§ 10. Mr. Mark Lazarowicz (Edinburgh, North and Leith)
What his policy is on the taxation of friendly society savings products. 
§ The Financial Secretary to the Treasury (Ruth Kelly)
The Government recognise the contribution of friendly societies in encouraging regular savings, particularly among the less well-off, and want a thriving friendly society sector in future. The Sandler report recommended a change to the tax rules that, if adopted, would affect some of the insurance policies sold by friendly societies, particularly their tax-exempt savings products. As announced in the pre-Budget report, we are considering that recommendation as part of the Budget process.
§ Mr. Lazarowicz
I thank my hon. Friend for her answer. When considering the proposals, will she bear in mind the fact that the abolition of tax-exempt savings products could well result in the devastation of the friendly society movement? The Association of Friendly Societies has estimated that some 50 per cent. of their members could close to new business if the proposals proceed. As my hon. Friend rightly pointed out the importance of the friendly society movement in 398 encouraging people on low incomes to save, I hope that she will realise the consequences of implementing the proposals as they stand.
§ Ruth Kelly
I know of my hon. Friend's deep interest in those issues. Of course, we are fully aware of the representations and concerns about possible implications that are regularly raised by the Association of Friendly Societies and other interested parties. However, as I said, we want to see a thriving sector in future. If my hon. Friend looks at the pre-Budget report, he will note that when designing the child trust fund another method of encouraging savings, the open market option, was preferred to licensed providers precisely because it would allow institutions such as friendly societies to offer an alternative, distinctive channel of distribution and encourage saving among the less wealthy.