Below is the text of Mr Major’s response on TESSAs (Tax-Exempt Special Savings Accounts) made on 26th April 1990 in the House of Commons.
Mr. John Greenway To ask the Chancellor of the Exchequer what representations he has received about TESSA.
Mr. Major This innovative proposal has been widely welcomed.
Mr. Greenway The explosion of credit in recent years has not been matched by a similar growth in personal savings. Does my right hon. Friend agree that tax concessions can play an important role in encouraging individual savers, and that is why the TESSA scheme and the abolition of the composite rate have been so warmly welcomed? Does he agree that it is important to promote that new scheme next year to people who do not save now so that there will be a growth in savings and not simply a replacement of other deposits to take advantage of that valuable tax concession?
Mr. Major My hon. Friend makes an important point. There will certainly be an element of dead weight cost in the new scheme, as I acknowledged from the outset, but I hope that it will be widely promoted to encourage people who at present do not save to do so. That would be wise economically and socially.
Mr. Boateng Will the Chancellor step back for a moment from the paean of self-congratulation on TESSAs and reflect on their impact on the competitive position of friendly societies, which have made such a considerable contribution over the years to encouraging the very small savers whom we want brought into savings schemes? Will he consider raising the exempt limit on deposits for friendly societies, and will he legislate at an early date and bring into force the recommendations in the Green Paper? We do not want Green Papers alone, we want action.
Mr. Major Green Papers need to be considered. As for friendly societies, the hon. Gentleman will be aware of the measures in the Budget, to which I have nothing to add at present.