§ 10. Mr. Peter Luff (Mid-Worcestershire) (Con)
What measures he is taking to increase personal saving. 
§ The Financial Secretary to the Treasury (Ruth Kelly)
As well as creating an economy with low interest rates, the Government have introduced reforms such as individual savings accounts, the 10p starting rate for tax and the new child trust fund, and we have radically reformed and simplified financial regulation and pensions. Net wealth has risen by more than 50 per cent. since 1997.
§ Mr. Luff
Treasury Ministers in general and the Chancellor in particular remind me of the boxer in Simon and Garfunkel's song of the same name: a man who hears what he wants to hear and disregards the rest. Why do the Government disregard the collapse of the savings culture in this country—a collapse that was caused by endless fiddling with tax-free savings schemes, the £5 billion raid on personal pensions and the massive expansion of means-testing?
§ Ruth Kelly
The hon. Gentleman has got his facts absolutely wrong. Let us look at what has actually happened. The hon. Gentleman knows that reform of advance corporation tax was part of a process of widespread corporate tax reform, in order to promote investment that will benefit savers in the long term. He knows that ISAs have been far more popular than their predecessors, TESSAs and PEPs; indeed, one in three of the population now saves in an ISA product. He knows that we increased the limits from £5,000 and £3,000 when we introduced the scheme to kick-start ISAs; they have been successful.
§ Mr. Gordon Prentice (Pendle) (Lab)
A few moments ago, I was Upstairs in Committee agreeing an increase of 7.8 per cent. in the adult minimum wage—it will be introduced in October—on top of the previous year's 7.1 per cent. increase. My question, however, is: what can we do to encourage people on low and modest incomes to save?
§ Ruth Kelly
My hon. Friend is absolutely right that our priority must be to help those on low and moderate incomes. Of course, our first priority was to tackle pensioner poverty, and through the introduction of the pension credit, we have been successful in doing so. Now, we must make it as easy as possible to save, which is why we are committed to wholesale reform of the regulation and taxation of pensions. The introduction of new stakeholder products makes it much easier for people on low and moderate incomes to save.
§ Mr. Colin Breed (South-East Cornwall) (LD)
The Minister mentioned a 50 per cent. rise in national wealth. How much of that is due to inflated property values, rather than pensions, shares and other savings?
§ Ruth Kelly
The hon. Gentleman knows that house prices have risen since 1997. Houses are an important 1542 store of value, and it is important that we look at assets as well as savings when considering these issues, but we cannot be complacent about what is happening to savings. Our analysis shows that 3 million people could be seriously undersaving, which is why we have a strategy to help people make informed choices about the future. We are concentrating on new products, on overhauling regulation and taxation, and on enabling informed choice.
§ Mr. James Plaskitt (Warwick and Leamington) (Lab)
Does my hon. Friend agree that the savings industry itself must take some responsibility for ongoing problems in the savings field? She will know that the Treasury Committee has been looking at this issue for the past few months. We have uncovered endless examples of mis-selling, lack of transparency, opaque products, over-complexity and rip-off commission structures. Does she agree that the industry itself can contribute to solving such problems?
§ Ruth Kelly
I do, and I know of my hon. Friend's long-standing interest in this issue. It is absolutely true that in the past, the savings industry has been characterised by opacity and complexity. It is also right that we as a Government deal with that by shifting consumer protection away from the sales process and more towards the regulation of products, so that people can buy a stakeholder product—perhaps even during their lunch hour—that will suit their savings needs. That will make it much easier for people to make informed choices about their future savings. Such measures accompany the work being done by the Department for Work and Pensions. Over the next few years, millions of people will for the first time receive a combined forecast of their likely pension income. It is only right that we work with industry and with firms to promote employer take-up of schemes, to look at ways of automatically enrolling individuals in pension schemes, and to see how we can make it much easier for people to save.
§ Mr. Mark Prisk (Hertford and Stortford) (Con)
Despite the Financial Secretary's fanciful claims, the reality is that, over the last seven years, the Chancellor has repeatedly cut tax incentives for savers; indeed, he has now removed tax credits for ISAs, costing savers another £250 million. Given that the savings ratio has already halved since 1997, why are the Government yet again penalising savers, whether they are at work or at lunch?
§ Ruth Kelly
I do not think the hon. Gentleman has studied the latest figures on the savings ratio, but perhaps he will understand that the savings ratio varies with the economic cycle. At a time of boom and bust, the savings ratio is artificially inflated as people protect themselves against rising unemployment. I have said that we are not complacent; we are determined to tackle undersaving and to make sure that people can make informed choices about their future. That is why the DWP is introducing its informed choice strategy and why we are radically simplifying the regulation and taxation of pensions.