§ 3. Mr. David Tredinnick (Bosworth)If he will make a statement on his policies to encourage saving. [141835]
§ The Economic Secretary to the Treasury (Miss Melanie Johnson)The Government's strategy to encourage saving is to create the right environment for saving and the right incentives for people to save, and to provide information and education to help people to make the right saving choices.
The Government's initiatives include introducing the highly successful individual savings accounts, and developing stakeholder pensions, which widen people's savings opportunities for retirement. More than £28.4 billion was invested in ISAs in their first year—a third more than was invested in TESSAs and PEPs during their last and most successful year. Early indications show that ISAs are doing even better in their second year.
§ Mr. TredinnickDoes the Economic Secretary recall the words spoken by the Chancellor before the last general election:
We will never raise the levels of investment in our economy if we do not encourage savings … ?Is it not a fact that we now have the lowest savings ratio since 1963 and that the amount taken from people's pension funds by general taxation has increased by £5,000 million? How can the hon. Lady look my constituents in Hinckley in the eye and say that savings have improved under Labour?
§ Miss JohnsonWe have done a lot to encourage savings, as is demonstrated by ISAs. Estimates show that low-income savers invested £3 billion more in their ISAs in their first year than they had in the previous year in their PEPs and TESSAs. The hon. Gentleman is also forgetting the fact that there is more investment in savings via the net wealth that is available. Net financial wealth has risen by 25 per cent. since 1997—more than twice the rise in income. The stock of wealth saved shows that people have money to invest and that it is being invested.
§ Sir Peter TapsellDoes the Economic Secretary agree that, over the years, much of the nation's wealth has been invested in our gold reserves? She and I have had a lot of correspondence about that. Will she confirm that, since July 1999, the Treasury has sold 225 tonnes of Britain's gold for US $2,000 million? According to her last answer to me, 40 per cent. of that money has been reinvested in the euro. As the euro has lost one fifth of its value against the dollar during that period, is it not clear that the Treasury has frittered away huge amounts of the taxpayers' money?
§ Miss JohnsonThe hon. Gentleman's ability to introduce this subject into any question is remarkable, and I compliment him on it. However, the answer is the same as those he has received on many occasions. We made the right decision to diversify our portfolio and we were only acting in line with decisions taken by a number of other 792 comparable countries at the same time. Perhaps the hon. Gentleman does not want to discuss the economy and the issues facing the Opposition. He does not want to face the fact that no fiscal rules have been offered by the shadow Chancellor, that we have the lowest interest rates for years, that we have built a stable economy and that we have put an end to the Tory years of boom and bust.
§ Mr. Oliver Letwin (West Dorset)If the Economic Secretary is able to tell the House, as she just has, that her policy is to encourage savings, does she think that it is a measure of the success of that policy that the savings ratio is now at its lowest level for 37 years? Does she agree that the more worrying trend is in gross savings, and that the proliferation of means tests is bound to provide a further disincentive to saving? Does she agree with the Chancellor, who wrote in the pre-Budget report:
Any further weakening would pose risks to the economic outlook … ?
§ Miss JohnsonThe hon. Gentleman has not given the figures for the United States savings ratio, which are markedly lower than those for the UK savings ratio. [Interruption.] Yes, indeed, but he mentioned the United States. [HON. MEMBERS: "No, he didn't."] All right. [Interruption.] Okay, fine, but the fact remains that the United States has a much lower savings ratio than the UK. The hon. Gentleman is trying to avoid debating the current good state of the economy and the fact that we have returned the economy to stability. We have fiscal rules and we are able to provide an environment in which people feel confident enough to spend and to save money. The hon. Gentleman is avoiding that question because he does not want to refer to the Tory record. [Interruption.] The hon. Gentleman is getting very agitated about this subject. Frankly, that is unsurprising from a member of a party which was in office in the 1980s when 2 million people lost their jobs in a recession and in the 1990s, when nearly 2 million more people lost their jobs in a recession. We have got many more people into employment, creating 1 million new jobs. As a result of the prosperity and stability that we have created, people are able both to save and spend with confidence in Britain today.