§ 10. Mr. Robert Syms (Poole)What estimate he has made of the savings ratio in 1999–2000. [91102]
§ The Chief Secretary to the Treasury (Mr. Alan Milburn)The March 1999 Budget showed the savings ratio rising to 7.5 per cent. in 1999 and beyond.
§ Mr. SymsWill the Minister apologise for the vicious attack that the Government have launched against savers: the £5 billion that they are taking out of pension funds; and the abolition of personal equity plans and tax-exempt special savings accounts? Is it any wonder that, since the last election, the savings ratio has plummeted to 7 per cent?
§ Mr. MilburnIf I were the hon. Gentleman, I would be careful about quoting savings ratios, because under his Government the savings ratio hit a low of 3 per cent. It is now 7 per cent. and rising. It is rising precisely because of the economic stability that this Government have created. I tell the hon. Gentleman and hon. Members who are chuntering from the Front Bench that the worst enemy of savers is the rampant inflation that we saw under the previous Government.
§ Mr. Christopher Leslie (Shipley)Is it not the case that pensioners with savings gain most from the current extremely low level of headline inflation? Is not that beneficial product of the Labour Government's policies a contrast with the prolonged double-figure inflation rates that we had under the previous Government?
§ Mr. MilburnMy hon. Friend is absolutely right: pensioners and others are benefiting from the low-inflation climate that we have managed to create. We have created a form of economic stability that this country has not seen for many years, with interest rates at their lowest level in more than 20 years, mortgages at their lowest rate for more than 30 years, inflation down and public finances under control. All of that is in marked contrast to the economic turmoil that we saw when the previous lot were in power.
§ Mr. Howard Flight (Arundel and South Downs)The savings ratio was 9.7 per cent. on average in the last three years of the Conservative Government. How does the Chancellor reconcile his fine words about increasing investment with the fact that the savings ratio has fallen by 26 per cent. since his Government came to power? It is, indeed, the attack on savings that has led to that. Not only have the subscriptions to individual savings accounts in the first quarter, in value terms, been enormously down on PEPs and TESSAs; not only are pension funds losing £5 billion a year; but the Chancellor will find, following the initiatives on stakeholder pensions, that there is a massive fall in the value of company pension scheme provisioning to money pensions, and a massive increase in people cashing in personal pensions. Here again we have the Government spinning one thing and doing another.
§ Mr. MilburnI know that the hon. Gentleman and the Conservative party do not like individual savings accounts, but the truth is that savers do. In the first two months following their launch, savers invested more than £4 billion in them—more than twice as much as was invested in PEPs and TESSAs during exactly the same period last year. What is most heartening from the Government's point of view—and, I should have thought, from the point of view of the House as a whole—is that most of the savings were invested in cash ISAs, which will benefit small savers especially. The Government are creating not only economic stability, but an environment in which saving will expand and increase.
I am grateful to the hon. Gentleman for asking his question, because, in many respects, his is the authentic voice of the Conservative party. He is the man who says that he wants state pensions to be privatised, and sickness and unemployment benefits to be transferred to the private sector. Moreover, rather than agreeing with his hon. Friends on the Back Benches that public spending should be increased, he wants it to be cut by £50 billion this year, next year and every year. That is the authentic voice of the Conservative party.