Savings (Government Contributions) Bill (Fourth sitting)

Lucy Frazer Excerpts

Thursday 27th October 2016 Public Bill Committees

[Ian Blackford]

I beg to move amendment 7, in schedule 2, page 19, line 31, at end insert—

‘(2A) Where a bankruptcy order is made against a person with a Help-to-Save account any bonus paid into the Help-to-Save account will not form part of a debtors estate during insolvency proceedings.

(2B) Any bonus paid into a Help-to-Save account shall not be liable to be taken as repayment via third party debt orders.’

The amendment would ensure that those subject to a bankruptcy order would not be stripped of their assets. Currently, Help to Save affords no protection to the Government bonus paid into accounts from insolvency proceedings or third-party debt orders from creditors. The Government need to look closely at the debt collection and insolvency implications of the scheme. Given the target audience of Help to Save, it is likely that many will face financial difficulties while holding a Help to Save account. That would leave them vulnerable to third-party debt orders and potential insolvency.

[Lucy Frazer (South East Cambridgeshire) (Con)]

I wonder why the hon. Gentleman is proposing this provision for protection from insolvency when we know that under section 283 of the Insolvency Act 1986 the bankrupt’s home is not protected from insolvency. A pension that is already in payment is also not protected.

[Ian Blackford]

I would not agree with the last assertion, because pension payments—certainly pension pots—are protected under the Welfare Reform and Pensions Act 1999. That condition exists, so I do not agree with the hon. and learned Lady on that point.

[Lucy Frazer]

They are not protected once they are already in payment.

[Ian Blackford]

That is not the point that I made, which was about when payments are in the pension pot. We are arguing that the pots should be protected under the Help to Save scheme. Given that a key purpose of the Help to Save scheme is to promote long-term financial resilience, it would be counterproductive if creditors could take the money saved, or even the bonus, to satisfy existing debts. That would result in creditors benefiting from public money intended to help low-income families build precautionary savings. At the very least, the bonus should be protected. For the absence of doubt, there is a precedent for that in the 1999 Act, which states that approved pension arrangements do not form part of the bankrupt’s estate.