grant Bill

I am grateful, Madam Deputy Speaker. This debate is about how we help poorer people in society and save resources. Of course, that might not interest all hon. Members in the Chamber today, but that is another discussion—[Interruption.] The Saving Gateway Accounts Act was introduced to pave the way for a national scheme. Members will be aware that the saving gateway was to be a cash savings account for those on lower incomes. It was to provide a financial incentive to save, with the Government making a matching contribution for each pound that people saved into the scheme. The saving gateway was first proposed in 2001, after which it was consulted upon and piloted twice. In total, more than 22,000 people took part in the pilots, achieving an additional £15 million of savings. As Members will know, accounts would have run for two years and would have been offered by financial institutions such as banks, building societies and credit unions. The Government would have contributed 50p for each pound saved, which would have been paid at the end of the accounts. The criteria for opening a saving gateway account were fairly straightforward. If an individual in the community was on income support, jobseeker's allowance, incapacity benefit, employment support allowance, severe disablement allowance or carer's allowance, or if they were on tax credits and their income was less than £16,040 a year, they would qualify for the saving gateway scheme. The objectives of the saving gateway scheme were quite simple: to kick-start a savings habit among people on lower incomes, by providing a strong incentive to save through a matching fund contribution from the Government; and to promote financial inclusion by encouraging people to engage with mainstream financial services. The pilots, which were successful, were delivered in partnership with the then Department for Education and Skills, with the Halifax bank—now HBOS plc—providing banking facilities. The first pilot ran from August 2002 to November 2004, with individual accounts open for an 18-month period. In the first pilots, about 1,500 people took part, and the scheme covered five areas: Cambridge, east London, Hull, Cumbria and Manchester. People living in those areas were eligible to open an account if they were of working age—between 16 and 65—and had household earnings of less than £15,000 or individual earnings of less than £11,000, or if they were out of work and receiving benefits, as I have described. Individuals in the first pilot were allowed to save up to a limit of £25 a month in the account, up to a maximum of £375 overall, for which they received a pound-for-pound match when the account matured. A final evaluation of the first pilot was produced in March 2005. Based on that pilot, the largest saving gateway pilot was run in the same five locations, as well as in another area, South Yorkshire. That pilot started in March 2005, and the accounts were open for 18 months, as in the first pilot. In total, around 22,000 accounts were opened and the second pilot was opened to a wider income group, including households with incomes of less than £50,000, individuals with incomes of less than £25,000 a year and, similarly, those receiving benefits. The point of the pilots was to establish whether the scheme would be successful and whether it would meet the objectives that we had set, which were to encourage lower-income savers and to ensure that individuals saved resources that they would not have saved previously. The key findings from the pilots were that the saving gateway scheme generated new savers, that new saving was generated among existing savers and that the scheme brought individuals into contact with mainstream financial institutions for the first time. Research from the pilots showed that 60% of participants were still saving regularly two years after they had ended, and that three in 10 participants who were not saving regularly before the pilot were now doing so. Participants were extremely positive about the saving gateway. I quoted in Committee the fact 98% of people involved in the pilots said that they would open another saving gateway account if offered the chance, while an astonishing 99% would recommend it to a friend. In the Budget on 24 March, my right hon. Friend the Member for Edinburgh South West (Mr Darling) announced that the first saving gateway accounts would be available from July, and that Lloyds Banking Group, the Post Office and the Royal Bank of Scotland Group would provide the accounts on a regular basis. Before we touch on the fact that the accounts did not open in July, it is important to refer to the all-party support for the saving gateway account before the election. One of the reasons I wanted to give the Minister a chance to reflect, having had discussions in Committee, was that when the then Saving Gateway Accounts Bill came before the House in February 2009, he said:"““This Bill serves a valuable purpose in encouraging people, particularly those on low incomes, to save. People on higher incomes have an opportunity to smooth out fluctuations in income and expenses to which those on low incomes do not have access. If the Bill is successful in encouraging people to save, it will enable them to create a modest buffer against variations in income, such as the unexpected expense of being laid-off for a short period. It will give people a degree of financial security that they have not had hitherto.””—[Official Report, 25 February 2009; Vol. 488, c. 323.]" That was the Minister, before the pilots had been completed, saying that he believed that that Bill had merit, that he supported it and that he believed that it would meet some of the difficulties that people on low incomes would face if they lost their jobs. However, it was not just the Minister saying that, but the hon. Member for Taunton Deane (Mr Browne)—now the Minister of State, Foreign and Commonwealth Office—who was then the Treasury spokesman for the Liberal Democrats. On Third Reading, he said that"““it is the equivalent of the share-owning democracy being extended to people in the bottom 10 to 20 per cent. of society. That will bring widespread social benefits if the Bill works out as successfully as we all hope.””—[Official Report, 25 February 2009; Vol. 488, c. 325.]" The evidence that we took in Committee from those responsible for administering the scheme and for looking at its effectiveness indicated that they had no reason whatever to believe that in the event of a change of Government, which I accept and acknowledge has happened—