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Bob Spink: Although I can, on balance, support the measure, it will increase the gap between rich and poor. The poorest people will end up with around £911 at the age of 18, whereas those from families with disposable incomes who can invest £100 a month will end up with a fund of between £35,000 and £40,000 at 18, thereby increasing relative poverty.
Mr. Foster: The hon. Gentleman is wrong, for this reason. The poorest will receive a higher contribution from the Government, which will push them above where they would have been otherwise. The middle classes will always look after their own and would make those contributions in any event. We are giving the poorest groups an opportunity to have something, whereas the better off will always act to achieve their own objectives. The gap will not grow and the scheme will enable everyone to save more towards whatever is needed at 18. This innovative scheme, making everyone a stakeholder, is to be welcomed.
I have three other points to make. First, I encourage my hon. Friend the Financial Secretary to hold firm to the 1 per cent. cost. The scheme is very cheap to operate. It is cheaper than the average stakeholder pension scheme as there is no possibility of withdrawal for at least 18 years; it is only a matter of collecting contributions. If the Portcullis pension scheme can offer 0.4 per cent.I agree that it has a captive audienceit ought to be entirely possible for providers to offer 1 per cent or thereabouts.
Secondly, although the scheme will be good in itselfits purpose must be to encourage parents to contribute in a tax-efficient way to their offspringchildren themselves must be encouraged to save, which has not happened for a long time. I remember that, in the dark ages of the 1950sunder a Conservative GovernmentI was encouraged to contribute sixpence for a Princess Anne stamp and 2/6, or half a crown, for a Prince Charles stamp. That Conservative Government gave me no interest on the investment, so I was contributing to
Such a measure is required now, giving young people collectively an encouragement to save. The scheme itself will do that, because every child, in due course, will have a savings fund. I do not know if they will check in the pink pages to see how their shares are doing, but they will know that they have an asset for the future. If we could encourage youngsters to put cash aside in some form of savings scheme, it would be helpful.
Mr. Ian Liddell-Grainger (Bridgwater) (Con): Does the hon. Gentleman agree that the ethos of saving has changed totally? When we were younger, saving was part of our pride in this country. Does he think that we might have to re-educate an entire generation of youngsters to save for the future, as they have not been encouraged to do so?
Mr. Foster: I entirely agree that the "me now" society, which developed some time ago and which we hope to dissuade people from continuing, changed the saving habit among ordinary people, who thought that they could borrow all the time to get what they wanted. There is a difficult cultural issue. I do not want to be over-political, but today's parents are Thatcher's children, which may be part of the problem. I agree that the objective is to try to get people into a different culture and to understand that there has to be a payment day. The scheme is a move in that direction.
Thirdly, I want to impress upon my hon. Friend the Financial Secretary the fears of my hon. Friend the Member for Dumbarton (Mr. McFall) and his Committee about the extension of the scheme to other children. I do not want to plead a special case for my four grandchildren, but they are aged five and below and none of them will qualify. The Financial Secretary said in her opening remarks that the scheme is for all children, but it is not for all children if 80 or 90 per cent. will not be included. The cost of extending the scheme to pay the cash would be unaffordable, but that is not my plea. I hope that, in Committee, she can deal with the problem of allowing certain young people, but not others, to enjoy tax benefits.
Extending the scheme to all would be a popular choice and an important one, for three reasons. First, it would be important for equity, as it is unfair that some young people should be treated differently from others. Secondly, it would be important for simplicity. Despite what the Financial Secretary said earlier, the existing schemesI wonder whether she has investigated themare rather complex. Thirdly, and perhaps most importantly, they are jolly expensive, often taking some 4 to 5 per cent. of children's funds. So it would be much more sensible to have one schemethe child trust fundthat is clearly worked out, and to allow all children to benefit from it.
Mr. Andrew Robathan (Blaby) (Con): The hon. Member for Hastings and Rye (Mr. Foster) spoke about the Bill with great enthusiasm. I have to say that I share neither his enthusiasm nor his view that, although the middle classes will look after their own, we will have to look after "these poor people". I found that somewhat condescending, to put it mildly. I am afraid that his enthusiasm will not save him at the next general election, but never mindI am sure that we will miss him.
I was rather more in agreement with the hon. Member for Yeovil (Mr. Laws). I hasten to add that I did not agree with everything that he said, and nor did he need to take 35 minutes to say it; nevertheless, many of the issues that he discussed needed to be raised. In a debate such as this, it is difficult to come out and say that one does not want to give a boost to the 1.6 million beautiful, bouncing, bonny babies; however, this scheme looks to me like a gimmick. The Financial Secretary spoke winninglyindeed, I almost wanted to believe that she was rightbut notwithstanding her comments, at the end of her speech she seemed not to believe herself what she was saying. That was rather worrying.
The scheme will cost £4 billion over 18 years, but is it really a good way to spend our money? After all, this is a Government who are very capable of spending money rather than very good at spending it. They have raised taxes 60 times, and through the abolition of advance corporation tax they have raised £30 billion to £35 billion from people's pension fund savings. Now they want to take away money by taxing parents such as me, and to give a gift to new babies. I do not see the logic of that. How does that encourage prudence, saving and self-reliance?
This gimmick was first announced in 2000, before the last general election. In fact, the figure of £1,000 was then gaily bandied about, but now we learn that it will be only £250. Perhaps that is one reason why the Home Secretary is disappointed with the scheme. I question the principle of a gift that is unrelated to the actions of the individual. After all, it is not intended to help those in dire straits; it has no relation to what theyor, if they are babies, their parentsdo. The Financial Secretary said that the scheme will kick-start a savings habit, but why should it? Why should giving back to taxpayers' children part of their own parents' money lead toas she described ita change in attitude to saving? Nothing in her speech led me to believe that it will.
My hon. Friend the Member for Tatton (Mr. Osborne) made a fine first speech in his new role. He rightly pointed out that members of the middle classof course, most of us in this place are members of the middle classsuch as himself, the Financial Secretary, the hon. Member for Yeovil and I all received a private, Oxbridge education. We understand about saving. I already have savings accounts for my two small children, who are aged seven and four, and I suspect that the Financial Secretary has such accounts for hers.
Mr. Robathan: Perhaps she is introducing this Bill, at the enormous cost of £4 billion, just in order to have them. But we know that most middle-class parents save for their children, which is very sensible. Furthermore,
The hon. Member for Dumbarton (Mr. McFall) spoke of the 50 per cent. or more of parents who save nothing, or next to nothing, for their children, but nothing in the Bill will encourage them to save more. They probably do not have the money, as the hon. Member for Angus (Mr. Weir) pointed out; if so, how will they save for their children? As has been pointed out, the money will be locked up in an account to which they will have no access.
Returning to my point about the middle classes, this is a very patronising measure. It takes the view that poor people must save, and that the nanny state will make it easier for them. Yes, of course we want it to be easy for them, but we should encourage all members of society to save. We should not patronise them; we should give them opportunities, not handouts.
What will happen at the age of 18, long after the current Blair Government are just a distant, unhappy memory, lamented by none? The Financial Secretary was 18 more recently than I was, but I should point out that I know quite a few 18-year-olds. Many are leaving school and going on to universityof course, the Government want 50 per cent. of young people to go to universityand some are going on to work. What will these 18-year-olds do? The Financial Secretary will perhaps correct me if I am wrong, but according to some, if only the initial £250 has been invested, they will have some £400; at a growth rate of 5 per cent., they would have some £602. She said that at the age of 18, the children themselves should decide what to do with the money. They obviously will not be able to pay a year's tuition fees. With top-up fees, the figure might be anywhere between £2,000 to £10,000 a year. With a mere £400, £600 or £900 in their account, they will not be able to repay the student debt, which may be £10,000 or even £20,000.
The Financial Secretary suggested, rather sweetly, that one could use the money to buy a van and set up a business. As it happens, I have a business, which is included in the Register of Members' Interests. I am a farmer, and last year I bought a Land Rover, which cost me a grand. Since then, I have spent about £2,000 repairing it, so it was not necessarily a good buy, but my point is that although £400, £600 or £1,000 will perhaps help, it is not much when it comes to starting a business. It is a nice idea, and perhaps some people will be able to use it for that purpose; but not many will be able to do so.
Most of the 18-year-olds whom I know like to go to Ibiza. I do not know whyI have never beenbut something goes on in the bars and on the beaches that 18-year-olds seem to like. Even those who are not rich want to go on holiday. According to today's copy of the Evening Standard, the last few seats are available for