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Mr. David Laws (Yeovil) (LD): I hate to break up the emerging cross-party consensus on the Bill. However, Liberal Democrat Members believe that it is yet another of the Chancellor's well meaning but flawed initiatives. It represents more of the serial micro-meddling that he has introduced since 1997 and is not good value for money for scarce public funds. We shall therefore vote against the proposals.
The child trust fund is an ill-considered and under-evaluated initiative in the tradition of the film industry tax relief, which was established several years ago as a modest measure but now costs hundreds of millions of pounds. It is in the tradition of the many loopholes that the Chancellor has introduced in every Budget and pre-Budget report. All those tax loopholes seem to have only one thing in commonthey cost a great deal of money and nobody, certainly not the Treasury, has the slightest idea of what they do, in practice, that is of value to the economy.
Mr. Cameron: Conservative Members are enjoying a lecture on consistency from the Liberal Democratsthat is always worth while. Has the hon. Gentleman analysed the incentive to save in relation to introducing a local income tax? Does he think that that would have an impact on savings?
Several hon. Members referred to the Treasury Committee's report on the child trust fund. When the hon. Member for Dumbarton (Mr. McFall) talked about what was said by people who were consulted on that report, he cited favourable comments from certain bodies that appeared to be financial institutions. As someone who has worked in a financial institution, I suggest that we must not regard advice from that quarter as necessarily wholly impartial, because those institutions have an interest in seeing this product, like other financial market products, take off.
In order to persuade the House that our objections to the Bill are not simply party political, I refer hon. Members to one of the more independent memorandums submitted to the Treasury Committeethe memorandum from the Institute for Fiscal Studies.
Mr. George Osborne: The hon. Gentleman tried to pick me up on what other Conservatives have said. I am right, am I not, that there is a Liberal Democrat member of the Treasury Committee, who, I am told privately, might serve on the Standing Committee with us? That
We should start by considering how much the Government plan to spend on the proposals and whether that expenditure is justified. The context of today's debate was established last week by the Chancellor's pre-Budget report, in which he unveiled a public borrowing figure of £37 billion for the current fiscal yeara figure that is significantly above the 3 per cent. that the Government previously regarded as a commitment on public borrowing. In addition to that very high figure, the Chancellor unveiled future forecasts for public borrowing that indicate that he will need to borrow some £150 billion over the five years from 2003 to 2008. Against that background, it cannot be anything but obvious to every hon. Member that next year we are in for an extremely tight and difficult public sector spending review when the Chancellor sets the spending figures for the three years starting in 200506. It is therefore incumbent on us all to consider not only whether there may be some merit in each individual scheme brought forward by the Government, but whether the merit of a particular scheme is greater than the alternative uses to which the money could be put.
At least two other costs will fall on the taxpayer: first, the tax relief on savings that will be triggered as a consequence of the measurethe Financial Secretary's evidence to the Committee suggests that she considers that that cost will be very smalland, secondly, the significant advertising campaign that will, as ever, be undertaken by the Government. Will the Financial Secretary give some idea of how much that will cost?
All those costs and all the money that flows from them will not make an iota of difference to child poverty. The Prime Minister said when he appeared at the launch of the child trust fund policy in April 2001:
Mr. Andrew Love (Edmonton) (Lab/Co-op): The hon. Gentleman will be aware that, in his pre-Budget statement, the Chancellor announced other measures that will have a direct and immediate effect on child poverty. Is it not sensible that he should plan for the future, so that we can deal with child poverty in several different ways?
Mr. Laws: I am grateful to the hon. Gentleman for his sensible interventionhe makes a fair point. In some respects, the Government are seeking to push ahead with reforms that we very much welcome: for example, the children's centres that were announcedor perhaps re-announcedin the pre-Budget report. However, the point at issue for Liberal Democrat Members, and the reason why we do not believe that the expenditure on the child trust fund is justified in comparison with potential alternatives, is the slowness of the roll-out of some of the other measures that the Chancellor and the Government are promotingspecifically, children's centres. One of the best things that the Government have done over the past few years is to establish the Sure Start scheme, because intervention in the very earliest years is the only way in which we will really be able to challenge the enormous inequalities of opportunity in society.