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Mr. Robathan: May I say, for the benefit of the whole House, that the fact that my children are too old to qualify—albeit by only two years—is not the reason why I oppose the measure?

Mr. Osborne: Later in my speech, I shall come on to what can be done for children who, because they were not born after 1 September last year, do not qualify.

Let me make it clear from the outset that we greatly support the principle that the Bill is designed to promote. Conservative Members believe in the virtue of savings. We think that having savings, like owning one's home, gives people a stake in society, gives them independence, encourages self-reliance and bolsters the freedom of the individual against the overbearing state. In that sense, it is the most practical manifestation of liberty. That, of course, is why, when the Conservatives were in government, they encouraged wider share ownership and gave council tenants the right to buy. It is also why, when in opposition, we have been alarmed at the halving of the savings ratio and the spread of the means test.

Conservative Members did not stumble across a belief in savings through some focus group or seminar. It is rooted in a Tory tradition that stretches from John Locke and Edmund Burke to the present day. Any policy that has the prospect of increasing savings and the freedom that they bring is something to which we should give a fair wind.

Whether the child trust fund works in practice is another matter. For a start, we do not know many of the key details. Indeed, we are none the wiser after the Financial Secretary's speech on aspects such as the level of the charge cap or the form of the sales regime. Given that the Treasury started talking about child trust funds almost three years ago, it is astonishing that so much is still so unclear at so late a stage. It is particularly astonishing that the Financial Secretary admitted in her speech that she had not yet considered some of the regulations, even in draft. I welcome at least her promise that they will be available during the passage of the Bill. I hope that she meant the passage of the Bill through this House and not through the other place.

From what we know, it is clear that, despite their good intentions, the Government have fallen prey to their characteristic habits of over-complexity and means-testing—ironically, the very factors that have caused such a mess in the welfare system to date, and have contributed to the savings crisis that the Bill seeks to address. We have serious concerns about the detail, but it would be churlish to oppose the principle behind the Bill. As I said, Conservatives believe in the virtue of savings.

The Financial Secretary comes to the subject by a different route—the Institute for Public Policy Research. When the Government were desperately scratching around for something new to say before the last election, the IPPR did what it is supposed to do by

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helpfully supplying the child trust funds, dressing them up in a new-fangled theory called asset-based welfare. The IPPR is, of course, the king of the Blairite think tanks—not for it obscure meetings in shabby offices on the fringes of Westminster; when it held a seminar last year on the child trust fund proposals, it took place at No. 10 Downing street, no less.

What was said at that seminar? That may give us a clue about the thinking behind the Bill. The Financial Secretary knows, because she was there and said much of what was said. I know, too, because I have got hold of a copy of the minutes. [Interruption.] I can hear that my hon. Friends are excited about that. They will be interested to know that child trust funds are known in new Labour circles as a

"third way within the Third Way".

I did not even know what the third way was, let alone that there were three different versions of it. By my calculation, if each way has three separate ways, there may be as many as nine ways in total: the House can see why I am on the Treasury team.

It is good to discover that someone is still talking about the third way. It is a bit like discovering a group of Esperanto speakers, or a Rubik's cube convention. The phrase "the third way" certainly has not passed the Prime Minister's lips for at least two years, and the Financial Secretary reminds me of one of those Japanese soldiers discovered on remote Pacific islands long after the war was over: she is still fighting a cause that her political masters gave up on long ago.

The minutes are full of other fascinating insights into the thinking behind the Bill. For example, a Mr. Kevin Rudd, apparently a leading light in the Australian Labour party, told the seminar:

"The left has begun to realise that assets and wealth are important to people who want to 'get on'. It taps into deeply felt aspirations and should be harnessed to progressive ends rather than left to the clutches of the right."

I suppose that we are the "clutches of the right".

The minutes go on:

"Kevin finished his presentation with a potential problem. The long-term nature of the Child Trust Fund could mean that it does not fit well with the electoral cycle."

Oh dear! Thankfully, the Government have been able to solve Kevin's problem. They announced their child trust funds just two months before the last general election, and they plan to send child trust fund vouchers out to the parents of 1.8 million children just a month before the likely date of the next one. Gosh! There I was naively thinking that this was all about helping other people.

Ignoring the third way clap-trap and setting aside the cynical electioneering, I still, despite provocation, believe that the Chancellor has produced a policy whose ambition is not ignoble. We all want the savings habit to be encouraged in all parts of our society. However, I must raise four questions, here and in Committee: first, will they work and encourage saving; secondly, will they reach the right people; thirdly, will they be ready on time; and fourthly, will they help develop a lifelong savings habit?

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The honest answer to the first question—whether they will work and get people saving—is that the Government simply do not know. As the Financial Secretary said before the Treasury Committee, the child trust fund approach is

"not one that has been tried . . . anywhere else in the world".

She quoted Association of British Insurers surveys and examples from the United States about individual development accounts, but those are no substitute for proper research into whether the policy will achieve the objectives hoped for. All she could say was that she hoped that it would kick-start a savings habit.

Hope rather than research is a dangerous thing when expensive new legislation is being introduced. In the words of the Chairman of the Treasury Committee's Sub-Committee on the matter, it is a "leap in the dark". I take this opportunity to thank the Chairman of the Treasury Committee, the hon. Member for Dumbarton (Mr. McFall), who is here, and my hon. Friend the Member for Sevenoaks (Mr. Fallon) and his Sub-Committee for producing an excellent report to inform the Second Reading debate.

From my reading of the evidence in the report, and from having attended a session myself, I note that the Financial Secretary was strangely reluctant, when questioned by my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley)— I thought that they struck up some rapport at the time—to set any kind of target for how many people she wants to see saving under the child trust funds scheme, or even to hazard a guess. It is hardly a sign of confidence in her own policy that she refuses to predict how successful it will be.

The Financial Secretary must acknowledge that the policy will be regarded as a success only if most parents, other relatives and children themselves top up the funds with additional savings, however modest those top-ups might be. The policy will have failed on the Government's terms if it soon becomes clear that many trust funds become dormant, with the only content the Government's initial deposit and the money earned on it. Each dormant account will signal a failure of the policy to encourage the savings habit, but only time will tell how many such failures there will be.

If the Government cannot answer the first question about child trust funds—whether they will work—perhaps they can answer the second, which is whether they will reach the right people: lower-income families who do not use other vehicles to save for their children? The Financial Secretary was strangely reluctant to be drawn on that issue when she appeared before the Select Committee and was questioned on that point by the hon. Member for North Norfolk (Norman Lamb). Encouraging low-income families to save is clearly the principal purpose of the whole policy, but the Financial Secretary seems to have a grander purpose. She told the famous IPPR summit that one of her concerns was the current unequal distribution of wealth. She continued:

"What is more, there are signs that wealth inequality is increasing."

She added that child trust funds are

"part of the response to that situation."

I do not want to disappoint her, but I fear that the Bill may have an effect exactly opposite to that which she intends. The unequal distribution of wealth—as she

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puts it—could be exacerbated by the policy. Middle-class parents who put in the maximum amount of £1,200 a year will give their child a nest egg that could be worth £34,000 by the time they reach 18, but children from lower-income families whose parents make no contribution will have only one thirty-fourth of that—around £1,000—in their trust fund.

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