§ Lord Newby asked Her Majesty's Government:
§ Whether they are content with the level of interest shown in ISAs (individual savings accounts) by both providers and individual investors.
§ Lord McIntosh of HaringeyMy Lords, the Government believe that individual savings accounts have got off to a flying start. Very nearly 400 firms have been approved by the Inland Revenue to act as ISA managers. Many firms have been surprised by the high level of interest shown by savers, with one bank reporting a quarter of a million ISAs taken out in the first week. The Government look forward to many more savers being introduced to the benefits of tax-free savings with ISAs in the future.
§ Lord NewbyMy Lords, I thank the Minister for that Answer. I am glad that I am not flying with the Government. Given the reluctance of the supermarkets to operate cash ISAs, which were the new feature of the ISAs aimed at small savers, will the Government consider taking further action to make ISAs more attractive to the small savers to whom they were designed to appeal?
§ Lord McIntosh of HaringeyMy Lords, it is not true that supermarkets have stayed away from ISAs. Safeway, the Co-op and Tesco are acting as ISA managers. It is far too early to say how many small savers have taken up ISAs, but we are confident that the accounts will extend the range of saving among those too many people who have little or no savings.
§ Baroness Gardner of ParkesMy Lords, does the Minister believe that it is necessary to take action about constant reports in the Sunday newspapers that putting a small amount of money into one type of ISA precludes one from putting a larger amount into any other? Although I cannot remember the precise details, I believe that if one puts a small amount of money into a cash ISA, the amount one is able to put into another type is limited. Many people have written to the Sunday newspapers to complain that they were not told that opening one type of ISA limited their access to another. If that is the case, should there not be an obligation on the organisation accepting the small amount of cash to explain the effect of that on other ISAs?
§ Lord McIntosh of HaringeyMy Lords, ISAs are designed to be flexible. There is a choice between the 1080 maxi ISA, which is for those who want to put everything with a single ISA manager, and the mini ISA, which allows an individual to have up to three ISA managers. I do not know to which Sunday newspaper reports the noble Baroness refers, but it is not true that if one puts a small amount of money into one ISA one cannot put money into other ISAs. That is made clear in the documentation produced by the Inland Revenue.
§ Lord NorthbrookMy Lords, why have ISAs been made so complicated when the regime they replaced. PEPs, was straightforward?
§ Lord McIntosh of HaringeyMy Lords, I do not believe that that is the case. They are flexible in the sense that there are a number of different options for stocks and shares, life assurance and cash ISAs. However, the relevant options for individual savers are straightforward and simple. I never really understood PEPs and TESSAs, but I found the ISA document fairly easy to understand.
§ Lord ChristopherMy Lords, although I do not want to undermine the Minister's response, I believe that there is a strong case for wider public education. The scheme is immensely complicated and many fund managers find difficulty in explaining it. I believe that we shall not attract small savers until they see some link between the ISA and their savings for retirement. Will the Minister consider that?
§ Lord McIntosh of HaringeyMy Lords, we are always open to consider variations and developments in any financial product. However, perhaps I may remind your Lordships and my noble friend where we are starting from: half the people in this country have savings of less than £200 and a quarter have no savings at all. It is that new market for savings that we wish to open up with ISAs.