Savings Accounts and Health in Pregnancy Grant Bill

Jamie Reed Excerpts

Tuesday 26th October 2010 Commons Chamber

[Mr Hoban]

Spending on that scheme was included in the spending score card by the last Government. We are not spending the money; therefore we are saving it.

If we had not found the savings where we have found them, we would have had to find them through other spending cuts, through tax rises or through higher borrowing, and that would have kept the deficit higher for longer. Those who oppose the Bill must tell us what they would cut instead.

Having explained the context of the Bill, I shall now describe its measures in more detail starting with the most straightforward element, which is clause 2. It repeals the Saving Gateway Accounts Act 2009. As Members may be aware, the saving gateway would have been a cash saving scheme for people on lower incomes based on matching—there would have been a Government contribution for each pound saved. The scheme was due to be introduced in July 2010; that is when the previous Government booked the spending from. I believe that people in Britain, including those on lower incomes, need to save more, and there was evidence from the saving gateway pilots that matching was a popular and easily understood incentive to save, but when we looked at the proposal ahead of the Budget, it was clear that this would have been exactly the wrong time to introduce a new scheme that would have cost us up to £115 million a year.

[Mr Jamie Reed (Copeland) (Lab)]

I was grateful for the support the hon. Gentleman’s party gave when in opposition to the then Labour Government’s efforts to reduce child poverty. What assessment has his Department made of the effect of the withdrawal of these grants and schemes on child poverty in this country, not just in general but by region and constituency?

[Mr Hoban]

There was clearly a choice. We could have continued with these schemes and cut spending elsewhere, but we decided that it was better to take action now to tackle the deficit than to put that decision off, as the hon. Gentleman’s party would do, and therefore have to make deeper cuts in the future. I think the steps we are taking are the right course of action to tackle the deficit.

Although the previous Government had agreed with RBS and Lloyds Banking Group that they would introduce saving gateway schemes, none of the other big high street banks were planning to do so, and although the Post Office was going to offer the accounts, that was only because the previous Government had agreed to pay it to enable it to do so. Also, while a number of credit unions were signed up, not a single building society signed up to provide the saving gateway account. Therefore, although I appreciate the engagement of those who had planned to offer saving gateway accounts, I was concerned that not everyone in the eligible population would have had an accessible provider. For these reasons, we announced at the Budget that the saving gateway would not be introduced. We therefore stopped the Saving Gateway Accounts Act from coming into force, and this Bill repeals it altogether. Although we may want to come back to this idea at some point in the future, we have no plans to do so at present so it would be wrong to leave this legislation on the statute book.