Savings (Government Contributions) Bill (Fifth sitting)

Ian Blackford Excerpts

Tuesday 1st November 2016 Public Bill Committees

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I beg to move amendment 10, in clause 6, page 3, leave out lines 36 to 39 and insert—

‘(2) This Act comes into force on the day after the establishment of an Independent Pensions and Savings Commission.’

This amendment would delay the commencement of the products until an independent pensions and savings commission is established.

The amendment would delay the commencement of the products until an independent pensions and savings commission was established. The Scottish National party has long called for the establishment of an independent pensions and savings commission to look at the crisis in saving for retirement. Following the success of the Turner commission, we should recognise that we need a standing commission to help us steer a long-term, sustainable path for pensions and savings. The Cridland commission is looking at the state retirement and pensionable age, which we welcome, but all such matters should be looked at holistically.

A commission of experts, free from political influence, could focus on all aspects of pensions and savings, with a view to delivering a universal pensions and savings system that enables dignity in retirement. Such a commission is needed to minimise politically motivated changes to pensions and savings, with the aim of eliminating complexity and perverse incentives. We have voiced our legitimate concerns that the Bill risks undermining pension savings and redirecting consumers to products that will not confer the greater level of benefits that pension savings offer. We need to pause and consider what we are seeking to achieve with pensions and other savings products, while making sure that we build confidence in pension savings in particular.

Malcolm McLean of Barnett Waddingham, the pensions consultant, who is a former head of the Pensions Advisory Service, said:

“Much of pension policy seems to be dictated by political expediency rather than the needs of consumers… Political time horizons are too short. Pension policy is controlled by a government whose agenda is short-term, yet pensions are a long-term issue.”

Chris Noon, a partner at the consultancy Hymans Robertson, also commented on the need to free pensions from the political system, saying:

“Political temptation to raid pensions in hard times is too great. We need less meddling and more long-term thinking. We need to get the best brains together to work out how we deal with longer term, intergenerational issues.”

[The Financial Secretary to the Treasury (Jane Ellison)]

Good morning to you, Mr Wilson, and to the rest of the Committee.

As we have just heard, the amendment concerns the date from which the Bill will come into force as an Act. The hon. Gentleman has outlined his reasons for wanting a delay. The amendment would provide that the Act will not come into force until the day after the establishment of the independent pensions and savings commission he has just described.

Over the course of our deliberations in Committee, we have discussed why the schemes in the Bill are really positive steps for savers, so I will not go through those arguments at length again. The fundamental point is that we want both the lifetime individual savings account and Help to Save to become available to people as soon as possible. A delay would not be fair to the people who could have benefited from them. For example, delaying the lifetime ISA for a year would mean that people would miss out on the chance to save up to £4,000 into such an ISA and get a bonus of up to £1,000.

[Ian Blackford]

Will the Minister confirm that anyone who has the opportunity to enrol in an auto-enrolment pension is going to be better off doing that than investing in an ISA? That is one of the issues we are trying to determine with the amendment.

[Jane Ellison]

To some extent, we are returning to a debate we had during last week’s proceedings. The products in the Bill are not designed to be an alternative to pensions. The Government could not have been clearer in expressing our strong support for auto-enrolment and pensions saving more generally. Help to Save is very much a product directed at people for whom there is very little choice available in the savings products that are currently on the market.

[Ian Blackford]

I apologise for coming back to this, but it is critical. My real worry is that there is nothing that will prevent someone from taking out a LISA and perhaps not taking out an automatic enrolment pension, when the latter would be best for their financial interests. My real concern with the LISA and its consequences is that we will end up with savers putting money into products that are, in this case, not fit for purpose.

[Jane Ellison]

That takes us back to territory we have covered. I do not doubt the hon. Gentleman’s sincerity in putting forward his concerns, which he has expressed during debates on other amendments, but as I say, the Government are completely committed to auto-enrolment. We want to have a robust, functioning pension system, but there is also a need for complementary products.

--- Later in debate ---

[Jane Ellison]

Yes, I do. That is exactly right. I remind the Committee of the independent Financial Conduct Authority’s remit in this regard. Its role is to regulate the providers of policies to ensure, as is its ordinary remit, that they are transparent to consumers about the products that they are offering and that those products are sold with suitable safeguards in place. That is in addition to the Government publishing factual information about the lifetime ISA on gov.uk and working with the Money Advice Service and its successor to ensure that appropriate information is available. I reiterate that if we want individuals to be well informed, those are the mechanisms by which an individual, with their individual circumstances, will be informed. I genuinely do not think that a commission is the way to look at advising each individual, because by its very nature, it cannot look at each person’s affairs, life and aspirations and say what is right for them. We need to give people individual advice.

[Ian Blackford]

I am very grateful to the Minister; she is being generous with her time. The whole point about a pensions and savings commission is not to look at each individual and give advice, but to ensure that we bring Government policy together and look holistically at all the issues affecting pensions and savings, deal with the fact that we have had so many gimmicks like these and get something that is right for the long term for those who wish to save for their pensions.

[Jane Ellison]

I do not accept that these are gimmicks. I do not think the hon. Gentleman means what he said about Help to Save. If we can help thousands of families to save money for a rainy day and stave off disaster, to which they are all too susceptible at the moment, that would be a very good thing, and all of us on the Committee could take pride in that.

[Ian Blackford]

To clarify, I am talking about the LISA. I have not made any reference to Help to Save in this regard. I am specifically addressing what I see as the shortcomings of the LISA.

[Jane Ellison]

Indeed, and we have debated that in previous sittings. The thrust of the hon. Gentleman’s argument is that the Government do not consult and are not reviewing things, and that Governments—I suspect he means Governments of all colours—have tinkered with these things. I do not accept the broad point. We have done consultations on Help to Save and the lifetime ISA came out of an extensive consultation on pension tax relief. It is worth noting that there was no clear consensus from that. It is not as if the truth is out there, and if we just have an enormous commission, we will come to one point of view that everyone agrees with. In this area, there is a lot of debate and contention, and therefore we are trying to find a way through that goes with the grain of human nature and common sense. That is why having the lifetime ISA as a complementary product to auto-enrolment or people’s other pension arrangements makes sense.

I will finish the point about Government reviews, because it is worth getting it on the record. We already hold all savings policy under review, particularly through the Budget process. Our commitment to reviewing policy is also evident in the review of the state pension age, which will be informed by the independent report led by John Cridland, and the upcoming review of automatic enrolment in 2017. The Government are not walking away from the important job of scrutinising how things land in reality, but I am not persuaded that the reasons the hon. Member for Ross, Skye and Lochaber advanced for a delay are right in the context of these two products and this Bill.

[Ian Blackford]

Does the Minister accept that the Turner commission was a force for good and for change in pensions and savings in this country? Out of the Turner commission, we effectively got auto-enrolment, about which there was cross-party consensus in the House. That is what we seek to achieve by taking these issues away to a commission. That would create the circumstances in which we could all work together to improve the pensions and savings landscape in this country.

[Jane Ellison]

Let me try to wind this debate up on a note of consensus. Where we can achieve consensus on important long-term reforms—auto-enrolment is a very good example—it is wise to do so, but we are debating apples and pears here. The debate about what is the right way to go in the pensions and savings landscape over the next several decades is separate from, albeit related to, the Bill and the two products that we want to bring in to augment the available landscape of products for individuals in this country.

--- Later in debate ---

[Ian Blackford]

I beg to move, That the clause be read a Second time.

This new clause builds on new clause 2, tabled by the hon. Member for Bootle, and it makes specific reference to advice to be given on automatic enrolment and workplace saving. Many people are in the dark about what they can expect from the state and their employers when they retire. The complexities in the system and in products and the lack of independent advice are not only confusing but may lead to a lack of uptake on saving.

In March 2016, Citizens Advice, which delivers the face-to-face channel of Pension Wise, found that some of the most used pension terms were confusing for customers. It said that people would find it easier to understand their pensions if the industry used simple, standard language to describe its products. It says that some people are also unclear about terms that appear to be more straightforward, which puts them at risk of missing out on the best pension options for them.

--- Later in debate ---

[Jane Ellison]

I totally accept that point. I suspect that some of us on the Committee would put ourselves in that category, casting their mind back over the years. The point is that the regulatory landscape today is very different from what it was; the hon. Member for Luton North made that point in one of our debates last week.

The Government are fully committed to providing advice. The Treasury sponsors the Money Advice Service, which has started to play a greater role in co-ordinating financial education programmes in schools. We have seen a lot more progress on that. We have the 10-year financial capability strategy, led by the Money Advice Service and supported by industry, which aims to improve financial capability across the nation. We see many different bodies going into schools and working with young people. There is always more to do, but I genuinely think that we are looking at a very different landscape from that of some decades ago. While we would never be complacent, that is why we want to take all the measures that I have mentioned to provide advice and information.

We have to find a balance in ensuring that people can access accounts that could greatly benefit them and their family. It is worth reiterating that with Help to Save, people’s money is not locked away. If individuals change their mind or decide the scheme is not for them, they are free to close their account and withdraw their savings, free of charge. I want to end with that reminder. We have designed the product with maximum flexibility in mind for a group of people whose current financial exclusion we should be ashamed of as a nation. We want to do something about that.

[Ian Blackford]

I am disappointed that the Minister has decided to reject the new clause, because it is about ensuring that those applying for the LISA or Help to Save have appropriate advice, which is important to them. We have talked about ensuring that people are aware of the other choices that they have, particularly auto-enrolment. The new clause is about ensuring that we do not end up in a situation where there could be any dubiety about the potential for mis-selling. This is not about the regulator; it is about ensuring that consumers are given all available information at the point of sale. On that basis, I seek to press the new clause to a vote.

Question put, That the clause be read a Second time.