Right of Reply: Patricia Hewitt

The Economic Secretary to the Treasury replies to a leader on the introduction of ISAs
Click to follow
YOUR LEADING article "Confusion is always the enemy of thrift" suggests that the Government made a mistake in abolishing a workable savings system in PEPs and TESSAs, and should have been swifter in advertising the benefits of the ISA.

Neither suggestion is correct. ISAs will be a better way for more savers to save than existing schemes, and we have worked closely with the Inland Revenue to ensure clear information is easily available.

A quarter of the population have no savings at all, another quarter have less than pounds 200 saved. Many are aware of the need to save, but are worried about hidden charges or not having access to their money.

ISAs were developed to provide flexible, tax-free ways to save to meet a range of needs: easy access cash ISAs for those needing to get at savings quickly.

To help savers, particularly new savers looking at new products, we have introduced new minimum CAT standards on reasonable charges, easy access and fair terms.

We know that ISAs will offer a wide choice to both new and existing savers. We have made sure that all savers can find out more about ISAs and make informed choices about which are for them.

In January this year, the Inland Revenue published a widely available booklet explaining in simple terms what ISAs are all about and what the benefits are.

Savers will quickly become aware of these benefits and wish to take them. As they do, providers will respond to their needs.

We believe ISAs will become as popular among new savers as PEPs and TESSAs became among existing savers, but that their benefits will - rightly - be more widely available.